On April 2, President Trump presided over a “Liberation Day” ceremony in the Oval Office, announcing dramatic increases in America’s tariffs on foreign goods and services, in a bold move that he described as America’s declaration of economic independence.
Trump imposed a general ten percent tariff on all countries, with additional surcharges on most countries indexed to circumstances in their bilateral trade relations with the United States. Naysayers seized on immediate market turmoil to pronounce his policies chaotic and destructive, but in the ensuing weeks stock indexes have substantially recovered. Over 130 countries have approached the White House and other influential interlocutors in Washington seeking deals to take down the tariff walls, with some countries offering zero-tariff trade relations or investment deals of unprecedented size.
On May 8, Trump made a general agreement with the United Kingdom – long desired but long elusive – that secured significant market access for American agricultural products in that country. Four days later, a spiraling tariff war with China scaled down temporarily as negotiations proceed for a fairer bilateral trade deal between the world’s two largest economies. Meanwhile, in April US customs collected $16.3 billion in tariff revenue, about twice the standard monthly pre-Liberation Day figure.
The Washington establishment is not happy. In their view, Trump’s actions have undermined an international order in which the US plays the part of a declining power in an emerging multipower world strictly regulated by international organizations. A recent letter signed by hundreds of former “American diplomats around the world and national security leaders here at home” denounced Trump for, inter alia, what they called his “senseless tariffs and war on legally binding trade agreements.”
The prospect of America pursuing its national interests – instead of an America that consents to its own decline in the supposed interests of international comity – challenges their assumptions. Tariffs are “senseless” even when they yield positive results; they interfere with “fair” trade that preserves out-moded categories (e.g., China classified as a “developing country” for trade treatment). All suggests ossified thinking left over from the post-World War II era.
Disrupting the Post-World War II International System
The international system Trump is actively disrupting has its roots in the post-World War II world. For a brief period in the late 1940s, the United States accounted for roughly half of the world’s industrial output. Its armies bestrode much of Europe and Asia and for a few years held a nuclear monopoly. Protected by two vast oceans, America was the only major country without significant damage to its infrastructure. Its gross national product more than doubled during the war years, while productivity levels nearly doubled. Despite immense military spending, Americans’ standard of living increased between 1940 and 1945, just as it had during World War I. Ironically, it was the absence of war – which saw a quick mass demobilization of millions of servicemen and a radical scaling back in military spending – rather than the effects of war that caused a US economic downturn in the late 1940s.
American power was an unavoidable fact, but the priority was a well-functioning world order that did not require costly military strength. For men whose formative years had witnessed the collapse of the deeply flawed post-World War I settlement, which proved unenforceable without serious military power, the major concern was to marginalize or eliminate radical ideologies with aggressive international tendencies. Whether extremism threatened to manifest in communism or fascism, the solution was the same: to promote politically moderating prosperity through steady economic growth.
A new international trade regime was central to this vision. Allowing devastated economies – whether wartime friend or foe – to pursue export-led growth offered the irresistible outcome of stable nation-states that would also be reliable trading partners integrated into the capitalist world. Unilateral American financial assistance, epitomized by the Marshall Plan, helped get devastated economies back on their feet, while international institutions like the World Bank, the International Monetary Fund, the General Agreement on Tariffs and Trade (GATT), and the early structures of European unity created an international system designed to reduce competition, conflict, and crisis.
For a long while, the system worked. European and Japanese recovery proceeded quickly and marginalized political extremes. Tariff arrangements, however discriminatory, allowed restored economies to grow through export to rich American consumers while protecting their fragile domestic markets from American competition. Freer international trade allowed residual colonial powers to divest burdensome positions in the developing world without significant economic loss. An umbrella of American military power over the recovering home countries allowed them to maintain minimal military spending and focus on domestic development.
By the 1970s, however, the system began to break down. Rather than continue their powerhouse economic rise, the recovering nations of Western Europe harnessed their growing wealth to generous but ultimately unaffordable and unproductive social spending. Bureaucracies blossomed while innovation stagnated. The tariff system, by then a generation old, continued to protect their markets from American competition. But instead of sustaining politically benign democracies and reliable trading partners, the discriminatory tariffs – and US military protection – began to subsidize their drift away from American geopolitical leadership. They also became rich enough to use standing trade deficits to reverse the balance of investment.
By the 1980s, America was a debtor nation for the first time since before World War I, with much of its academic sphere predicting – and even welcoming – its inevitable decline as other powers rose in a multipolar world that was expected to be more stable.
When the collapse of communism appeared to herald a “new world order” in the early 1990s, the theory behind the Cold War-era discriminatory tariff system found new life. Just as imbalanced trade relations had allowed devastated postwar economies to recover amid political moderation, the Washington consensus came to believe that extending the same arrangement to former adversaries, especially China but also Russia and more recently Iran, would help them transition to successful export economies, goad them into geopolitical restraint, and even convert them into compatible democracies.
As Trump and his America First acolytes have realized, the opposite happened. China became rich and defiant rather than economically integrated and cooperative. Russia plundered American aid and good will as much as it could before pursuing the same long-standing national interests of tsars and Soviets alike. Iran correctly interpreted Obama’s and Biden’s peace offerings as weakness and pocketed American concessions while using its growing wealth to develop nuclear weapons and arm an increasingly violent array of surrogates across the Middle East and beyond. None became liberal democracies; all became more authoritarian and more repressive, in significant part to maintain their regimes’ hostility to the United States.
The Second Trump Administration Begins
By the time Trump returned to office for his second term in January, all that was left was what he has aptly called an “America Last” policy. Prudent postwar tariff imbalances, which had gone a long way toward stabilizing Cold War international politics, had long outlived their usefulness. They were subsidizing economic rivals with divergent interests and ideologies. Attempting to graft the principles of postwar tariff policy onto olive branches intended to moderate or mollify geopolitical adversaries only made those adversaries richer and more powerful while driving them away from, rather than toward, better relations and democratic governance.
The domestic consequences, which in no small way propelled Trump’s movement to power in 2016 and 2024, drained America’s domestic productive capacity, impoverished its working and blue collar middle classes, left it dependent on cheap foreign imports, and threatened its strategic vulnerability by outsourcing much of its information technology, communications equipment, artificial intelligence, microchips, and even some military components to China or to friendly countries (e.g. Taiwan) that would be instantly vulnerable in the event of conflict with China. A return to foreign energy dependency after a few years of self-sufficiency in the 2010s also placed the American economy at the mercy of an unstable Middle East where Russia and Iran were on the march.
Astonishingly, much of the American foreign policy elite found this state of affairs acceptable, desirable, and irreversible. Trump and his supporters, who include an emerging counter-elite, reject the outmoded status quo, realizing that its structural weaknesses are to some extent self-imposed and can be reversed over time, with decisive leadership. The preliminary signs in the weeks since Liberation Day suggest the latter may be in the right.
