Expert Q&A: The Global Security Risks That Come with Tariffs

By The Cipher Brief  featuring Retired Admiral James Stavridis, Fletcher Dean Emeritus, and former supreme allied commander of NATO

EXPERT Q&A — President Donald Trump’s raft of global tariffs came into effect early Wednesday – an unprecedented move that punished U.S. allies and adversaries alike and sent financial markets into a tailspin. Around midday, Trump announced he would pause what he called the “reciprocal” tariffs on most countries for 90 days, bringing down the levies to a universal 10%. The one nation that was not spared was China; Trump said he would raise tariffs on Chinese exports to 125%, after Beijing announced further retaliation. 

Trump has touted tariffs as a way to correct trade imbalances and restore American manufacturing; experts have warned of damage to global supply chains and other impacts that will likely lead to inflation and a sharp economic downturn, in the U.S. and elsewhere. 

But beyond the financial and economic disruption, experts have warned of the national security risks posed by the tariffs as well.

“One is the reshaping of military supply chains — and the link between the U.S. military and major weapons producers who still import quite a bit from China,” Isaac Stone Fish, founder and CEO of Strategic Risks told The Cipher Brief. “The other is how this may continue to fracture relations between the U.S. and allies, not only on intelligence sharing, but on willingness to work together in the case of, say, a [Chinese] invasion of Taiwan.”

Admiral James Stavridis, a Cipher Brief expert who served as NATO Supreme Allied Commander, also sees global security consequences for the U.S. and other nations. 

Admiral Stavridis spoke with Cipher Brief CEO Suzanne Kelly just prior to the Trump Administration’s announcement of a pause in the tariffs. Their conversation has been edited for length and clarity. You can also watch the full discussion at The Cipher Brief YouTube channel.

The Cipher Brief: The U.S. has placed tariffs on more than 90 countries. Why or how could this be a national security issue?

Admiral Stavridis: I think in four ways principally. Number one, and most obviously, if we do go into a recession, and most economists believe there’s now a better than even chance that we will, that’ll put downward pressure on all forms of spending, but particularly on defense spending. So recession, if it comes as a result of this, is very bad. And the evil twin of recession is inflation, which means that dollars for defense don’t go as far. That’s problem number one. 

Problem number two is all of this back and forth comes across to our allies, partners and friends as kind of slipshod, erratic, and certainly very negative in how we’re treating them. From a national security perspective, our allies, particularly at NATO, which is essentially the European Union, are going to be less likely to partner with us against Iran, against the Houthis, against China, against Russia, and above all in Ukraine. You feel those alliances sort of getting a little crumbly. 

Number three, our targets in this may retaliate. And they may retaliate not just against U.S. goods but also against U.S. services, meaning less money for Google, Amazon, Microsoft. Currently, those enterprises are not tariffed. Europeans could tariff them. That would reduce our national security, because a lot of our very best thinking on artificial intelligence goes on there. 

And fourth and finally, and this is an ancient evil, but it always pops up when you start charging massive tariffs on trade — smuggling. If we believe, as I do, that smuggling comes along with a desire to get around tariffs and taxes, certainly can you smuggle microchips so that they’re not subject to 50% tariffs coming out of Taiwan? Can you smuggle iPhones? Can you smuggle any number of different kinds of goods in order to avoid those tariffs? Smuggling always creates corruption, malfeasance, chaos on our borders. So I think there are big, negative national security implications for this policy.

The Cipher Brief: You worked with EU head Ursula von der Leyen. What might an EU response look like, do you think?

Admiral Stavridis: They’re calling it the “bazooka response.” She is not going to use a term like that, but you’ll find it in the journalism and literature of Europe. Effectively, what it means is putting big tariffs on U.S. goods coming in.

But I alluded a moment ago to putting tariffs on services, meaning Amazon, Microsoft, Nvidia, all of the “Magnificent 7” [U.S. tech companies] doing business in Europe. All of them could be subject to pretty extreme tariffs and that would be much to the disadvantage of the United States. 

And then secondly, as I mentioned a moment ago, part of Europe’s response could be, You want us to partner with you in standing up to China? Maybe not so much. Maybe we’ll take a look at that Belt and Road Initiative again. Don’t forget, Italy, a NATO member, was part of the Belt and Road Initiative. We put pressure on them. They backed out under the Meloni government. But Europe could find itself working more closely with China. I think that’s less likely, but not impossible. Those are two big potential responses from Europe.

The Cipher Brief: China and the U.S. are following two very different global strategies right now. You’ve got China making investments in many of these smaller countries with the Belt and Road Initiative. And then you’ve got the U.S. both defunding a lot of programs that brought benefits there and also imposing these tariffs. 

How do you see this playing out in terms of the U.S. influence around the world if China is able to really significantly get an edge with many of these smaller countries?

Admiral Stavridis: Another way to put this is what country benefits the most from this huge tariff output from the United States? Certainly the [Trump] administration would argue it’s the United States. I think you can make a pretty good case that it’s going to be China ultimately, because it’s going to drive so many nations to Beijing, not to Washington, to try and find better trade arrangements. 

And then as you point out correctly, this is coupled with, I think, the disastrous decision on the part of the administration to effectively gut the U.S. Agency for International Development, USAID. This is foreign aid, and we don’t do that for altruistic purposes. We do that because it provides real security for the United States by keeping people wanting to work with us. Now we’re gonna abandon that playing field to China, both on trade and on development. I think China’s gonna take big advantage in both cases, and it’s a long-term benefit for Beijing.

(This post is republished from The Cipher Brief.)