US’s economic colonisation

In recent weeks, US President Donald Trump has announced a string of new trade deals with dozens of countries across the globe.

Although the details of those agreements remain limited, a closer look at them clearly shows that President Trump has leveraged the threat of his higher tariffs imposed on most countries on April 2 and the US’s economic power to force massive trade concessions and investments from its trading partners.

Broadly, Washington has used threat of steep tariffs to a) coerce its trading partners into pledging investments worth trillions of dollars in the US to finance the revival of its manufacturing industry; b) secure preferential access — in some cases duty-free and in others concessional — for its energy and agricultural exports; c) influence the global supply chains and national industrial policies of its trading partners; and d) isolate nations seen as violating American trade or geopolitical interests. In return for tariff relief and continued access for their goods to the US market.

The statements made by President Trump and the White House are also couched in a language which consistently uses such words as “historic,” “unprecedented,” “landmark”, and “massive, underscoring a clear attempt to frame those deals as a ‘win’ for American workers, farmers and businesses.

These announcements clearly tell a story of unfair and one-sided provisions, strategic coercion, and the imposition of US economic priorities on its partner nations. No attempt has been made in the announcements to conceal the fact that Washington has secured these trade pacts by putting pressure on its trading partners, including both its strategic allies and rivals, obscuring the fact that the rates imposed on April 2 were abnormally high to begin with.

At their core, the trade agreements suggest an ambition to re-anchor the global economic system around Washington’s priorities

The tariff rates may have been reduced from their peak, but they are still punitive. The focus of national versions of the agreement, meanwhile, has been on the reduction of the threat of tariffs that the US had imposed on the countries in April. This is despite the fact that in most cases, tariffs remain well above pre-April levels — even after reduction, and could further disadvantage them besides deepening their existing economic challenges.

The US conditions on “supply chain security” limit how much value-added processing can be done outside the exporting country, effectively punishing economies that rely on global production networks. Vietnam is among the most affected. Over 70 per cent of its exports are produced by foreign-invested firms, including American brands such as Apple, Foxconn, Intel, and Nike — many of which operate with globally distributed supply chains.

The new US rules impose an additional 40pc import tax on goods transshipped by any country, making it more challenging for these firms to export to the US unless a significant portion of the value is added locally. That constraint directly undercuts Vietnam’s industrial parks, which have become hubs for intermediate assembly and export.

A consistent demand across the new trade deals has been greater market access for American agricultural exports. With the US now running its third consecutive agricultural trade deficit — a first in 70 years — Washington is pushing to reverse the trend by shifting the burden on others instead of reforming domestic production.

Japan offers a case in point. Despite agriculture comprising just 1pc of its GDP, the sector holds major political weight. Yet under pressure, Tokyo has agreed to increase US rice imports by 75pc, rising from 346,000 tonnes to over 600,000 tonnes annually within a World Trade Organisation-mandated quota. This increase, while technically within the rules, threatens Japan’s fragile rice economy and may come at the expense of its neighbouring Asian suppliers.

Similar patterns are emerging elsewhere. Vietnam and Indonesia have granted the US zero-tariff access for selected agricultural goods. Other countries — including South Korea, India, Pakistan and the UK — have been pushed to open markets to different American agricultural exports.

Reluctance shown by New Delhi on this condition has resulted in a 50pc tariff on that country, making it the second economy after Brazil to attract the highest US import taxes in the world.

These terms introduce sharp competitive imbalances, exposing local producers to surges of cheaper US goods, often heavily subsidised at home.

Bloomberg reported earlier this year that each time a trade war begins, the US loses ground in the global agricultural market. In 2025, the US has found itself locked in disputes with China, Mexico, and Canada — the top three buyers of American agricultural products.

Together, these countries accounted for more than half of US agricultural exports last year. The escalating trade tensions have further eroded the competitiveness of US farm goods and intensified financial pressure on American farmers.

The deal with the European Union, hailed by President Trump as the “largest trade deal in history”, has sown differences in the bloc. At the heart of the controversy is a commitment by the European Union to invest $600 billion in the US economy and purchase $750bn worth of US energy over three years — a figure that far exceeds both current trade levels and market forecasts. For context, the total value of US oil and LNG exports in 2024 was $180bn. France has been especially critical, with its officials describing Brussels’ position as a “yield” to Washington.

Though specifics remain opaque, Bangladesh has likely agreed to new purchases of US goods — possibly including Boeing aircraft, wheat, soybeans, LNG, and cotton.

Although full details are yet to be disclosed, Pakistan has apparently agreed to broad openness to US goods and services — especially imports like cotton, soybean, and energy — and appears to have addressed at least some American concerns over non-tariff barriers to market access.

Media reports suggest the US has also been offered 4,100 tariff lines at zero rate, including 2,400 tariff lines available only to China. In a first, Pakistan’s refiner, Cnergyico, has also arranged a test shipment of one million barrels of US crude, expected to arrive in Karachi in October 2025.

At their core, these trade agreements suggest a deeper ambition: to re-anchor the global economic system around US priorities, even if it means constraining the growth of partner nations. Critics argue that this amounts to a form of economic coercion — partner nations must not only accept elevated tariffs but also submit to the US.

The unfair deals signify a new wave of ‘economic colonialism’ led by the US in the garb of trade policy. With the balance of power tilted in its favour, Washington is least interested in even the scales in the foreseeable future.

Published in Dawn, The Business and Finance Weekly, August 11th, 2025