Paul Krugman, I think accurately, describes Trump's first 80 days as the "Third Worlding of America." It would not have been unexpected if Trump's tariffs led to a surge in the value of the dollar. Both the extreme levels of tariffs and the chaotic nature of the entire 80 days has led the rest of the world to treat the US not as the world's largest economy, but as an untrustworthy developing world nation, ruled by a dictator of unsound mind and policies.
Krugman:
The common thread in currency and bond markets is that, thanks to Trump, dollar assets — traditionally the foundation of the global financial system — are no longer perceived as safe.
The combination of interest rates soaring amid a slump and the currency plunging despite rising interest rates isn’t what we normally expect for advanced countries, let alone the owner of the world’s leading reserve currency. It is, however, what we often see in emerging-market economies. That is, investors have started treating the United States like a third-world economy.
Did I see this coming? No, not really. Unlike the sanewashers, I knew that Trump’s policies would be irresponsible and destructive. However, even I didn’t expect him to destroy credibility accumulated over 80 years in less than three months. But he has.
And even if Trump were to backtrack on everything he’s done, we wouldn’t get the lost credibility back. The whole world, sanewashers aside, now knows that America is run by a mad king, surrounded by enablers, who can’t be trusted to behave rationally.
I don’t know how this ends. In fact, I don’t know what policy will be next week. But that’s basically the point.
It may seem incredibly premature to think about what happens after Trump, but I think this basic thread I've seen everywhere raises that question. We see it a lot with regards to countries like Canada or other NATO allies saying, "We can no longer rely on the United States." or "The old order is gone."
That could very well be the case, but I don't think it's as locked in as people think. When a French politician said, "Europe cannot be held hostage to what 10,000 voters in Wisconsin think every four years" that does seem like a truly important shift. Europe as an entity is going to need to step up in ways that might prove difficult. The exact problem the EU has with America - the capricious idiocy of Donald Trump - is exactly why America has been the indispensable nation in the liberal world order. Our president has wide latitude to act, especially in international relations. Europe has no president in the same way that we use the word. Getting Europe to act in harmony is likely to prove a challenge.
Similarly, I have no doubt that Trump's policies - if they continue, and who the hell knows what he will do next week - will make America poorer. However, the loss of America as a foundation of the global economy is likely to make almost everyone poorer.
Now, there is the darkest timeline, where Trump tries to seize even more power by somehow degrading or cancelling the midterm elections. At that point, America likely collapses. That is not off the table, but it does feel very unlikely. If there are Democratic majorities in 2026, there might be some constraints on the Mad King. Dictators become dictators because they both promise good things and then at least partially deliver them. The worse things get, the less likely Trump becomes a true dictator.
Once we emerge from Trumpistan - and I don't think he can transfer his perverse charisma to a successor - the world may be deeply skeptical of us, and rightly so. Those 10,000 Wisconsinites are still an issue. The sheer force of gravity that the US exerts however, might lead to some return - though in now ways a complete return - to the status quo ante.
The reason Trump is such an awful figure in world history will be precisely because the rest of the world has relied on the US for leadership - however flawed that leadership may be from administration to administration, from crisis to crisis. The primary force for this was that the US most of the time, stood for principles that mattered, but the lapses in those principles were very real and very damaging, even in the past. How many murderous dictatorship did we prop up during the Cold War? And yet we were still trusted.
I can't say with 100% certainty that America will be a democracy in 2029. I think it will be, but I can't be completely sure. If we are, then the same factors that made us preeminent in 2015 will still be there.
If we survive.
If.
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