1 week Ago
IN these last few weeks, the seeds have been planted for seismic shifts in the world’s entire geopolitical order. Even if US President Donald Trump’s latest tariffs are completely rolled back or cancelled, the damage has arguably been done. Trump’s tariffs, purportedly announced to reduce America’s trade deficit, has instead skyrocketed a trust deficit against all things American.
The consequences of this trust deficit may not be seen immediately, but it is possible it has forever changed the way the world sees America. In turn, this change in perception may be the starting point in a journey away from the unipolar Pax Americana. As a brief aside, a military superpower like America is unlikely to sit idly by as the global world order reshapes itself.
It did not seem coincidental that just this last Monday, the USS Carl Vinson aircraft carrier group passed through our own Straits of Malacca en route to the Middle East, amidst a brewing conflict with Iran. Should domestic pressure grow too strong, there is a chance that Trump will use such a war as a major distraction from his failures at home. As we take a deep dive into all the above and what middle powers like Malaysia should do to prepare, let’s start with the context of Trump’s actions.
Perhaps the most important structural context in which this tariff misadventure should be understood is the elements of deep unsustainability of America’s economic model and financial system. The shortest summary perhaps would be that over the decades, America has borrowed far too much money. Their total national debt is almost US$36 trillion (RM159.
2 trillion), and China is one major owner of this debt. Trump’s announcements brought to mind The Nixon Shock of 1971, where then US president Richard Nixon unilaterally overthrew the pre-existing global system of tying a nation’s currency to its gold reserves, and beginning the era of fiat currency. What we are seeing today is in some ways a culmination of this policy, and the decades of increasingly reckless fiscal policies it enabled.
One way to look at the situation America is facing is that if the person with the biggest guns in the village is borrowing a lot of money from you, eventually he’s going to start thinking: why do I need to pay any of that money back, when I can just shoot my way out of this problem? For brevity, we can speculate that Trump felt he had to do something about the vast amounts of American debt and its global trade deficit. The general consensus among economists seems to be that tariffs are not the right “something” to do, in this case. What is important for the rest of the world however, is what effect this tariff debacle will have on how reliable, predictable, and trustworthy we perceive the United States to be.
Whatever the final tariff number ends up being may no longer be what is important in the long run. This is because, the signal that was sent loud and clear from America to the rest of the world was: this can happen to you at any time. Our president can impose a tariff on your nation, however arbitrarily high, absolutely any time he chooses.
These tariffs essentially make it impossible for you to sell your exports in America, leaving you with untold amounts of unsold stock. Of course, said president may change his mind and “show mercy”, just as long as you don’t protest, don’t retaliate, and – here I quote verbatim from Trump’s comments on why he decided to instate a 90-day pause – “Kiss his a**”. There are two factors at play here.
The first is monetary in nature; the second involves national pride. Once your business has been put at risk in this manner, no wise businessman would put all his eggs in an American basket ever again. This would be commercial suicide – foolhardiness on an unimaginable scale.
I imagine in the short term, businesses and nations will do and say whatever they need to, with forced fake smiles, to mitigate any short-term shocks that would emanate from losing America as a market. Behind those smiles though, any businessperson or politician worth their salt will be furiously plotting their way out of dependence of any sort on American hegemony as soon as possible. To continue such a dependency would be fiscally irresponsible.
After what Trump has said, it would also be unbearably humiliating. If this is the choice facing essentially every country in the world that is not America, what does this mean for the future of American hegemony? What does it mean when America no longer feels the need to respect anyone else? It means that everyone else will be shopping for a new world order. Should Trump continue to be president, it seems unlikely that any of the fears of other nations will ever be assuaged.
Trust takes a lifetime to build, and only moments to destroy. Whether or not China emerges as the second pole in a bipolar world, there is no doubt that relatively speaking, China and its President Xi Jinping will appear in many eyes of the world as an eminently more reliable, predictable, and trustworthy trading partner. Ideally, this is instead the beginning of a multipolar world, where an alliance of middle powers that share key values can learn to depend on one another, instead of on decaying, morally bankrupt old empires.
We can only hope that Americans will eventually be able to take back their country, and guide it back to the light. We will always only ever wish them the best on that journey. But in the meantime, none of us can afford to sit around watching and eating popcorn while everything America has so painstakingly built for decades crumbles around it.
Instead, this is a time to put extremely serious thought and effort into what comes after – into diversifying export markets, and playing a key role in shaping the next era of a rules-based, multipolar world order. Nathaniel Tan has a great deal of love for Americans and for America, where he went to university. He is a strategic communications consultant who can be reached at nat@engage.
my. The views expressed here are solely his own..
