A Returning President Trump Takes on The World
The limits of US power suddenly come into view
By: Philip Bowring
The world will not sit back and wait in the face of Trump’s declaration of economic war against much of it. Retaliation does not in itself increase the dangers of global trade war although Washington, in its new incarnation, cannot expect its intended targets to sit back and do nothing. Indeed, retaliation may have the effect of moderating other tensions, notably those between China and Europe. The simplest form for many would be to dump a hunk of US Treasuries and other dollar paper that others have been acquiring, and that has sustained the US economy and enabled the US stock market to reach a valuation level seldom seen before.
The long run of US growth has also created the very jobs for which immigrants are needed and which Americans refuse to do – but are now to be expelled by an incoming administration with astonishingly few non-white faces and with a cheerleader giving Nazi salutes – and pretending it was a Roman gesture when the Roman empire never had such a salute.
A big outflow of US dollar bonds would force up US rates. Under normal circumstances that would attract more money into the dollar, but used as a deliberate policy by central banks and other state holders of US assets it could crash the dollar while keeping interest rates high, pushing up inflation and driving the US economy into the recession which it deserves, That would help accomplish Trump’s goal of reducing the external deficit.
Another tactic would be to take aim at Trump’s billionaire friends at X, Amazon, Meta, Alphabet, etc., whose quasi-monopolies in most of the world have been sustained by pressure from Washington, for example in opposing EU attempts to rein in their monopolistic thuggery and their evasion of taxes through patently dishonest measures defended by legions of lawyers and tax avoidance experts posing as accountants.
Of course, some of Trump’s threats may yet be rhetorical, and others scaled down and sooner or later reversed. But what will never be forgotten, at least by countries that have been allies for decades, is the priority he appears to have given to punishing Canada and Mexico, both supposedly US partners in the NAFTA and one a close ally in NATO. Coupled with recent remarks about taking over Greenland and the Panama Canal, these indicate a desire for a specific hegemony over the western hemisphere. He announced he would rename the Gulf of Mexico, calling it the Gulf of America, and that he would change the name of Denali in Alaska, the tallest peak in North America, back to the name it held between 1917 and 2015 – Mt. McKinley, in honor of the nation’s 25th president William McKinley, who presided over victory in the Spanish–American War, gained control of Hawaii, Puerto Rico, Guam – and the Philippines, in a disgraceful colonization that led to the deaths of at least 200,000 Filipino citizens between 1898 and the onset of World War II. This interest seems now to take precedence over erstwhile allies in East Asia – Japan and Korea officially and several others unofficially.
Whatever Trump now has in store for China, it is clearly not seen as the major priority even though its exports, its technology, its military, and its diplomacy are obviously America’s biggest challenge in maintaining global influence – including in South America, where China has been making deep investment inroads. The US, which in effect colonized vast territories in Central America, the Caribbean coast of Colombia, and the West Indies through such entities as the United Fruit Company and Dole Foods and organized coups and rebellions on their behalf, has long lingered under the illusion that South America has been in its sphere of influence even since the 1823 declaration of the so-called Monroe Doctrine, aimed at keeping European power out of America.
Although the Europeans were kept out, especially of Central America, that didn’t mean that the US had much economic influence over what happened in Brazil, Argentina, etc. Indeed, those countries’ closest economic links were with Europe if only for reasons of geography, Brazil today, with a population two-thirds that of the US, does far more trade with China than with the US, and no more than the EU which recently reached a trade agreement with Mercosur (Brazil, Argentina, Bolivia, Paraguay, Uruguay).
The US has strong and legitimate strategic interests in vast, barely populated Greenland, but why anger the Greenlanders, Denmark, and Canada with imperialist talk when the US already has a base there and presumably could have more?
It is notable that the only relatively warm receptions Trump’s inauguration has received have been from China and Russia and the right-wing foreign leaders who attended his inauguration including Italian Prime Minister Giorgia Meloni and Argentine President Javier Milei, the first time foreign leaders have been present at an inauguration. That’s unsurprising given his eagerness to threaten allies and to probably care more about Tik-Tok than substantive issues. Without being aware of it, he is being played for a fool by China, which has made a big bargaining chip out of a peripheral question.
US influence in general has taken a huge knock as others like the EU look to be more self-reliant in defense. Indonesia expects to become a full member of BRICS, a group too unwieldy to do positive things, but already a reflection of irritation with US use of dollar power. It will now gain new issues which will surely do the opposite of MAGA.