Some US presidents use military force to impose America’s will on other countries. Most prefer traditional diplomacy and negotiation, or else they ask allies to help them get their way. Jimmy Carter and Barack Obama stressed the importance of moral example in projecting global leadership.

Donald Trump does things differently. Since taking office last year, he has repeatedly resorted to draconian economic sanctions and trade tariffs, launching them like missiles at countries and people he does not approve of. Trump did not invent the practice but it has become his foreign policy weapon of choice.

The US Treasury imposed sanctions on 944 foreign entities and individuals in 2017, a record. This year, the total is projected to surpass 1,000. It currently lists 28 “active sanctions programs” ranging from Belarus and Burundi to Venezuela and Zimbabwe. In February alone, people and businesses in Lebanon, Libya, Colombia, Pakistan, Somalia and the Philippines were targeted.

Sanctions beget more sanctions. Last week, named Chinese and Russian companies were penalised over alleged breaches of previous bans on trade with North Korea. Whether it’s rocket components, illicit booze or smuggled cigarettes, global sheriff Donald J Trump is on the case.

What might be termed Trump’s “money wars” are now raging across large swathes of the globe, from Canada and Europe to Russia and China. On current trends, any country not under economic attack from the US will soon be the exception. Trump’s most recent target is Turkey, whose currency plunged last week following the sudden imposition of US sanctions and tariffs. His action, which Turkey’s president, Recep Tayyip Erdoğan, called “a stab in the back”, followed a new tranche of sanctions on Russia, linked to the Salisbury nerve agent attack.

Russia’s position is anomalous. It was initially sanctioned after its annexation of Crimea in 2014. By most estimates, it poses the biggest international challenge to US interests and values. Yet Trump appeared opposed to the state department’s sanctions in the Skripal case. Even so, follow-up sanctions are planned this autumn.

Iran was also recently targeted in Trump’s money wars. After reneging on the multilateral pact curbing Iran’s nuclear activities, Trump attacked its financial and trading interests. Next up, Iran’s banking system, and a potentially ruinous embargo on its oil exports.

In sanctioning foreign states, Trump typically acts without prior notice or any attempt at serious negotiation. His modus operandi is becoming familiar: shout – threaten – punish. Then comes a supposedly magnanimous offer to talk one-on-one, as happened with North Korea and the EU.

Trump uses real or confected public expressions of personal anger to soften up opponents and rally his electoral base to his latest cause. Then, like the lifelong capitalist he is, he hits his targets where he thinks it hurts most: in the pocket. After all, foreign wars are expensive and usually end badly. Better to follow the money.

Facebook Twitter Pinterest Protesters in Tehran’s Grand Bazaar voice anger over Iran’s economic problems. Photograph: AP

Using this as a weapon makes ultimate sense to Trump. In his experience as a property developer and entrepreneur, money really does make the world go round. For him, the world is simply one big marketplace, where cash is king. He aims to make a deal, not a difference.

The president’s dollars-and-cents approach reflects the America that raised him. Money, it is said, is second only to God in what was once called a “nation of hustlers”. Calvin Coolidge, a White House predecessor, famously declared in 1925 that “the chief business of the American people is business”.

Writing in The American Conservative, David Masciotra recalled the poet Walt Whitman’s likening of the American obsession with commercial conquest and pecuniary gain to a “magician’s serpent that ate up all the other serpents”. On this analogy, Trump is viper-in-chief.

Given this context, the declared purpose of Trump’s sanctions and tariff war – protecting America’s bottom line from “unfair” trade competition – is easy to understand. It explains, without justifying, measures taken against the EU, Mexico and Canada.

Paradoxically, it is globalisation, which Trump opposes, that has given the US such immense financial reach. China has been hardest hit. Last month, Washington imposed 25% tariffs on $34bn of Chinese imports. Another $16bn’s worth will be imposed this week if scheduled talks make no progress. Yet only 50 years ago, such leverage was non-existent.

Trump’s money wars have important strategic and political elements, too. The overall aim is to reinforce US dominance in the global economy. This extra-territorial over-extending is exemplified by Trump’s threat to punish European companies doing business with Iran.

His pressure tactics are assisted by the dollar’s position as the world’s reserve currency. Multinationals do business in dollars, and most emerging economies depend on dollar-denominated loans. So when the US Federal Reserve raises interest rates, as it is expected to do again next month, debt servicing and borrowing costs rise. In Trump’s unscrupulous hands, this is another powerful political tool.

In Turkey’s case, Trump used tariffs to express anger over the detention of a US citizen – whom he is now calling a “patriot hostage” – and policies such as Ankara’s intervention in Syria. The tariffs have little or nothing to do with Turkish exports to the US, which are relatively insignificant.

The measures against Iran are also politically motivated. Trump makes no secret of his hopes for regime change in Tehran. But as in Turkey, the effects of sanctions have hurt ordinary Iranians, not their leaders.

Does the use of sanctions and tariffs as a foreign policy tool actually work? The White House claims its “maximum pressure” campaign against North Korea succeeded in bringing Kim Jong-un to the negotiating table in June. But while the summit strengthened the North Korean dictator, Trump’s main aim – denuclearisation of the Korean peninsula – remains as elusive as ever. In this case and others, critics say, sanctions are a substitute for thought-through policy.

Trump’s sanctions on Iran are likewise in danger of backfiring politically. The measures have principally succeeded in uniting warring hardline and moderate leadership factions in shared defiance of Washington.

More significantly, in terms of Middle East peace, Iran may retaliate by forcibly halting all regional oil exports via the Gulf and the Red Sea if the US embargo goes ahead. The result of Trump’s bully-boy tactics could be a global oil shock – and military confrontation in the Strait of Hormuz.

Trump’s escalating global economic warfare is producing other unexpected results and unintended consequences. One is the chilling effect on traditional US alliances.

Facebook Twitter Pinterest A US farmer with his soya bean crop. Photograph: Aleksandra Michalska/Reuters

Opinion polls suggest respect for and confidence in US leadership has sharply declined around the world. This holds especially true in western Europe, where Nato and EU allies feel assailed and betrayed.

Diplomats and analysts make a more fundamental point. Sanctions are a blunt tool that, historically speaking, usually do not work well and harm the most vulnerable people. One oft-quoted example is the suffering in Iraq caused by the 13-year universal sanctions regime erected after Saddam Hussein invaded Kuwait in 1990.

For such measures to have a chance of working, they must be enforced multilaterally, ideally with the UN’s legal and moral backing. From this point of view, Trump’s go-it-alone approach is doomed to failure. Other countries actively work to undercut what they see as arbitrary US behaviour. This is already happening over Iran and North Korea.

Trump’s money wars, coupled with his nationalistic America First agenda, are also seen as undermining the multilateral, rules-based global order symbolised by the World Trade Organisation. Most governments value these structures. This potentially hurts Americans, too.

Trump already faces a backlash from US exporters hit by retaliatory foreign tariffs. He was recently forced to offer stricken soya bean farmers a $12bn federal bailout – ironic for a Republican for whom the private sector is sacrosanct.

The more the US relies on unilateral sanctions and tariffs, the more likely the rest of the world – disregarding possible financial penalties – will refuse to play along. Those who can afford to, like China and the EU, inevitably retaliate in kind, creating a mutually damaging economic downward spiral. Those who cannot defend themselves, such as smaller, emerging-market economies, will look elsewhere for help.

The resulting tensions divide America’s friends and unite and strengthen its competitors and foes – while accelerating the search for alternatives to American leadership.

This effect may already be observed in increased Chinese and Russian geopolitical collaboration and enhanced economic alignment through groups such as the eight-country Shanghai Cooperation Organisation.

The converse is also true. The more Trump penalises Beijing, the more unlikely it is to help with problems like North Korea and Iran. Some predict a new cold war, with China replacing the Soviet Union.

An insight into just how self-defeating Trump’s economic world war could be was provided by Erdoğan’s threat last week to quit Nato and transfer Turkey into Russia’s orbit – a prospect enthusiastically welcomed by Moscow. Who will be next to jump ship?

Tom Wolfe would have laughed. Trump is behaving like a new master of the universe – the ultimate arbiter of global markets, trading favours and punishments for political gain. But worldwide, his stock is falling. And, for the US, Trump’s money wars may yet prove to be very expensive indeed.

Around the world, US trade tactics have a human cost



Turkey

Hakan Evin



Hakan Evin is the closest thing to a celebrity in the world of Turkish carpets. The walls of his shop in Istanbul’s Grand Bazaar are lined with magnificent rugs and kilims, as well as photographs of Evin with a slew of US political figures who were his customers, including John McCain, Lindsey Graham and John Boehner, Laura and George HW Bush, and one with the actor Ben Affleck as he gave him a guided tour of the ancient, labyrinthine market.

That’s perhaps why his upbeat, wide smile fades when conversation turns to the US sanctions on Turkey and the diplomatic crisis over the continued detention of the pastor Andrew Brunson.

“Donald Trump is punishing Turkish businessmen,” he said. “It’s childish. He’s supposed to represent the richest, strongest nation in the world. I don’t understand it.”

“I wish we could all just be together,” he added. Evin could spend hours talking about the intricacies of carpet design and weaving, the silk production methods of decades past that are no longer in use, his teenage years visiting his father’s carpet shop in the bazaar, and the inferiority of machine-woven rugs, all over copious amounts of pistachios and apple tea. His face lights up when he holds up a tiny eyepiece that lets him count how many knots per square centimetre are in an individual rug.

The centrepiece of Evin’s shop is a 1980s Hereke, the most intricate class of Turkish rug, which he estimates took two weavers in the city of Bursa around seven years to craft, using silk made by silkworms feeding on mulberry leaves. It costs $160,000.

The silver lining of the crisis that has battered the Turkish economy over the past week, Evin said, was that it might spur tourists to come because of the dollar and euro’s strength against the lira. The country’s political crises have driven away wealthier patrons from the west and Middle East. Many think Istanbul is unsafe, a perception that is unlikely to change with the latest sanctions, even though there have been no major terrorist attacks, Evin noted, since 31 December 2016.

“Turkey is safe,” he added. “Our problem is we get scared sometimes, and [people] may not want to invest because they don’t trust how much the dollar will be tomorrow.

“That’s why we prefer stability, in jobs and money.”

Already there are rumours swirling among Istanbul’s carpet weavers and traders that the Trump administration may impose tariffs on Turkish rugs, and Evin is spending more time at his other shop in the bazaar, which sells scarves – a more affordable alternative for budget-conscious tourists.

But there is little doubt where his heart really lies.

“A carpet seller will tell you when he sells something with imperfections, they will say ‘nothing is perfect, and the imperfections are due to it being handmade’,” he said. “That’s the classic lie. You have to make it as perfect as possible.”

Kareem Shaheen in Istanbul and Gokce Saracoglu

Iran

Bahar Mohammadi

Facebook Twitter Pinterest Bahar Mohammadi

Bahar Mohammadi’s expertise in digital marketing was in high demand following the 2015 landmark nuclear agreement that led to the return of foreign car manufacturers to Iran, where the automotive industry is the country’s biggest after petrochemicals.

Mohammadi, 36, a graduate of Tehran University, found a job in 2015 in a multinational automobile manufacturer in Tehran. But the reimposition of sanctions following Donald Trump’s decision in May to unilaterally withdraw the US from the nuclear deal, in spite of European opposition, has greatly affected the car sector. Mohammadi has since been laid off.

“Everyone is anxious,” she said. “A lot of people are worried that the price of goods will soon go up, so they’re stockpiling. They can’t afford a lot of things, as salaries are worth less. A lot of people – I see this particularly among my friends – are thinking of leaving the country.”

In June, as it geared up for the return of US sanctions, the Iranian government banned car imports. US sanctions, reimposed this month, will be followed by even more stringent measures by 4 November, including an embargo on the import of Iranian oil and sanctions on the banking sector.

“Businesses, the quality of life, things such as travel, salary, education or, even more importantly, the health sector have been affected,” Mohammadi said. “Medicine prices have soared – some important medicines are no longer imported.”

Sanctions are compounding Iran’s economic woes. The national currency, the rial, has gone into a tailspin, halving in value since April, fuelling street protests over economic grievances.

The German carmaker Daimler, which announced a joint venture in Iran last year, said this month that it was freezing its business activities in the country. In June, Peugeot of France said it was halting investments. Other car manufacturers, such as Renault, have announced similar policies, either running down their operations or bringing them to a complete halt.

“The main reason the government gave for the ban on imports of cars was that money was getting out of the country,” Mohammadi said. “A lot of experts are losing their jobs – it’s estimated that between 10,000 and 15,000 will lose their job in the car sector alone. They have to start again from scratch.”

Saeed Kamali Dehghan in London

Russia

Artem Temirov

Facebook Twitter Pinterest Artem Temirov in Chernyy coffee shop. Photograph: Andrew Roth/The Guardian

Coffee shops dominate Moscow, but it’s hard to find one like Chernyy (meaning black). The sleek downtown cafe is the retail front for a left-leaning cooperative, a rarity in the Russian capital’s cut-throat restaurant scene.

“We wanted to make something that would bring in money but would also reflect our ideas about a different way of organising society,” said Artem Temirov, a founding member, who sports a close-shaven head and two scarlet flowers in his breast pocket.

The cooperative is particularly vulnerable to price shocks from the exchange rate because it imports pre-roasted coffee priced in dollars. The 8% fall in the value of the rouble to the dollar this month, largely on sanctions fears, means a projected coffee budget shortfall of about 50,000 roubles, or £580, for the cooperative.

“That’s the salary for an employee – it’s pretty serious for us,” said Temirov. He and his partners also sell coffee wholesale to other cafes or directly to consumers through a subscription service. Over a cup of Ethiopian, he whips out a MacBook with a spreadsheet that is programmed to show the monthly budget at different dollar exchange rates.

“Everything more or less worked at 63 [roubles to the dollar],” he said. “But at 67 or 68, we start having serious losses and that means we need to cover our budget in other ways. We can’t buy less coffee and tell our clients, ‘Sorry, guys, this month we’re not going to be supplying you.’ They rely on our coffee.”

It isn’t the first time that Temirov has faced uncertainty from the exchange rate. The cooperative barely survived the rouble devaluation in late 2014, when the rate halved just as a large delivery of coffee arrived from abroad. “It nearly wiped us out,” he said. A decision was made to remain in business, but it took until May this year to pay off the debts.

How can Chernyy deal with price shocks? The main answer is to decrease risk by holding off on new clients or custom coffee orders. “Naturally, it slows down our growth.”

The cooperative is bracing for a further decline in the rouble, although a true collapse could change how it does business. “If the rouble were to rise up to 100 [to the dollar], then I don’t even know what we’d do. We don’t make those kinds of predictions. I don’t know how to do business at that exchange rate.

“If we’re talking now about which speciality coffee to choose, the one that tastes of sea buckthorn or papaya, then that would simply be too expensive,” he added, after tasting some samples. “We would have to raise prices and position ourselves as a cafe for only wealthy people. But that’s not something we really have an interest in doing. We want to work as a city cafe for everyone.”

Andrew Roth in Moscow