The collapse of the Soviet Union in 1991 is often attributed to Mikhail Gorbachev’s policies of glasnost (openness) and perestroika (restructuring), which, despite their good intentions, inadvertently accelerated systemic weaknesses. Today, Donald Trump’s economic nationalism—particularly his tariff-driven “America First” agenda—risks triggering a similar unravelling for the United States. While Trump’s policies are framed as protecting American jobs and industries, they function more like an “America Only” strategy that isolates the U.S., destabilizes its economy, and empowers rivals like China. Trump’s tariffs harm U.S. citizens, benefit foreign producers, and position China to dominate the 21st-century global order.
1. Trump’s Tariffs: A Self-Inflicted Wound on the U.S. Economy
Trump’s tariffs—25% on goods from Canada and Mexico, 10% on Chinese imports, and 10% on Canadian energy—are marketed as tools to combat drug trafficking and protect U.S. industries. However, their economic impact is overwhelmingly borne by American households and businesses.
A. Rising Consumer Prices and Inflation
Tariffs function as taxes on imports, paid by U.S. companies and passed on to consumers. For example:
- Automotive sector: A 25% tariff on Canadian and Mexican auto parts could raise the price of U.S.-assembled cars by $3,000, affecting ~16 million vehicles sold annually. This would disproportionately impact middle-class Americans who rely on affordable transportation.
- Food and energy: Mexico supplies 60% of U.S. vegetable imports and nearly half of fruit/nut imports. Tariffs could spike grocery prices, while Midwest gas prices might surge 50¢/gallon due to reliance on Canadian/Mexican crude oil.
- Inflation: Economists warn annual inflation could jump from 2.9% to 4% under new tariffs, mirroring the 34% price hike for washing machines during Trump’s 2018–2023 tariffs. Higher inflation disproportionately affects lower-income Americans, exacerbating economic inequality.
B. Job Losses and Economic Contraction
The Tax Foundation estimates Trump’s proposed tariffs would shrink U.S. GDP by 0.4%, eliminate 330,000 jobs, and cost households an average of $800 annually in taxes. Retaliatory tariffs from trading partners—like Canada’s $107 billion countermeasures targeting U.S. steel, agriculture, and machinery—would further strain export-reliant industries in states like Ohio and Texas. The steel and aluminium tariffs alone resulted in the loss of approximately 75,000 manufacturing jobs due to higher production costs.
C. Disrupted Supply Chains
The U.S. imports $1.3 trillion annually from Canada, China, and Mexico. Tariffs threaten to disrupt intricate supply chains, particularly in sectors like automotive manufacturing, where parts cross borders multiple times before assembly. For instance, General Motors sources parts from at least six different countries for a single vehicle model. Such disruptions risk making U.S. industries less competitive globally, forcing them to move operations overseas to circumvent tariffs.
2. How U.S. Tariffs Lower Costs for Foreign Producers
Paradoxically, Trump’s tariffs could strengthen foreign economies by incentivizing them to diversify trade partnerships and devalue currencies.
A. Currency Depreciation as a Shield
Countries like Mexico and Canada have seen their currencies (the peso and Canadian dollar) weaken in response to tariff threats. A weaker currency makes their exports cheaper globally, offsetting the impact of U.S. tariffs. For instance:
- Mexico’s peso has depreciated 30% since April 2024, cushioning its exporters.
- China’s yuan has steadily declined, maintaining its competitiveness in markets beyond the U.S.
B. Diversification of Trade Networks
China, already less reliant on U.S. trade (37% of GDP vs. 60% in the 2000s), has deepened ties with the EU, Mexico, and Southeast Asia. Meanwhile, Canada and Mexico are expanding energy exports to Europe and Asia, reducing dependency on the U.S. market. The European Union has struck multiple trade deals with China, ensuring continued economic collaboration without U.S. interference.
C. Boosting Domestic Production
Foreign producers may redirect tariff-affected goods to other markets or invest in value-added industries. For example, Chinese manufacturers could pivot to high-tech sectors like semiconductors, leveraging state subsidies to outcompete U.S. firms. Additionally, Mexico has become a manufacturing hub for electric vehicle components, benefiting from diverted U.S. capital.
3. “America First” as “America Alone”: China’s Geopolitical Windfall
Trump’s isolationism undermines U.S. global leadership, creating a vacuum China is eager to fill.
A. Erosion of Alliances
By antagonizing NATO allies and trade partners, Trump weakens multilateral frameworks that have underpinned U.S. influence since WWII. Europe, for instance, warns that tariffs would harm both sides, noting that EU firms employ 3.5 million Americans. Alienating allies pushes them closer to China’s orbit, as seen in Germany’s increased economic ties with Beijing.
B. China’s Strategic Patience
While Trump focuses on short-term protectionism, China invests in long-term projects like the Belt and Road Initiative (BRI), digital currency systems, and green technology. The U.S. retreat from trade leadership allows Beijing to set global standards—a shift evident in its dominance of rare earth minerals and 5G infrastructure.
C. The New Cold War Dynamic
Much like Gorbachev’s USSR, the U.S. under Trump is overextending itself through ideological rigidity. By prioritizing tariffs over innovation, the U.S. risks ceding technological and economic supremacy to China, whose GDP is projected to overtake America’s by 2035.
4. Narendra Modi’s Missteps: Aligning with a Sinking Ship
Indian Prime Minister Narendra Modi’s alignment with Trump reflects a troubling pattern of strategic miscalculations.
A. The BRICS Currency Debacle
In 2023, India abruptly withdrew from a BRICS (Brazil, Russia, India, China, South Africa) initiative to create a shared currency aimed at reducing dollar dependency. Modi’s retreat, likely under U.S. pressure, undermined a historic opportunity to challenge Western financial hegemony and strengthen ties with emerging economies.
B. Betting on Trump’s Volatility
Modi’s embrace of Trump—including joint rallies and defence deals—ignores the risks of tying India’s future to a leader whose policies destabilize global trade. For instance, Trump’s threats to impose tariffs on Indian pharmaceuticals and IT services could devastate sectors central to India’s economy.
C. A Confused Foreign Policy
Modi’s simultaneous pursuit of alliances with the U.S. and Russia (via arms deals) reveals a lack of coherent strategy. This indecision weakens India’s position as China consolidates power in Asia.
A Historical Parallel: Gorbachev’s Ghost and the Unraveling of American Power
History remembers Gorbachev not for his intentions but for the unintended collapse he precipitated. Similarly, Trump’s tariffs—touted as economic patriotism—are accelerating America’s decline while empowering China. The “America First” mantra, divorced from the realities of global interdependence, is a blueprint for isolation, inflation, and irrelevance.
For the U.S. to avoid this fate, it must reject zero-sum nationalism and reinvest in alliances, innovation, and fair trade. Donald Trump may become the ‘Mikhail Gorbachev’ of America, if not Geographically then certainly Geo-politically.
References:
- https://www.politico.com/news/2025/02/05/trump-trade-deficit-2024-00202569
- https://www.npr.org/2025/02/05/nx-s1-5284991/trump-tariffs-higher-prices-inflation-mexico-canada-china
- https://www.theguardian.com/us-news/2025/feb/04/trump-china-tariffs
- https://www.bbc.com/news/articles/czj31l4p7vzo
- https://www.thetimes.co.uk/article/the-times-view-on-trumps-trade-war-self-harm-r879zk76p
- https://news.uchicago.edu/story/what-effect-will-trumps-tariffs-have-us-economy
