Trump has floated export tariffs as high as 60% for China and 10% to 20% for Europe, though Wall Street remains skeptical he will follow through.

In a phone interview with Fortune, Ross said Trump recognizes that the mere threat of export tariffs can help him achieve his goals.

Ross, who served in Trump’s administration from February 2017 to January 2021, is a former investment banker with experience advising figures like President Bill Clinton and former New York Mayor Rudy Giuliani.

Ross explained: “To some degree, [Trump] can probably achieve his objectives simply because of the threat.

“For example, during his first administration, once I had put on the tariffs on steel and aluminum, he then sent me over to Europe, and I met with the heads of the big European car companies and then subsequently the Japanese ones.”

Then-Secretary Ross was tasked with telling foreign auto businesses to “step up the pace” of building factories in the U.S. or face tariffs, and “they did.”

The real question, therefore, is whether or not other nations can make enough concessions to “satisfy” Trump—either to “moderate or eliminate” the more extreme end of proposed measures.

Ross—who spoke throughout from his own perspective and not as a Trump spokesman—added that the reason other nations will acquiesce is obvious: They can’t afford an “all-out” trade war.

“China’s economy is only about two-thirds of our economy, and we buy a lot more from them … than they buy from us,” Ross explained. “As a result, our potential for inflicting pain is vastly greater on their economy than it is on ours.

“The same is true of the EU, and the same is especially true of Canada and Mexico because they’re much, much smaller economies.”

Previously, Wall Street has voiced similar estimations of whether the Republican politician will push through all the headline-grabbing policy proposals he made on the campaign trail.

Goldman Sachs’ U.S. economist Ronnie Walker, for example, is banking on a 20% rate with China as opposed to the threatened 60%.

“The China-focused tariffs are likely to draw from the lists of goods created during his first term and could be imposed fairly quickly,” Walker wrote in a note seen by Fortune last month. 

“While Trump has also proposed a universal 10% to 20% tariff on all imports, we see this as a serious risk but not the baseline.”

How far will Trump go?

For former Secretary Ross, the key issue is whether other nations can muster sufficient compromises to satisfy the Trump administration.

Leaders of foreign countries already appear to be thinking outside the box on this account, 87-year-old Ross added.

“One of [Trump’s] complaints with Europe—and for that matter with Canada—has been that they are not stepping up their defense budgets,” he explained. “Some of the leaders are now talking about not just going to 2%, which had been the NATO target, but possibly going to 3%.”

Mark Rutte, the secretary general of NATO, for example, told the Financial Times last month that he had a new percentage target in mind for members.

“When you look at the capability targets, [when] you look at the gaps still there … It is clear that, with 2%, you cannot get there,” Rutte said.

A German official added to the outlet that a commitment to 3% would be a “good signal to the U.S. and to Trump.”

In Great Britain, meanwhile, Prime Minister Keir Starmer has refused to commit to the higher level but has admitted it needs to increase: “There is an ongoing discussion in Europe about defense spending, and there is an acceptance that it needs to go up,” he told news station LBC in December.

Ross pointed out that—as the world’s largest arms exporter and home to a host of major defense businesses—increased military spending would also help Uncle Sam’s balance of payments.

“[Trump] will very likely look at the overall package the other countries come up with, and then he will make a considered decision what to do,” Ross added.