Fans of soccer (or football, as the rest of the world calls it) are familiar with the term “own goal,” which refers to a player scoring a point for the opposing team by sending the ball into their own goal. Own goals are inadvertent but always embarrassing. In the trade world, early indications are that Trump has just committed one of the greatest own goals in history, and, what’s more, it was deliberate. The immediate market reaction was sharply negative, but it will take time to determine how bad things will be. Experience suggests that reality usually ends up somewhere in the middle. It will not be the new golden age that Trump has predicted, but neither will it be the full-bore depression others have suggested. The tariffs have, however, shaken the global trading system to its core and produced a growing number of predictions that the postwar era is over, and we are entering into something new. I am not going to spend time this week on the details of the tariffs or their short-term implications—there are plenty of analyses out there, including one from CSIS. Instead, I want to look at the long-term implications of what has happened.
First, we are not entering into something new. We are entering into something old—an attempted return to nineteenth-century power politics where the large countries acted like kings and queens on the chessboard and pushed around the pawns. Trump apparently believes that because the United States is big, it can push everyone else around and get what it wants—something he blames his predecessors for failing to do. That system produced multiple conflicts and culminated in two world wars and a depression before it was finally put to rest in 1944. Why anybody would think that is an improvement over the last 80 years is a mystery.
Second, the biggest loser in an every-country-for-itself world is the global commons, which has become more important than ever in the twenty-first century. Many of the big problems the world faces, like climate change, pandemics, transnational terrorism and crime, and human trafficking, cannot be solved by countries acting alone. They require collective will and collective action. Trump’s rejection of multilateralism—both world institutions and collective negotiations—guarantees those problems will not be addressed, and the world will continue to suffer from them.
Third, the biggest losers in the U.S. economy will be poor people. Tariffs are a regressive tax. They impose the greatest burden on low-income people who spend most of their money on necessities such as food and clothing—the very things most likely to see price increases as a result of the tariffs. Ironically, the revenue generated by the tariffs, which CSIS estimates at $600 billion per year, will be used to finance the extension of Trump’s tax cuts, which primarily benefit the rich. That means the tariffs constitute one of the greatest tax increases and transfers of wealth from the poor to the rich in our history. That will make economic inequality even worse than it already is.
Fourth, over the long term, the underlying assumption of the tariffs—that the rest of the world needs the United States more than the United States needs the rest of the world—will prove to be wrong. In the short term, other countries’ reactions will parallel the stages of grief—denial, anger, bargaining, depression, and ultimately acceptance. Some will stay stuck on anger and retaliate. China already has. Many will attempt to bargain, and on that, the administration has sent decidedly mixed signals. Some officials have said there won’t be any; others have suggested that getting to an agreement was the point all along. Trump’s own history suggests he will not refuse to see another leader begging for mercy—after all, it makes him the center of attention—but at best will drive a hard bargain. I expect modest revisions, but none that will take tariffs below the 10 percent baseline and none that would alter the fundamental restructuring he wants.
In the long term, however, as countries reach the acceptance stage, trade will rearrange, and they will turn elsewhere. Through his actions and the way the tariffs were rolled out, Trump has signaled that the United States is an unreliable friend and partner. That will come back to bite future administrations because once the bonds of trust and confidence are broken, they are exceptionally difficult to restore. It will take future presidents a generation to rebuild, even assuming they want to do so. Meanwhile, other countries will not be standing still. They will be creating new trade relationships and finding new markets while the United States, having squandered its soft power, sits on the sidelines, wallowing in economic isolation. That will hurt U.S. exports, which are the key to our long-term growth.
Finally, globalization may be on life support, but it’s not going away, except maybe in the United States. Its enabling tools—digitization and enormous cost reductions in transportation and communication—are still here, and businesses will continue to use them. Creative companies will find new paths and create a new equilibrium without us. That will hurt our growth, but also our ability to innovate and create as we isolate ourselves. And that is the tragedy of Trump’s own goal. In the long term, it will relegate us to the sidelines as the rest of the world realizes it can get along quite nicely without us.
William A. Reinsch is senior adviser and Scholl Chair emeritus with the Economics Program and Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.
