80 years of good work gone in 80 days

The United States has demonstrated to the world that it cannot fully be trusted.

By David Bernell and Thomas Graham

President Donald Trump continues to put his efforts into harming the United States and the world. Last week, he imposed widespread and massive tariffs on countries all over the globe. Trump somehow thinks that causing worldwide economic havoc, denigrating America’s trading partners and friends, and imposing high costs on them is a recipe for American success. He is terribly mistaken.

The United States has had the good fortune of being an economic powerhouse since the end of World War II. American goods, American markets, and American dollars all have been in great demand globally. This has served the United States very well, giving the country economic growth, affordable goods, low interest rates, and the ability to sell its products overseas. Even the often-dysfunctional politics of the United States or its leaders’ questionable decisions have not gotten in the way of its economic success.

Under the current administration, as Trump targets U.S. trading partners with massive new tariffs, Americans are more likely to feel significant and extended pain – unless Trump reverses course and abandons for good his infatuation with tariffs. Trump imposed and then quickly withdrew many of the tariffs he implemented in February and March. Soon after the announcement of new tariffs on April 2, he said both that the tariffs were permanent and that they were negotiable. However, on April 9, Trump rescinded for 90 days most of the tariffs announced on April 2 (except for China, which saw another increase in tariffs), while still keeping a baseline tariff of 10 percent on most countries. The economic pain the tariffs were causing in only a few days was too costly for even the president to withstand. It remains unclear—probably even to Trump himself—what to expect in the future.

The Fallout from Tariffs

The world will see what Trump does next, but the best-case scenario regarding tariffs is that Americans will pay more for many of the goods they purchase, such as automobiles (a $35,000 Volkswagen would cost $42,000 to pay for the now-paused 20 percent tariff on goods from the European Union), fruits and vegetables grown overseas (a tariff on coffee or bananas or other goods not grown in the United States makes no sense), and electronics (the newest iPhone could cost $2,400 or more with the whopping 125 percent tariff China now faces). At best, higher prices and nothing more would be the impact from tariffs.

Unfortunately, that “best-case scenario” is unlikely. America’s trading partners, chief among them China, have planned or already enacted retaliatory tariffs. China’s tariff on U.S. goods now stands at 84 percent. It will be more difficult for American companies selling their goods in China. These tariffs will raise the price of American goods, making them less affordable, so other companies will replace those U.S.-made goods. American companies will see sales in China slump, so they will lay off employees and make less money, and some might go out of business altogether. China has reacted the fastest, but depending on what Trump does, China won’t be the only country retaliating. This scenario will be repeated by others.

The problem, however, is even worse than that. Stock markets in the United States (and around the world), which have taken a beating over the past several weeks, reacted strongly to Trump’s tariffs. Investors (individuals and companies) expect that American businesses will suffer in a global trade war. So even if you haven’t bought a new car or phone, even if you don’t sell products overseas, you’re still worse off today than you were before Trump entered office if you have investments or retirement savings. The Dow, the NASDAQ, and the S&P 500—the major U.S. stock exchanges— declined roughly 10 percent in just the few days after the latest tariffs were announced, and they had gone down by even more since Trump took office and began his on-again, off-again tariffs. Stocks began to rally upward after the tariff pause was announced, but this demonstrates just how precarious markets are amid economic uncertainty. (Trump says he’s enacting tariffs so that Americans can be working more. Well, we all could be working until we’re 90 to pay for his thinking that engaging in global trade is a rip-off.)

Recessions tend to follow downturns in financial markets, and this is now the expectation should high tariffs become the norm, according to recent economic forecasts. Even Trump has said that economic pain is likely in the face of his policies. Still, he has been asking Americans to “hang tough” even as his own aides admit that Trump doesn’t care about the impact of his policies. There is much to worry about if Trump is ready to fight until everyone else’s money is gone.

Trump expects overseas companies to build factories and businesses in the United States, but, even if that happens, they will take years to establish. More likely, however, anything requiring an investment of time and money won’t occur. Considering Trump’s erratic, destructive economic policies thus far, wise investors from around the world are apt to conclude that a big investment in the United States in the Trump years is a risky gamble, not a long-term plan for growth and success.

It's Even Worse Than You Think

Unfortunately, the problem is (again) worse than that. The economic chaos is only part of the adverse impact of Trump’s sporadically pursued trade war. Tariffs are but one component of the administration’s larger efforts, which also involve turning away from America’s longtime allies and interests.

Trump’s tariffs go hand-in-hand with his ongoing poor treatment of American allies and fellow democracies and his lack of commitment to NATO, thereby sowing doubt that the United States will come to its allies’ defense. European countries are now making plans to ensure their own security without having to rely on the United States—to “achieve independence from the USA” as the incoming German chancellor put it—and this includes cutting purchases of American-made weapons and other military equipment, hitting U.S. companies like Lockheed Martin and General Dynamics particularly hard. On top of all this, Trump has embraced Russian President Vladimir Putin, who seeks to regain territory once part of the Soviet Union and snuff out Ukrainian democracy and independence. These actions reflect Trump’s general disregard for the global order the United States led and built with its allies after World War II.

As we have written, American foreign policy since 1945, despite its shortcomings, facilitated American power and prosperity and provided benefits to much of the rest of the world. It built NATO and a system of alliances that kept peace among the world’s great powers and within Europe. It facilitated greater economic prosperity and stability with the establishment of the General Agreement on Tariffs and Trade (and its successor, the World Trade Organization), the World Bank, and the International Monetary Fund, as well as its commitments to economic development through the Marshall Plan, foreign aid programs, and USAID. It created and supported numerous international organizations to promote development, health, education, and international cooperation, all of which facilitated what has been called a “rules-based order.”

The policies, practices, and words of Donald Trump are now rupturing others’ trust in the United States and their belief that the post-World War II international order will continue. By turning away from what has made the United States and the world better off and instead seeking American dominance (or some Trump-imagined view of “greatness”) at the expense of America’s allies, friends, and trading partners, Trump— in a mere 80 days in office—is undoing 80 years of American foreign policy and the global system it shaped.

Therefore, in the worst-case scenario, the political and economic turmoil that the United States is causing suggests that we are potentially witnessing the end of an era – the end of the American century and globalization as we have known it. Canadian Prime Minister Mark Carney put it clearly and succinctly: “The eighty-year period when the United States embraced the mantle of global economic leadership—when it forged alliances rooted in trust and mutual respect, and championed the free and open exchange of goods and services—is over.”

When the Canadians—the Canadians—say that they can no longer count on the United States, the bridges are all pretty much burned.

A Way Forward, But Not a Way Out

Trump has crossed the Rubicon. The United States has demonstrated to the world that it cannot fully be trusted. Credibility and trust take years to establish, but they can be gone in an instant. Still, Congress should now seek to limit the damage being done by Trump, even if there is no going back.

One should have no illusion that House and Senate Republicans will find courage, but perhaps their fear of more ruin will turn them in another direction. Several Senate Republicans are already co-sponsoring a bill with Democrats that would limit presidential authority to set tariffs. Taxes, regulations, and spending require multiple approvals to bring policy to fruition. Tariffs, on the other hand, are subject only to a presidential decision. Trump just enacted what is, in effect, the largest tax increase in U.S. history based on nothing other than his preference. Congress ceded this authority to the presidency decades ago, never believing that its work would lead to what Trump has wrought. Now would be the time for Congress to change American law, take away the president’s authority, and set tariffs back to pre-Trump levels.

The American business community should also recognize that any hopes for Trump to pursue business-friendly policies were for naught. Businesses should engage in a full-court press to convince Congress and the president to reverse course, and not just for 90 days. Until there is a change, the economic harm and political fallout will continue to accumulate.

In the meantime, other countries will pursue a post-American world.

Retired Ambassador Thomas Graham Jr. was acting director of the U.S. Arms Control and Disarmament Agency under President Bill Clinton and served as general counsel of ACDA during the presidencies of Jimmy Carter, Ronald Reagan and George H.W. Bush. He is the author of several books on nuclear arms control, U.S. foreign policy, and American politics.

David Bernell is an associate professor in the School of Public Policy at Oregon State University. He is the author of “Constructing US Foreign Policy: The Curious Case of Cuba” and “The Energy Security Dilemma: US Policy and Practice.” He served in the Clinton administration with the U.S. Office of Management and Budget and the U.S. Department of the Interior.

You can find their work on Substack at Defending Democracy.