We are more than two months into Donald Trump’s second term as US president. Few on this side of the Atlantic relished his return to office, but one could hear respectable voices argue that the sky was not going to fall in. The first term was not so bad, they would say; he might pursue some absurd policies but the moment the markets get jittery or public opinion moves against him, he will self-correct; and yes, he will force Ukraine to the negotiating table but the moment Vladimir Putin overplays his hand, Russia will face retribution.
Any assessment of Trump’s second term has to be so far, so bad. By his inauguration, we already knew that his cabinet was going to be predominantly made up of cranks, rather than the establishment Republicans of his first term. Hopes that GOP senators might reject a few of the more egregious appointments were soon dashed. The judiciary – perhaps the last effective handrail on Trump’s power – is under vicious attack. As is free speech.
Trump is an old man in a hurry, keen to establish his place in history. Territorial expansion appears to be the means to do so, like a latter-day Alexander the Great. For Egypt and Persia, read Canada and Greenland.
The reassuring sensitivity to the stock market – the “Trump put” – has gone. He is reconciled to a “period of transition”. Chasing after short-term popularity is usually a weakness in populist leaders, but Trump’s apparent disinterest is disconcerting. Maybe public opinion does not matter quite so much in a country where a president has so much power.
As for Ukraine, he has bullied Volodymyr Zelensky and humoured Putin. Every intervention from senior figures in the US administration is sympathetic to the Russians. Those, such as Boris Johnson, who have bet their reputation that Trump will come through for the Ukrainians, have been exposed as fools.
Across the board, the president has behaved at the worst end of expectations. Those accused of suffering from “Trump derangement syndrome” have proved to be more prescient than the “it will be OK” merchants. It is commonplace to say that Trump should be taken seriously, not literally. We should certainly do the former, but can we be confident that we should not do the latter? The Ukrainians, Canadians, Panamanians, Greenlanders and Danes should be particularly nervous.
When Trump and his Maga supporters say “America first”, they mean it. Their world-view is that the rest of the world is ripping off the US. America pays for the defence of others and gets nothing in return; US consumers buy goods from other countries, other countries’ consumers don’t buy goods from the US. America is powerful but under previous presidents was foolish enough to be exploited. It is time for this to end; it is time for the US to use its power in the interests of the American people.
This is Trump’s central message, brilliantly and boorishly communicated to appeal in this self-pitying age to American voters who consider themselves victims.
It is also articulated more academically and cogently by the people around him. In recent weeks, there has been great interest in economic circles in a paper produced in November by Stephen Miran, recently confirmed as chair of the Council of Economic Advisers. The paper has attracted much attention because of Miran’s argument that the dollar’s status as a reserve currency causes it to be overvalued – to the detriment of US manufacturing jobs. To correct this, he argues not only for intervention from the US authorities to reduce the value of the dollar, but for assistance from other countries to achieve that end. Failure to assist would be punished by tariffs.
Miran does not, however, limit himself to this. Protection under the US defence umbrella is also a negotiating tool. You want US protection? You help us with our currency. And, by the way, you also buy long-term US government debt on interest-free terms. That defence protection don’t come cheap.
If this sounds more like something from The Sopranos than conventional defence, monetary and trade policy, you have a point. Most economists believe that Miran’s arguments – from diagnosis to solutions – are deeply flawed. But could Trump be persuaded to pursue a radical policy that claims to bring manufacturing jobs back to the US while transferring the costs of defence spending on to others? It is all too plausible that he might.
If so, it would expose the harsh reality that the closer a country’s relationship to the US, the greater the US’s leverage. There is a reason Trump is kinder to America’s traditional adversaries than its traditional allies – the latter have more to lose and, therefore, are more easily exploited and extorted. As a businessman, Trump did not succeed by building trust and optimising the value of relationships but by using every lever he had to obtain the largest share of the spoils. His ethos was screw the little guy. US allies can expect nothing better.
This, ultimately, will be the US’s problem as well as ours. Anti-Americanism among diverse electorates will increase (look at Canada). The case for de-risking, even de-coupling, from the US will become stronger on issues such as defence procurement and the regulation of US tech giants, harming US businesses. Economically and militarily, the Western alliance is being shattered. The ramifications will be enormous.
Unduly alarmist? Not on the evidence of the last two months it isn’t.
[See also: Conservatism is dead]
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