The United States self-immolating following "Liberation Day"

Johnathan Last of The Bulwark goes into just how self-destructive the current White House regime truly is - in the process declaring the American Age is over. When we keep in mind that Trump's big idea for decades has been to reimpose the sorts of tariffs only a Gilded Age president would love (McKinley, anyone?). We now are dealing with a tariff regime that makes no sense. Ask the penguins in isolated Antarctic islands that got caught up in this mess - well actually don't because penguins cannot talk or trade goods and services. 

The tariff regime has led the current Canadian Prime Minister (and likely future Prime Minister following elections in the near future) to declare the era of American leadership to be effectively over. As a great power, the US is finished. We just don't quite know the scope of what has been done just yet. The way the tariffs were rolled out had no real coherence. The end result in addition to possible (or probably) plunging all involved into a global recession is a loss of trust in the US to lead economically. Any trade agreements signed with the US? Those used to be trustworthy. Since Trump entered the chat, our trustworthiness has been a bit more wobbly. After Wednesday? That trust is gone. And I really don't blame other allied nations' governments to look for ways to move on without the US. Nor do I blame US enemies from offering to fill the void the US is leaving behind. And it is not just economic trust that is lost. The US has used its military might to ensure safe passage on the waterways since the end of WWII. Successive US presidencies have maintained that commitment, enabling global trade to generally thrive. US military alliances (NATO, etc.) have meant that the US has also been the largest supplier of military equipment and that there has often been a US military presence around the world. Trump has proven that the US cannot be considered a reliable ally any further. There are now legitimate questions regarding how reliably the US would supply any weapons or weapon systems agreed to, given current White House temper tantrums. There are questions regarding whether or not the US would honor its commitment under Article 5 if any NATO member came under attack. That the US could remotely cut off key features of its fighters (as it did with F-16s sent to Ukraine earlier this year) makes other national leaders question whether or not they're better served with alternatives to the F-35. Add to that threats to annex territory belonging to allies (Denmark, Canada) and invade other nations means that the US is better viewed as a threat rather than an ally. The US will be more isolated as a consequence.

For many, this might not matter. But it does. The US Dollar is considered the premier reserve currency because the US is seen as stable, reliable. The Dollar's value is only as good as the US is reliable. As of this writing, the dollar is losing value, which seems to be counter to what tariff advocates expected. Actually take even a cursory look at what is happening to the markets since Trump's big "Liberation Day" unveiling. Stock markets across the globe have tanked since Wednesday evening and there has been no let-up so far. Bonds, which are often a safe haven, are looking grim as well. Metals like gold, which are often a hedge investment in hard times has been either holding steady or declining. I haven't had much tim to look at commodities markets, but oil has plunged in value the last couple days especially. Part of the story with oil is that OPEC+ members are increasing the amount of oil they put on the market. Part of the drop is in anticipation of a global recession. Oh, and if you think low oil prices will mean you all get the cheap gasoline you all thought Trump would deliver for you? Think again. Much of the oil the US refines comes from Canada, and that is because the grade of crude Canada exports is what US refineries can handle. The US would actually have to build new refineries for the first time in about a half century in order to better refine its own light crude. That won't happen overnight. And retaliatory tariffs from Canada will make that crude so much more costly for US refiners. You'll pay at the pump. Agriculture looks to be in a world of pain. My guess is that if Trump can be awakened long enough to sign the appropriate paperwork, farmers in the US will be relying on bailouts - and it will be larger corporate farms that will benefit (to the extent anyone benefits). If you thought inflation was going away, you are wrong. You are going to pay. The US reserve currency status allowed the US to borrow without much concern about interest rates. Once the Dollar is no longer a reserve currency, the US is bound by the same rules that would apply to other middle-class nations. If the only thing you really wanted was more manufacturing in the US, well, here's the thing. After decades of having a just-in-time economy relying heavily on imports, the US simply does not have the manufacturing plants to immediately on-shore production of the goods we want or need. That will be a multi-year undertaking that had only barely begun under Biden. The US cannot mine rare earths and other minerals to the extent of many of its competitors, and that is bad news to the extent those are needed to manufacture products requiring them.

Let's say that over the weekend Trump changes his mind and undoes all the tariffs. The damage is already done. There is no going back to the way things were because the US is no longer a reliable ally or trading partner. The US will be a weaker and more isolated nation as a result. I seriously doubt whoever occupies the White House after Trump will be able to undo the damage that has been done. It would be unsound policy for any government to continue trusting the US knowing that its governing policies will change drastically every four years. The world will turn away. The US many of us knew is gone for good.