America was the world’s economic anchor. Thanks to the president, it may never have that role again.
Watching the wild lines of the S&P 500, U.S. Treasury bond yields, and various foreign markets is how I’ve spent most of the past week. This felt familiar; I’d spent much of 2017 doing the same, following the vagaries of the first Trump administration and tracking the markets’ reactions like a nurse checking a patient’s heart rate.
But despite that familiarity, this isn’t the same as last time. I actually wish it were. This time, there’s no coming back from this quickly. Whoever is elected the 48th president won’t be able to easily rebuild what Donald Trump is busy destroying. Countries can and will move on without the United States. Their firms will establish new supply chains and pursue other markets. Even if the U.S. were the ultra-dominant trading partner it used to be, the credibility of the nation’s promises, its treaties, its agreements, and even its basic rationality has evaporated in just weeks.
The first Trump administration flirted with protectionism, but nothing like what the second Trump administration is trying now. Those earlier efforts seem quaint in hindsight. Not only were tariffs imposed selectively on specific goods such as solar panels and aluminum, but they were much smaller in size and escalated gradually over the course of 2018 and 2019. This was trivial compared with the plans launched and unlaunched over the past 10 days that have sent bond markets reeling. Usually, investors in search of a haven from a plummeting stock market will flee to buy safe, reliable U.S. Treasury bonds, but the opposite seems to be happening, indicating that investors no longer view the U.
