Destroying American Soft Power
The First Two Weeks of Trump 2.0
According to the Oxford English Dictionary, soft power is the "power (of a nation, state, alliance, etc.) deriving from economic and cultural influence, rather than coercion or military strength.” The United States has significant soft power, by virtue of its economic might and its extensive non-military engagement with the rest of the world.
When the President places a phone call to just about any leader in the world, they will immediately pick up.
That is less true than it was in the past. In the aftermath of World War II, the U.S. accounted for something like 50% of global GDP. Our only peer competitor, the Soviet Union, was hamstrung by an inefficient socialist economic system and a political system that could only be imposed by force.
Today, we are no longer the only game in town. By purchasing power parity, China is now the world’s largest economy, at just north of 19% of global GDP. The US and European Union are at parity, just under 15%. China is technically a communist country, but it has a mix of a relatively free economy with a closed political system. Its economic might overcomes other country’s misgivings over a repressive political system.
The U.S. can’t continue to rely on overwhelming military and economic force. It must compete. It must cultivate a robust network of allies to counterbalance China and sell those on the fence about cooperating with the Americans. In this context, playing hardball with adversaries is important, but playing hardball with allies is counterproductive and plays against our long-term interests.
But, the sense of American decline is palpable and is creating support for “America First” policies that will only accelerate that decline. A sign of status anxiety is often overcompensation and lashing out. It creates a scarcity mindset that leads to turning inward and ending long-term investments that don’t have an immediate benefit. The end of foreign aid programs is one symptom. Tearing up trade deals and throwing up trade barriers are another.
The result is leaving the United States increasingly isolated in the world, with a collection of spurned former allies who no longer look to us for leadership.
Accusations of “Trump Derangement Syndrome” fly fast and thick. So, let’s stick to the facts:
Canada is probably our single closest ally, with which we share the world’s longest land border of over 5,000 miles. Canadians have fought with Americans as an ally in every conflict since the turn of the 20th Century. It is our largest trade partner.
Mexico is the United States’ second largest trade partner. It is central to disputes over immigration and the illicit drug trade.
The USMCA trade agreement, negotiated by President Trump himself in 2018, created the largest economic trade block in the world with fully integrated supply chains across multiple industries. His proposed tariffs effectively tear-up that agreement.
When the tariffs against Canada were announced, Canada unified against them. The more conservative prairie provinces lined-up behind Justin Trudeau’s government to support retaliatory tariffs. American products were pulled off the shelves, and Canadian NHL fans booed the U.S. national anthem.
Not to mention the tariffs themselves would have been entirely self-defeating. For example, American refineries rely on Canadian crude oil and are tooled to handle it. A 10% tariff on Canadian energy would cost billions in lost profits and investments to shift toward American oil, and those costs would have been passed to American consumers.
“Canada provided 75% of U.S. heavy crude oil imports in 2024, with its market share having steadily increased since 2000, squeezing outflows from Mexico, Venezuela and Colombia. Some 80% of Canada's crude production flows downstream to U.S. refiners, with U.S. imports of Canadian crude reaching a record high of 4.42M bbl/day in the week ending January 3, according to the U.S. Energy Information Administration.” - Crude Oil Prices Today
We also aren’t the only potential buyer. China would love the opportunity to buy contracts for much cheaper post-tariff Canadian oil and become a key player in North American supply chains. They might also be able to convince the Canadians, alienated from the United States, that they might be a safer bet. Rather than Make America Great Again, tariffs would hasten its decline. And potentially compromise American security in its own neighborhood.
Tariffs against Mexico have a similar impact. A capricious and unpredictable U.S. administration makes additional cooperation to solve mutual problems, such as the cross-border drug and immigration crisis and the Mexican cartels, more difficult. The announcement of a tariff delay in exchange for surging Mexican national guard to the border was simply a restatement of an agreement made with the Biden administration in 2021.
Americans would have seen huge price increases for imports, particularly in the automotive sector. Mexico is the largest auto part supplier to the United States. Some components cross the border multiple times before final assembly and would be taxed each time. This means the 25% tariff would be multiplied many times over for some components.
The auto industry is also one of Mexico’s largest. I doubt the people of Mexico would be thrilled with the United States for crashing a sector that employs over one million people in the country. I doubt they would also be thrilled with taxes on cross-border payments. This would increase political pressure on the Mexican government not to cooperate.
Automakers spent billions optimizing their supply chains assuming the current trade agreement with Mexico. Why would companies continue to do business in the United States if trade policy was upended every four years? Why would other countries seek to develop trade ties with a country hostile to them? Can we even credibly claim to have a free economy if the whims of politics cause constant uncertainty?
The United States does need to look after its interests first. But the allegedly “America First” policies of the early days of Trump’s second term only benefit the psychological need for control in the face of decline, while putting the long-term interests of this country last.