[Market Pulse] Trump’s Tariff Policy and Sadopopulism

President Trump views politics as transactional. In negotiations, he seeks to secure an advantageous position and acts aggressively to prevent his counterpart from responding. He creates scenarios where he wins at any cost and turns his successes into events to maximize their impact. Long-term relationships or mutual trust with the other party are of little concern to him.

Professor Timothy Snyder, renowned for his research on dictators, coined the term "Sadopopulism," a blend of sadism and populism. Criticizing President Trump's crackdown on American universities such as Harvard, Snyder left Yale University in April this year and moved to the University of Toronto in Canada. According to his concept of sadopopulism, Trump’s policies (Trumpism) are focused not on genuinely helping the voters who made him president, but on punishing his enemies.

He stirs up anger against countries, including China, with which the United States has a trade deficit, and portrays immigrants as criminals to justify mass deportations. He dismissed the head of the relevant agency by accusing unfavorable employment statistics of being manipulated. All of these actions contribute to creating the conditions for sadopopulism.

Extracting astronomical funds from the European Union (EU), Japan, and South Korea, and telling the American public that the U.S. will manage these funds and take 90% of the profits, is the ultimate form of sadopopulism. He believes that showing the other countries bowing down will lead Americans to support his policies. While South Korea tends to dismiss President Trump's statements as mere political rhetoric, the repeated rhetoric may actually be a process of rationalizing irrational actions. No country would make such astronomical investments simply as an "admission fee" for access to the U.S. market.

Even if Trump leaves the White House, American nationalism and protectionism are likely to persist. Unless there is a shock akin to the Great Depression, it may take a considerable amount of time for President Trump's harsh tariff policies to be revised. This is because, even if the side effects of high tariffs are recognized, it is difficult to overcome fiscal addiction. Although high tariffs will be passed on to consumer prices and burden American citizens, tariff revenue could help mitigate, to some extent, the risk of a U.S. national default. Furthermore, there have even been mentions of distributing tariff revenue as dividends to the American people.

Although the debt ceiling was partially adjusted earlier this year, the U.S. federal government still faces default risk. As of August 2025, the U.S. national debt has surpassed $37 trillion. Interest payments on the national debt alone require $1 trillion, which is more than the defense budget. While Trump boasts about increased tariff revenue, he cannot keep up with the growing fiscal deficit. Although tariff revenue has doubled compared to last year, it still accounts for just over 2% of total federal government revenue.

In the end, more government bonds will have to be issued to cover federal spending. The problem is that U.S. Treasury bonds are not selling as well as they used to. Depending on future relations with the United States, countries holding large amounts of U.S. Treasuries may dump them on the market. If this happens, bond prices will plummet, and the U.S. will not be able to escape default.

The United States needs countries to buy its government bonds. President Trump and Secretary of Commerce Howard Lutnick have stated that they will decide how to use the $1.5 trillion pledged by the EU, Japan, and South Korea, which may be related to this situation. Perhaps this is a revised version of the Miran Report announced at the end of last year. At the end of last year, when Trump was president-elect, Steven Miran, who worked at a financial institution, proposed the unprecedented idea of forcibly selling "0% 100-year Treasuries." Apparently pleased with this report, President Trump appointed him as Chairman of the Council of Economic Advisers (CEA).

Although a major hurdle was cleared with the recent tariff agreement with the United States, several even tougher challenges still lie ahead. The investment amount, equivalent to 80% of South Korea’s annual budget, is an enormous burden. Moreover, it will not be easy to devise ways for investments in the U.S. to align with our national interests, especially when trying to break free from President Trump’s sadopopulist rhetoric. At the upcoming Korea-U.S. summit on the 25th, overcoming Trump-style sadopopulism will be another major challenge.

Jung Ingyo, Professor of International Trade at Inha University, former Chief Negotiator for Trade