The End of "Pax Americana"

RP ONLINE The End of "Pax Americana" Thomas Spang, Washington • 23 hours • 3 minutes read Tariffs massively increased, tariffs reduced again, tariffs paused: The US President's erratic behavior – not only in terms of economic policy – ​​is a severe blow to order in the world. Trump's statements also make one thing very clear: America can no longer be relied upon. Donald Trump's "Liberation Day" meant this for order in global trade, just as the dismissal of Ukrainian President Volodymyr Zelenskyy in the Oval Office made clear for Europe's security architecture: America can no longer be relied upon. Neither the 90-day pause in so-called "reciprocal tariffs" nor the US government's half-hearted assurances of adherence to the NATO alliance change this. The United States' traditional partners cannot undo the shock triggered by the erratic behavior of the "America First" president in both cases. Especially since they have already become Trump's target in terms of trade policy. Mind you, the 25 percent tariffs on automobiles from Europe, the levies on steel and aluminum, and the 10 percent tariff on all other goods remain in place. The fact that not even his advisors knew what "King Donald" was up to when he announced his reversal on reciprocal tariffs illustrates the volatile nature of his policy. This isn't a positive; rather, it contributes to the maximum uncertainty in the markets, reflected in the rollercoaster ride of the stock markets. This is accompanied by a massive loss of trust not only among other governments, but also among individual players. From medium-sized companies to global corporations, investments in the USA are being put under scrutiny because no one knows what will happen next. It is doubtful that Trump will bring production back to his country in this way. His protectionist measures could have the opposite effect and drive investments out of the US. On April 2, 2025, US President Donald Trump announced new tariffs. International reactions soon followed. ©Evan Vucci Meanwhile, pressure is mounting in the US due to rising prices, a weaker dollar, and shrinking retirees' stock portfolios. The latter, in particular, poses a significant political risk for Trump, who ostentatiously went golfing when the markets crashed after the declaration of "Liberation Day." Unlike in Europe, Americans' retirement security depends on the health of the stock market. Trump only backs down under pressure It was only when the credit markets threatened to freeze due to the mass sale of US government bonds that the president pressed the pause button. This did not stop the "Tariff-in-Chief" from feeling he had caused lasting damage. Despite the 90-day suspension, the average US tariff rate remains at more than 25 percent. The only historical comparison that comes to mind is the American Civil War. From 1861 to 1868, the effective tariff rate rose by 32 percentage points. However, the US economy was less dependent on imports back then, and supply chains were far less complex. What Trump intends to do during the weeks-long tariff pause remains his secret. Contrary to the acclaim of his advisors, who celebrate him as the greatest negotiator of all time, no coherent plan is discernible. Neighbors Mexico and Canada have learned that concessions to Trump today only lead to further demands in the future. With regard to the escalation of the trade war with China, the protectionist in the White House is putting the cart before the horse. Compared to the unpredictability of the US, the People's Republic appears to be a rational actor and will therefore neither isolate itself nor allow itself to be brought to its knees. A better approach would have been to strengthen rules-based free trade with the Trans-Pacific Partnership and persuade China to rethink its position. Trump can't be reached with arguments Closing a blind eye to the new realities and hoping for the best won't help Germany or Europe. This "madman" in the White House can't be reached with arguments. And there's little negotiation that can be relied upon afterward. The only thing that can be controlled is the behavior of those responsible in this new situation. It is certainly wise to put on a brave face to gain time. This time must be used purposefully to build our own security architecture and new trade alliances. The answer to this can only lie in strengthening the EU. Consideration should also be given to associating Canada and expanding free trade with other countries affected by Trump's tariff frenzy. One thing is clear: As long as the "Customs Officer in Chief" sits in the White House, there will be no turning back.