On Our "Virtual Route 66" Around the World: On Tariffs, Donald Trump & America's Status Around the World

 

It has been quite a week around the World as the Trade War continued with no apparent end in sight.  As we went to press with this edition of the "Virtual Route 66", the Trump Administration had exempted Computers and Cell Phones from tariffs in an apparent nod to the key Tech Players (including Apple) as the Economist' KAL captured the state of the Tariff War.  

Our team pulled together a snapshot of the discourse around the World with thoughts from David Frum of the Atlantic, Joseph Stiglitz, and the Prime Minister of Singapore.    Eric Holder reflected upon the profound challenges of the rule of law and the critical development of how the US dollar is losing its status as a safe haven.   There is also the In America in the aftermath of the Tariffs as recession looms with thoughts from David Frum, Joseph Stiglis, and Seth Meyers, and the Prime Minister of Singapore on the rule of law with Eric Holder and the voluntary withdrawal of the US and the imminent danger of the US Dollar losing its status as a haven and the rise of Europe   and a closing thought on America right now courtesy the team at the Atlantic: 

(Patrick T. Fallon / Bloomberg / Getty)

A tension has always existed between President Donald Trump’s push for American retrenchment and his desire to “Make America great again,” but the gulf has grown yawningly wide in the past three months. The United States is retreating from hard power, surrendering soft power, and yielding economic power. If this is what greatness looks like, what’s the alternative? The economy is the most prominent of these at the moment, of course. Trump’s vacillations yesterday on the size of the trade war relieved financial markets of some of their immediate terror, but they don’t provide much in the way of predictability, which is what corporations crave. Trump has paused most tariffs for 90 days, but no one knows what will happen in that span, what comes next, or whether the president will change his mind again. After popping yesterday afternoon, stocks slid again today as investors apparently realized that the trade war with China was still on. (We warned them.) The latest flip reinforces Trump’s erratic approach. One notable trend leading up to the reversal—and one that reportedly weighed heavily on Trump’s decision—was rising yields on 10-year Treasury bonds. Usually, jittery markets drive investors to buy U.S. government bonds, because they’re seen as a very stable asset; that makes yields go down. But yields rose sharply instead, which many analysts see as revealing wariness about treating the American financial system as a haven. “Technical factors can’t explain why bonds and the dollar began behaving strangely weeks ago,” The Wall Street Journal’s Greg Ip wrote this morning. “The more fundamental explanation is that global investors might be changing how they view the U.S.” Points on the Dow Jones Industrial Average can be recovered quickly, but trust cannot, as my colleague Rogé Karma writes. If the administration’s trade policy leads the rest of the world to shy away from the United States, or even to stop treating the dollar as the world’s global reserve currency, it would be a big blow to American power, and it would be entirely self-imposed—created not by some external shock but by freely made choices. That seems like a bizarre way to increase American stature, and yet it echoes other Trump moves that voluntarily abdicate influence. For example, the U.S. is also yielding hard power around the world. The pullback appears to be more than a simple turn away from interventionism. NBC News reported this week that the Defense Department may remove 10,000 American service members from Europe. Most notable, Trump has thrown the future of American support for Ukraine into question, even as Russia continues to show little interest in negotiating a settlement to end the war there. European countries are working to fill the vacuum by creating their own security arrangements. When Trump criticized NATO during his first term, he argued that European countries need to bolster their spending for the common defense alongside the U.S. Instead, he’s driving them to an arrangement where they don’t need America. (Meanwhile, the U.S. continues to antagonize allies by threatening to claim Greenland and annex Canada. Trump hasn’t given much explanation for how this neo-imperialism connects to his approach elsewhere, though if more places become America, then “America first” has a broader remit.) The U.S. is giving up soft power, too, and no one is around to fill the space. The effort to close USAID means Washington has fewer ways to sway other countries to act in U.S. interests and elevate American moral standing. Sometimes, these cuts are especially appalling. One United Nations organization estimates that more than 14,000 people have died of tuberculosis since the administration slashed funding for TB-fighting efforts. Each of these deaths is a human tragedy for someone and a moral outrage, but it’s also a self-inflicted blow to American influence. Trump has framed many of these moves, including the trade war and the pullback from Europe, as necessary to confront China. Trump has long focused his attention on China, and his advisers view it as an existential adversary in a coming era of great-power conflict. Yet these goals seem at odds. If China is truly the threat to American freedom and prosperity that Trump and his aides believe, does it really make sense to take China on alone? Or would it be easier to do so while leading a broad alliance fostered by American soft power, economic dominance, and military preparedness? In the January issue of the Atlantic magazine, my colleague David Frum cautioned against a go-it-alone approach. “Americans have tried these narrow and selfish methods before,” he wrote. “They ended in catastrophe. History does not repeat itself: The same mistakes don’t always carry the same consequences.” With a president as erratic as Trump, the particular consequences are especially unpredictable, but going it alone is not a recipe for any kind of greatness.  We close out with a sense of hope:

On Our "Virtual Route 66" (Special Sunday Edition): On the Aftermath of The Trump Tariffs

 

Our team put together a sampling of the reactions around the World in the aftermath of The Trump Tariffs as Recession Fears mount in the aftermath of what Alistair Campbell of The Rest Is Politics called "bizarre," which we have featured at the end of this "Virtual Route 66" edition:  

On Our "Virtual Route 66" ((Special Edition)): On the Trump Tariffs

 

The President of the United States held an event at the Rose Garden of the White House on what he dubbed "Liberation Day," whereby he announced tariffs on over 60 Countries.   As we went to press with this special edition of our "Virtual Route 66", markets have been falling all around the World, and all countries have promised a response.    Our team chose this from Heather Cox Richardson; that speaks for itself as we decided to headline this edition of the "Virtual Route 66" with a depiction of the events of the day from KALToons:  

April 2, 2025 (Wednesday)

 

Just five months ago, on October 19, 2024, The Economist ran a special report on America’s economy. That economy was, the magazine said, “the envy of the world.” Today, stock market futures plummeted after President Donald J. Trump announced that he will impose a 10% tariff on all imports to the United States, with higher rates on about 60 countries he claims engage in unfair trade practices, including China, Japan, Vietnam, and South Korea, as well as the European Union.

Dow Jones Industrial Average futures lost more than 1,000 points upon the news, falling by 2.5%; the S&P 500 dropped 3.6%.

Trump’s erratic approach to the economy had already rattled markets, which dropped significantly in the first quarter of this year, and consumer confidence, which recently hit a twelve-year low. Trump waited until the stock market had closed today before he announced the new tariffs. Then, in a speech in the White House Rose Garden, he said: “For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike. But it is not going to happen anymore.” Instead, he said, tariffs would create “the golden age of America.”

“Never before has an hour of Presidential rhetoric cost so many people so much,” former treasury secretary Lawrence Summers posted. “The best estimate of the loss from tariff policy is now [close] to $30 trillion or $300,000 per family of four.” “The Trump Tariff Tax is the largest peacetime tax hike in U.S. history,” posted former vice president Mike Pence.

Trump claims he is imposing “reciprocal tariffs” and says they are about half of what other countries levy on U.S. goods. In fact, the numbers he is using for his claim that other countries are imposing high tariffs on U.S. goods are bonkers. Economist Paul Krugman points out that the European Union places tariffs of less than 3% on average on U.S. goods, while Trump maintained its tariffs are 39%.

Krugman said he had no idea where that number had come from, but financial journalist James Surowiecki figured out that the White House “just took our trade deficit with [each] country and divided it by the country’s exports to us.” He called it “extraordinary nonsense.” Washington Post economic writer Catherine Rampell posted that she was reluctant to amplify Surowiecki’s theory that the tariff rates were based on such a “dumb calculation,” but then the Office of the U.S. Trade Representative confirmed it.

Certain observers in business had apparently persuaded themselves that Trump didn’t really intend to raise tariffs very much and that his many vows to do so were simply rhetoric, since economists agree that tariffs are a tax on consumers and will raise inflation and slow down growth. Today’s tariffs are higher than expected, and business leaders are alarmed.

JPMorgan tonight said that they “view the full implementation of these policies as a substantial macro economic shock not currently incorporated in our forecasts” and that “these policies, if sustained, would likely push the US and global economy into recession this year.”

Economist Brad Setser of the Council on Foreign Relations agreed. He told David J. Lynch and Jeff Stein of the Washington Post: “In the short run, the effect is probably a recession. It’s going to raise the price of so many goods that can’t be made in the United States…. In the long run, it’s a vision of the U.S. that is very isolated from the world.”

But not from every other country. While Trump imposed tariffs on Australia’s remote Heard and McDonald Islands, which are uninhabited except by wildlife like seals and penguins, it did not put tariffs on Russia. A different financial shift lifted sanctions against senior Russian negotiator Kirill Dmitriev, to permit him to travel to Washington, D.C., today to meet with U.S. special envoy Steve Witkoff for what Alex Marquardt, Jennifer Hansler, and Alayna Treene of CNN refer to as “talks on strengthening relations between the two countries as they seek to end the war in Ukraine.”

Senator Chris Murphy (D-CT) noted tonight that the tariffs make no economic sense because “[t]hey aren’t designed as economic policy. The tariffs are simply a new, super dangerous political tool.” Murphy suggests they are a way to make private industry dependent on the president the same way he has tried to make law firms and universities dependent on him. Industries and companies “will need to pledge loyalty to Trump in order to get sanctions relief.”

Murphy warns that “[t]he tariffs are DESIGNED to create economic hardship…[s]o that Trump has a straight face rationale for releasing them, business by business or industry by industry. As he adjusts or grants relief, it’s a win-win: the economy improves and dissent disappears.”

There is also Trump’s apparent fascination with President William McKinley, who held office from 1897 to 1901, at a time when high tariffs concentrated wealth in the hands of industrialists while workers and farmers, as well as their families, faced injury, hunger, and homelessness from dangerous working conditions, low wages and commodity prices, and seasonal factory closings.

Trump has frequently claimed those years were the nation’s wealthiest, and today he helped to explain his focus on that era when he referred to the 1913 Revenue Act, a law that has angered the right wing for decades. That act began the process of replacing the high tariffs of the late nineteenth and early twentieth centuries with an income tax, thus shifting the burden of funding the treasury from ordinary Americans through tariffs to wealthier Americans through the income tax. At least some of Trump’s tariff plans seem tied to his enthusiasm for tax cuts on wealthy individuals and corporations.

But in trying to reestablish the financial patterns of the late nineteenth century—patterns that led to profound economic instability in the U.S., including economic crashes—Trump is undermining the system of global trade that has fostered international cooperation since World War II. CNN global economic analyst Rana Foroohar told CNN’s John Vause: “This is Trump saying…I am going to overturn globalization as we’ve known it.” She added: “I’m hoping it doesn’t push the U.S. and the world into recession.”

Josh Marshall of Talking Points Memo makes the important point that “Presidents have no inherent power over tariffs whatsoever.” The Constitution gives to Congress, not the president, the power to impose tariffs. But the International Emergency Economic Powers Act allows the president to impose tariffs if he declares a national emergency under the National Emergencies Act, which Trump did today, declaring a “national emergency to increase our competitive edge, protect our sovereignty, and strengthen our national and economic security.”

That same law allows Congress to end such a declaration of emergency, but so far, Republicans have declined to do so. Today the Senate rebuked Trump by passing a resolution to block his tariffs on Canadian products, with four Republicans—Susan Collins (ME), Mitch McConnell (KY), Lisa Murkowski (AK), and Rand Paul (KY)—joining Democrats to pass the resolution. House speaker Mike Johnson (R-LA) is unlikely to take the measure up.