Trump Is Cashing In 80 Years of American influence

Overview

In the first two weeks of his presidency, Trump’s isolationist and transactional worldview has been enacted through a series of executive orders and threats

1. Immediately pausing all U.S. foreign assistance programmes.

2. Withdrawing from multilateral frameworks.

3. Threatening draconian tariff environments.

Trump has long perceived America as weak on the world stage and is busy cashing in soft power for bargaining chips. In the model of many US administrators until the 1940s, he favours protectionism and isolationism. He especially favours 25th President McKinley, after whom he (re)renamed mount Denali, the highest peak in North America by executive order. As a representative, McKinley campaigned for and succeeded in raising protective tariffs under the Tariff Act of 1890. As president he maintained them with the Dingley act in 1897 at an average rate of 50%. McKinley also led America into the Spanish-American War in the process, annexing Puerto Rico, Guam and the Philippines in a major US territorial expansion.

The US in the 21st century is in a wildly different position in terms of trade integration and international involvement, and the US has too much at stake to not consider the second-order effects of these policies.

Tariffs

The Trump tariffs have several aims, the first is political. Trump has used tariffs as a diplomatic stick. Both Canada and Mexico both received a one-month reprieve by sending 10,000 soldiers to the border to prevent drug trafficking, Colombia agreed to accept two flights transporting deported migrants after Trump threatened to put up 25% universal tariffs and start immediate visa revocations on Colombian government officials.

The other aim is to correct what Trump perceives as America losing on trade. For him, the fact that the US runs the largest trade deficit in the world in nominal terms, is a disaster to be mitigated at any cost.

The most recent example of large-scale tariffs in America was the Smoot-Hawley act of 1930 which raised tariffs on 20,000 agricultural and industrial goods during the great depression, this act raised the average import duty to a staggering 40% and is described by the US senate website as 'among the most catastrophic acts in congressional history.’

Smoot Hawley was a ‘shot across the bow’ in international trade terms. 25 countries directly retaliated, and this paper shows that many other countries followed suit, closing off their economies to foreign imports including American. For example, Great Britain abandoned its commitment to free trade in favour of a bloc, based on its empire. This reduced total world exports by 49% between 1929 and 1932.

Domestically, the Smoot-Hawley tariffs prolonged and deepened the great depression, but internationally, the effects were even more severe.

In Japan, the rise of international protectionism and global economic collapse dried up their export market and made them conscious of their dependence on Anglo-American trade for iron and oil. In response, Japan commenced a brutal campaign of territorial expansion in China to secure resources. Following the British model, Japan established the ‘Greater East Asian Co-Prosperity sphere’ in which the Japanese Empire created preferential trading partners for itself in the form of colonial puppet states in China. This was incredibly effective for developing Japan’s economy. Manchuria, occupied in 1931 became the recipient of 70% of Japanese foreign direct investment. And alongside the two other Chinese states became Japan’s largest trading partners. Accounting for 78% of exports by 1938. The regime of preferential trade allowed Japan to develop its industrial base without the global productivity advantage required under free trade. During this period the Japanese economy was growing at 5% per year.

In Germany the effects of the great depression and worsening trade environment are well known. Germany was hit hard by a sudden rise in the global costs of raw material cost and a fall in the global price of manufactured goods of which it was a producer. At this point Germany still had large reparations to pay to allied powers, which it serviced by taking on enormous foreign debt. In response Germany pursued a policy of economic self-sufficiency known as 'Autarky.' It put up trade barriers and established bilateral trade agreements with countries in the German sphere of influence. This led to rationing of consumer goods such as poultry and clothing.

In the modern day, the US is the largest market for manufactured goods globally. A trade war lead by the US would exert similar pressures on both developed and developing countries as in the interwar period. Needless to say, the US and the rest of the world is in a far better position with a generally open trade policy.

International Cooperation

Since the cold war US’s foreign policy has been built on three pillars:

1. Nuclear non-proliferation

2. US military dominance

3. An extensive network of allies

This strategy has been largely effective at achieving the US’s goals of maintaining peace through a clear international order with the US on top and ensuring US economic growth.

Trump is threatening the foundation of this order by removing many of the tools the US uses to maintain it. His distain for multinational organisations is well known, pulling out of the Paris Climate Accords and the WHO by executive order on the first day of his presidency. Additionally, he is threatening the integrity of NATO through confrontation over Greenland and now has his sights set on gutting the state department.

The activities of these organisations and the influence and legitimacy that they give the US on the global stage are huge asset to the US in terms of soft power.

The US gave $68 Billion in foreign aid in 2023 to 204 countries worldwide. As a result, it wields significant influence. This was on full display in 2024 with Egypt reciprocating US assistance by mediating between Israel and Hamas, Jordan by intercepting Iranian missiles.

Roughly one quarter of US aid is military assistance, the rest being economic and humanitarian. The military aid especially beneficial to America as it is conducted through the State Departments foreign military financing. The US extends preferential loans for their partners to purchase American military hardware. This not only fuels American industry but also creates a dependency from the recipient country on the United States. Weapons need to be maintained and serviced by US experts and complex spare parts can only be procured from the US factories. A huge amount of soft power is earned by the fact that the state department can cut off access to any country that does not comply with US foreign policy, crippling its military as the shortage of spare parts wears away the equipment's effectivenss in the long run.

Trump's increasingly erratic posturing on the world state may cause the customers base for American weapons to dry up as they anticipate the US' foriegn policy diverging wildly from their own. Already European powers are following France's long-held policy of military self-sufficiency and are organising domestic weapons production. Once this capacity is in place it is highly unlikely that these powers would return to dependance on American equipment. So although in the short run Trump is correct in his assessment of the amount of leverage he has over his main trading partners and allies, in the long run this policy would considerably weaken the US' hold over them.