China’s Economic Reckoning
The Price of Failed Reforms
Present at the Creation is an 800-page memoir written by Dean Acheson, U.S. President Harry Truman’s secretary of state. The title, with its biblical echo, was immodest, but in Acheson’s defense, it was deserved.
Working from planning begun under President Franklin Roosevelt, Truman and his senior advisers built nothing less than a new international order in the wake of World War II. The United States adopted the doctrine of containment, which would guide U.S. foreign policy for four decades in its Cold War struggle with the Soviet Union. It transformed Germany and Japan into democracies and built a network of alliances in Asia and Europe. It provided the aid Europe needed to get back on its feet under the Marshall Plan and channeled economic and military assistance to countries vulnerable to communism under the Truman Doctrine. It established a host of international organizations, including the United Nations, the International Monetary Fund, the World Bank, and the General Agreement on Tariffs and Trade (the forerunner to the World Trade Organization). And it constructed a modern foreign and defense policy apparatus, including the National Security Council, the CIA, and the Department of Defense.
It is impossible to imagine one of the national security principals of the Trump administration writing a memoir that includes the word “creation” in its title. The problem is not just that little has been built over the past three and a half years. Building has simply not been a central aim of this administration’s foreign policy. To the contrary, the president and the frequently changing cast of officials around him have been much more interested in tearing things apart. A more fitting title for an administration memoir would be Present at the Disruption.
The term “disruption” is in and of itself neither a compliment nor a criticism. Disruption can be desirable and even necessary if the status quo is incompatible with one’s interests and there is an alternative that is both advantageous and achievable. But disruption is anything but desirable if the status quo serves one’s interests (or would with only minor adjustments) or the available alternatives are likely to be worse. By this standard, the disruption set in motion by the Trump administration was neither warranted nor wise.
As with health care and the Affordable Care Act, when it came to foreign policy, Trump inherited an imperfect but valuable system and tried to repeal it without offering a substitute. The result is a United States and a world that are considerably worse off. This disruption will leave an enduring mark. And if such disruption continues or accelerates, which there is every reason to believe it will if Donald Trump is elected to a second term, then “destruction” might well become a more apt term to describe this period of U.S. foreign policy.
Trump entered the Oval Office in January 2017 convinced that U.S. foreign policy needed to be disrupted. In his inaugural address, speaking from the steps of the Capitol, the new president offered a grim account of the United States’ record:
For many decades, we’ve enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military. We’ve defended other nation’s borders while refusing to defend our own. And spent trillions and trillions of dollars overseas while America’s infrastructure has fallen into disrepair and decay. We’ve made other countries rich while the wealth, strength, and confidence of our country has dissipated over the horizon. . . . From this day forward, it’s going to be only America first.
After three and a half years at the helm of U.S. foreign policy, Trump had apparently seen nothing to change his mind. Addressing graduating cadets at West Point earlier this year, he applied a similar logic to the use of military force:
We are restoring the fundamental principles that the job of the American soldier is not to rebuild foreign nations, but defend—and defend strongly—our nation from foreign enemies. We are ending the era of endless wars. In its place is a renewed, clear-eyed focus on defending America’s vital interests. It is not the duty of U.S. troops to solve ancient conflicts in faraway lands that many people have never even heard of. We are not the policemen of the world.
Many of the foundational elements of Trump’s approach to the world can be gleaned from these two speeches. As he sees it, foreign policy is mostly an expensive distraction. The United States was doing too much abroad and was worse off at home because of it. Trade and immigration were destroying jobs and communities. Other countries—above all U.S. allies—were taking advantage of the United States, which had nothing to show for its exertion even as others profited. The costs of American leadership substantially outweighed the benefits.
Missing from this worldview is any appreciation of what, from a U.S. perspective, was remarkable about the previous three-quarters of a century: the absence of great-power war, the extension of democracy around much of the world, a 90-fold growth in the size of the U.S. economy, a ten-year increase in the lifespan of the average American. Also missing is a recognition that the Cold War, the defining struggle of that era, ended peacefully, on terms that could hardly have been more favorable to the United States; that none of this would have been possible without U.S. leadership and U.S. allies; and that despite this victory, the United States still faces challenges in the world (beyond “radical Islamic terrorism,” the one threat Trump singled out in his inaugural address) that affect the country and its citizens, and that partners, diplomacy, and global institutions would be valuable assets in meeting them.
Trump inherited a valuable system and tried to repeal it without offering a substitute.
Numerous other dubious assumptions run through Trump’s worldview. Trade is portrayed as an unmitigated negative that has helped China take advantage of the United States, rather than as a source of many good export-oriented jobs, more choices along with lower costs for the American consumer, and lower rates of inflation at home. The United States’ domestic ills are attributed in large part to the costs of foreign policy, even though—while the costs, in lives and dollars, have been high—the share of economic output spent on national security has fallen in recent decades and is far below what it was during the Cold War, which happened to be a time when Americans were able to enjoy security and prosperity simultaneously. There is ample reason to find fault with the wars in Afghanistan and Iraq without blaming them for the condition of American airports and bridges. And although Americans spend far more on health care and education than their counterparts in many other developed countries do, the average American is worse off. All of which is to say, doing less abroad would not necessarily lead to doing more of the right things at home.
It is possible to understand this distorted framing of U.S. national security only by considering the context that gave rise to “Trumpism.” The United States emerged from the Cold War with no rivals, but also with no consensus as to what it should do with its unrivaled power. Containment, the compass that had guided U.S. foreign policy for four decades, was useless in the new circumstances. And policymakers and analysts struggled to settle on a new framework.
As a result, the most powerful country on earth adopted a piecemeal approach to the world—one that, over time, led to overextension and exhaustion. In the 1990s, the United States fought a successful limited war to reverse Iraqi aggression in the Persian Gulf and carried out humanitarian interventions in the Balkans and elsewhere (some relatively successful, others not). After the September 11, 2001, terrorist attacks, President George W. Bush sent large numbers of troops to Afghanistan and Iraq—both ill-advised wars of choice (Iraq from the outset, Afghanistan over time), in which the human and economic costs dwarfed any benefits. In the Obama years, the United States initiated or continued several costly interventions and at the same time signaled uncertainty as to its intentions.
Frustration over perceived overextension abroad was reinforced by trends at home, especially after the 2008 financial crisis. Middle-class wages stagnated, and widespread job losses and factory closings created a narrow but intense hostility to trade (despite the fact that productivity increases tied to technological innovation were the primary culprit). Altogether, there was a widespread sense of the establishment having failed, both by neglecting to protect American workers at home and by undertaking an overly ambitious foreign policy abroad, one detached from the country’s vital interests and the welfare of its citizens.
The foreign policies of the first four post–Cold War presidents—George H. W. Bush, Bill Clinton, George W. Bush, and Barack Obama—blended the principal schools of thought that had guided the United States’ approach to the world since World War II. These included realism (emphasizing global stability, largely by maintaining a balance of power and attempting to shape other countries’ foreign, rather than domestic, policies); idealism (putting greater weight on promoting human rights and shaping the domestic political trajectory of other countries); and humanitarianism (focusing on relieving poverty, alleviating disease, and caring for refugees and the displaced). The four presidents differed in their emphasis but also had a good deal in common. Trump broke with all of them.
In some ways, Trump’s approach does incorporate elements of long-standing currents in U.S., and especially Republican, foreign policy—particularly the nineteenth-century nationalist unilateralism of President Andrew Jackson, the pre– and post–World War II isolationism of figures such as Republican Senator Robert Taft of Ohio, and the more recent protectionism of the presidential candidates Pat Buchanan and Ross Perot. But what distinguishes Trump more than anything else is his emphasis on economic interests and his narrow understanding of what they are and how they should be pursued. His predecessors believed that if the United States helped shape the global economy, using its power and leadership to promote stability and set rules for trade and investment, American companies, workers, and investors would flourish. The Gulf War, for example, was fought not for oil, in the sense of creating opportunities for U.S. companies to gain control of supplies, but to ensure that oil would be available to fuel the U.S. and global economies. Both grew markedly as a result.
Trump, by contrast, routinely complains that the United States erred by not seizing Iraqi oil. More fundamentally, he obsesses over bilateral trade balances, on increasing American exports and decreasing imports, even though deficits matter little as long as other countries are playing by the rules and the United States can borrow to cover the shortfall. (All countries have comparative advantages, and different rates of saving and spending, that lead to deficits with some and surpluses with others.) He berates allies for not spending more on their militaries, incorrectly telling fellow members of NATO that their failure to spend two percent of their GDPs on defense means that they owe the United States money. He was quick to cancel large military exercises central to the U.S.–South Korean alliance, in part because he thought they were too expensive. In trade negotiations with China, he cared more about getting Beijing to commit to specific purchases of American agricultural products than tackling larger structural issues, even though addressing the latter would be much more beneficial for American companies and for the U.S. economy as a whole.
The corollary to this focus on narrowly defined economic interests has been an almost total neglect of other aims of U.S. foreign policy. Trump has shown little interest in advocating human rights, advancing democracy, alleviating humanitarian hardship, or addressing global challenges such as migration, climate change, or infectious diseases (the toll of such disinterest in the last has become especially, and tragically, clear in recent months). When it came to Saudi Arabia, he did not allow blatant human rights violations to get in the way of arms sales. And he has been reluctant to respond at all to Russia’s military intervention in Syria, its interference in U.S. politics, or recent evidence that Russian agents paid bounties to the Taliban to kill American soldiers.
The contrast between Trump and previous presidents is no less pronounced when it comes to the means of foreign policy. The two Republican and two Democratic presidents just before him all broadly believed in multilateralism, whether through alliances or treaties or institutions. That did not mean they eschewed unilateral action altogether, but all understood that, in most cases, multilateral arrangements magnify U.S. influence and treaties bring a degree of predictability to international relations. Multilateralism also pools resources to address common challenges in a way that no amount of individual national effort can match.
Trump, by contrast, has made a habit of withdrawing or threatening to withdraw from multilateral commitments. Even a partial list would include the Trans-Pacific Partnership (TPP), the Paris climate accord, the Iran nuclear deal (the Joint Comprehensive Plan of Action, or JCPOA), the Intermediate-Range Nuclear Forces Treaty, UNESCO, the UN Human Rights Council, the World Health Organization (WHO), and the Open Skies Treaty. Trump’s United States also refused to join a global migration pact or European-led efforts to develop a vaccine for COVID-19.
Trump’s narrow and inadequate understanding of U.S. interests and the best means of pursuing them has also shaped—and in most cases hindered—the administration’s approach to other issues. When it comes to the military, Trump’s appetite for disruption has been most evident in the actual or threatened withdrawal of forces, often with little thought to why they were there in the first place or what the consequences of withdrawal might be. All presidents make decisions about the use of military force on a case-by-case basis. Trump, like Obama in this one area, has been largely wary of new military entanglements; his uses of force against Syria and Iran were brief and limited in scope, and his threats to unleash “fire and fury” on North Korea quickly gave way to summitry, despite North Korea’s continued work on its nuclear and missile arsenals.
His calls for withdrawal, meanwhile, have applied to areas of conflict as well as places where U.S. troops have been stationed for decades in order to deter war. In Syria, the United States’ Kurdish partners were left in the lurch when Trump abruptly announced U.S. troop withdrawals in late 2018; in Afghanistan, little thought seems to have been given to what might happen to the government in Kabul once U.S. troops depart. But it’s one thing to conclude that the United States erred in Afghanistan and Iraq and should avoid such wars in the future, quite another to equate those interventions with the stationing of U.S. forces in Germany, Japan, or South Korea, which have helped maintain stability for decades. The administration’s announcement in June that it would withdraw 9,500 troops from Germany, seemingly triggered by German Chancellor Angela Merkel’s refusal to travel to Washington for a G-7 meeting amid a global pandemic and not by national security considerations, was entirely consistent with Trump’s coolness toward overseas military commitments. That this decision was taken without prior consultation with Berlin, just as the decision to cancel major military exercises with South Korea was taken without consulting Seoul, only made a bad situation worse.
These moves reflect Trump’s broader indifference to allies. Alliances depend on treating the security of others as seriously as one’s own; “America first” makes clear that U.S. allies come second. Trump’s relentless focus on offsetting the costs of the United States’ overseas military presence has reinforced the corrosive message that U.S. support for allies has become transactional and conditional. His warm treatment of foes and competitors—he has consistently been friendlier toward Russian President Vladimir Putin, Chinese President Xi Jinping, and the North Korean leader Kim Jong Un than toward their democratic counterparts—has exacerbated the problem, especially given Trump’s reluctance to reaffirm U.S. fidelity to NATO’s Article 5, the treaty’s collective-defense provision. Even Russian interference in American democracy hasn’t stopped Trump from being less confrontational with Putin than with European leaders. In the one notable case in which the administration acted against Putin, in providing arms to Ukraine, any reassurance was undercut by the fact that subsequent aid was conditioned on a commitment by Ukraine’s new president to investigate Trump’s likely Democratic opponent in the 2020 election.
At some point, disruption becomes so far-reaching that there is no turning back.
On trade, the administration has mostly rejected multilateral pacts, including the TPP, which would have brought together countries representing 40 percent of the world’s GDP and pressured China to meet higher economic standards. It has regularly resorted to unilateral tariffs, even imposing them on allies and using dubious legal justifications. And although the United States has not withdrawn from the World Trade Organization, the administration has tied it in knots by refusing to approve judges for the panel that adjudicates trade disputes. The one exception is the U.S.-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement. The USMCA is a curious exception, however, in that it departs only modestly from the harshly criticized NAFTA and borrows heavily from the text of the rejected TPP.
With China, Trump’s welcome willingness to challenge Beijing on trade has been undermined by what can only be described as an incoherent policy. The administration has used confrontational language but has diluted any real leverage it might have had by bowing out of the TPP, incessantly criticizing (rather than enlisting) allies in Asia and Europe, and blatantly showing its hunger for a narrow trade deal that commits China to accepting greater American exports ahead of Trump’s reelection campaign. The administration has been tardy or inconsistent in its criticism of China for its crackdown in Hong Kong and its treatment of the Uighurs in Xinjiang, and it has been mostly passive as China has solidified its control of the South China Sea. Meanwhile, reduced spending on basic research at home, the placement of new limits on the number of skilled immigrants allowed into the United States, and the inept handling of the COVID-19 pandemic have made the country less competitive vis-à-vis China.
In the Middle East, Trump’s disruption has similarly undermined U.S. objectives and increased the likelihood of instability. For five decades, the United States had positioned itself as an honest broker in the Israeli-Palestinian conflict; everyone understood that the United States stood closer to Israel, but not so close that it would not push Israel when necessary. Convinced that a new approach had to be taken, the Trump administration abandoned any pretense of such a role, forgoing any real peace process for a series of faits accomplis premised on the mistaken belief that the Palestinians were too weak to resist and Sunni Arab governments would look the other way given their desire to work with Israel against Iran. The administration sanctioned the Palestinians even as it moved the U.S. embassy to Jerusalem, recognized Israel’s annexation of the Golan Heights, and put forward a “peace plan” that set the stage for Israeli annexation of parts of the West Bank. The policy risks sowing instability in the region, foreclosing future opportunities for peacemaking, and jeopardizing Israel’s future as both a democratic and a Jewish state.
With Iran, the administration has managed to isolate itself more than Tehran. In 2018, Trump unilaterally withdrew from the JCPOA, introducing a new round of sanctions as he did so. The sanctions hurt Iran’s economy, just as the killing of Qasem Soleimani, the commander of the Quds Force of Iran’s Islamic Revolutionary Guard Corps, was a setback for its regional ambitions. But neither was enough to force fundamental changes in Tehran’s behavior, at home or abroad, or bring down the regime (which appears to have been the real goal of the administration’s policy). Iran has now started flouting the limits on its nuclear programs established by the JCPOA and, through its meddling in Iraq, Lebanon, Syria, and Yemen, continues to try to reshape much of the Middle East.
Trump encountered a difficult inbox at the start of his presidency: growing great-power rivalry, an increasingly assertive China, a turbulent Middle East, a nuclear-armed North Korea, numerous conflicts within countries, a largely unregulated cyberspace, the lingering threat of terrorism, accelerating climate change, and plenty more. On the eve of his inauguration, my book A World in Disarray was published, which I mention only to underscore that many difficult challenges greeted the 45th president. Today, the disarray is considerably greater. Most of the problems that Trump inherited have gotten worse; to the extent that he has simply ignored many of them, neglect has not been benign. And the standing of the United States in the world has fallen, thanks to its inept handling of COVID-19, its denial of climate change and rejection of refugees and immigrants, and the continued scourges of mass shootings and endemic racism. The country is seen not just as less attractive and capable but also as less reliable, as it withdraws from multilateral agreements and distances itself from allies.
American allies, for their part, have come to view the United States differently. Alliances are predicated on reliability and predictability, and no ally is likely to view the United States as it did before. Seeds of doubt have been sown: if it could happen once, it could happen again. It is difficult to reclaim a throne after abdicating it. What’s more, a new president would be constrained by the ongoing pandemic, large-scale unemployment, and deep political divisions, all at a time when the country is struggling to address racial injustice and growing inequality. There would be considerable pressure to focus on righting the home front and limiting ambition abroad.
A partial restoration of U.S. foreign policy is still possible, however. The United States could commit to rebuilding its relationships with its NATO allies, as well as its allies in Asia. It could reenter many of the agreements it exited, negotiate a follow-on pact to the TPP, and spearhead a reform of the World Trade Organization. It could adjust its immigration policy.
But there is no going back to the way things were. Four years may not be a long time in the sweep of history, but it is plenty long enough for things to change irreversibly. China is wealthier and stronger, North Korea has more nuclear weapons and better missiles, climate change is more advanced, the U.S. embassy has been relocated to Jerusalem, and Nicolás Maduro is more entrenched in Venezuela, as is Bashar al-Assad in Syria. This is the new reality.
There is no going back to the way things were.
Moreover, restoration on any scale will be inadequate given the extent to which disarray has spread under Trump. The United States will need a new framework for contending with a more assertive and repressive China, as well as initiatives that narrow the gap between the scale of global challenges—climate change and infectious diseases, terrorism and nuclear proliferation, cyberwar and trade—and the arrangements meant to address them. Rejoining an inadequate Paris agreement, a soon-to-begin-expiring JCPOA, or a flawed WHO would not be nearly enough. Instead, a new administration will need to negotiate follow-on agreements on both climate change and Iran and partner with others to reform the WHO or bring about a new body to assume some of the global health burden.
And if Trump is reelected? Buoyed by an electoral victory that he would interpret as a mandate, he would likely double down on the central elements of the foreign policy that has defined his first term. At some point, disruption becomes so far-reaching that there is no turning back. Present at the Disruption could become Present at the Destruction.
Countless norms, alliances, treaties, and institutions would weaken or wither. The world would become more Hobbesian, a struggle of all against all. (This was actually previewed in May 2017 in a Wall Street Journal op-ed written by two senior Trump administration officials: “The world is not a ‘global community’ but an arena where nations, nongovernmental actors and businesses engage and compete for advantage.”) Conflict would become more common, and democracy less so. Proliferation would accelerate as alliances lost their ability to reassure friends and deter foes. Spheres of influence could arise. Trade would become more managed, at best growing more slowly, but possibly even shrinking. The U.S. dollar would begin to lose its unique place in the global economy, with alternatives such as the euro, and possibly the renminbi and various cryptocurrencies, growing in importance. U.S. indebtedness could become a major liability. The global order that existed for 75 years would surely end; the only question is what, if anything, would take its place.
A great deal hinges on which course the United States follows. Even a partial restoration would make Trump’s foreign policy something of an aberration, in which case its impact would prove limited. But if his brand of foreign policy persists for another four years, Trump will be seen as a truly consequential president. In this scenario, the model embraced by the United States from World War II until 2016 will prove to be the aberration—a relatively brief exception in a longer tradition of isolationism, protectionism, and nationalist unilateralism. History makes it impossible to view this latter prospect with anything but alarm.