The Rachman Review

Episode: US systems unravel under Trump

Date: February 13, 2025
Host: Gideon Rachman (Financial Times)
Guest: Daniel Dresner (Professor, Fletcher School at Tufts University, Specialist on Economic Statecraft)

Overview

This episode delves into the dramatic changes in American domestic and foreign policy in the second Trump administration. Gideon Rachman and guest Daniel Dresner discuss the administration's aggressive trade tactics, the shutdown of key government agencies, growing unpredictability in international alliances, Elon Musk’s involvement with federal payment systems, and the fragility of checks and balances in US governance. The conversation considers far-reaching consequences for the global order, America's allies, and internal stability, offering a sobering assessment of the prospects for US leadership and democracy.

Key Discussion Points and Insights

1. Trump’s Tariff Strategy: Contradictory Goals and Global Fallout

• Tariffs as a Cure-All:

  • Dresner likens Trump’s faith in tariffs to a “My Big Fat Greek Wedding” character’s belief that Windex can fix everything ([02:09]):
    • “Trump believes that tariffs can do everything.” — Daniel Dresner [02:17]
  • Trump employs tariffs in three contradictory ways: as coercion, protectionism, and revenue generation ([02:20–03:22]):
    • As a coercive tool to force other nations’ compliance
    • To protect US industries (favorite historical reference: William McKinley)
    • To boost government revenue via import taxes

• Limits, Tactics, and Media Spin:

  • Dresner notes Trump mainly uses tariff threats to appear strong, then accepts token concessions, often claiming political victory regardless of substance ([04:19–04:29]).
    • “He can claim, see, I was willing to throw US economic might around. All these countries caved… an America First foreign policy.” — Daniel Dresner [04:29]

• European Union as a Primary Target:

  • Trump views the EU not as a subordinate (like Canada or Mexico), but as a peer competitor deserving of direct economic confrontation ([05:00–05:33]).
  • Dresner predicts Trump is more likely to actually implement tariffs against the EU, aiming to "take the European Union down a peg.” ([05:33])

• Advice to Europe: Tit-for-Tat or Trinkets

  • Options include counter-tariffs targeted at key US exports (e.g., bourbon from Kentucky), redirecting trade to non-US partners, and offering Trump flashy or symbolic concessions to appease him without substantive change ([06:04–06:38]).
    • “You want to give him trinkets he can then claim as trophies.” — Daniel Dresner [07:14]

2. The Global Order: Erosion of Trust in the US

• Eroded US Credibility:

  • Trump’s unpredictability means allies no longer trust US commitments; they now must hedge against future abrupt reversals ([09:05–09:24]).
    • “All of those allies and partners are going to be looking at the United States now and realizing we can no longer trust you, and we need to prepare and hedge.” — Daniel Dresner [09:16]

• Relative Gains for China and Other Powers:

  • Even with economic troubles, China now appears more stable than the US on the world stage ([09:35–10:02]).
    • “It’s the United States that’s acting crazy. You maybe can’t completely trust us, but we’re not going to try to blow up the system.” — Daniel Dresner [09:57]

• Potential Weakening of the Dollar:

  • While challenging the dollar’s reserve status is difficult, continued unpredictability could push Europe and China to create alternative payments systems ([11:08–12:14]).
  • Historical example: Instex, Europe’s failed Iran workaround, as a “trial run” for non-dollar payment structures ([12:04–12:14]).

• Europe’s Dilemma:

  • EU’s collaboration with the Biden administration on “de-risking” China policy complicates any pivot towards Beijing; Europe is caught between two increasingly unreliable partners ([12:26–13:24]).

3. Stresses on the Transatlantic Alliance and Domestic Institutions

• Death of the Postwar Western Alliance?

  • Dresner suggests the current rupture is deeper than previous cycles of transatlantic tension, rooted in loss of US credibility and the emergence of a true peer rival (China) ([14:09–14:43]).
    • “This is a fundamental rupture that is different from what we have seen in previous go arounds…” — Daniel Dresner [14:20]

• US Systemic Breakdown:

  • Erosion of institutional checks: Congress is largely compliant; federal bureaucracy is being gutted; the Supreme Court demonstrates broad deference to presidential authority ([16:02–16:51]).
    • “[Trump’s] folding of USAID into the State Department...violates the law of Congress. All of these things are illegal, but for them to actually be stopped, you need Congress to...step up.” — Daniel Dresner [15:46]
    • “If Congress is unwilling to step up, the only other arbiter is the Supreme Court...has demonstrated remarkable deference to presidential authority.” — Daniel Dresner [16:39]

• Markets as the Only Constraint:

  • The financial markets may serve as a short-term brake, especially if Trump threatens US debt default ([17:27–18:14]).
  • Trump’s business mentality could lead him to treat national debt like personal bankruptcy, with catastrophic global consequences ([18:36]).

4. Elite Dissent and Prospects for Resistance

• Internal Dissent Unlikely:

  • Burnout rates among senior officials are high, but public opposition is rare due to Trump’s penchant for punishing dissenters ([20:33–21:13]).
    • “Those people don’t survive politically....the question is, do they want to stay within the fold even if they have almost no autonomy, or do they want to be sent out in disgrace?” — Daniel Dresner [21:03–21:13]

• The American People as a Last Check:

  • Poor polling for Trump’s policies and potential upsets in special elections could send warning signals, but real political consequences are tied to the (distant) midterms ([21:35–22:16]).
    • “The fundamental check on Donald Trump’s power...see what happens” in upcoming elections. — Daniel Dresner [21:35–21:41]

• Pessimism about Reversal:

  • Given the pace of executive action, much damage can be done before electoral correction is possible ([22:23–22:26]).
    • “We’re only talking about the damage done after three weeks. Imagine where we will be in January of 2027.” — Daniel Dresner [22:26]

Notable Quotes & Memorable Moments

• “Trump believes that tariffs can do everything.” — Daniel Dresner [02:17]
• “You want to give him trinkets he can then claim as trophies.” — Daniel Dresner [07:14]
• “The US is no longer a reliable hegemon…what Donald Trump is pursuing is what I call a Humpty Dumpty foreign policy — you’re not going to be able to put it back together again.” — Daniel Dresner [08:17–08:33]
• “Allies and partners are going to be looking at the United States now and realizing we can no longer trust you…and hedge for when you act out.” — Daniel Dresner [09:16]
• “Everything [Trump and Musk] have done so far in the second term is along the lines of ‘move fast and break things’...that works right up until the moment you do something truly catastrophic.” — Daniel Dresner [19:18–19:28]
• “The fundamental check on Donald Trump’s power is going to be...what happens in the special elections...If [Democrats] win one of those three seats, that should be a warning shot across the bow for Republicans.” — Daniel Dresner [21:35–22:05]
• “We’re only talking about the damage done after three weeks. Imagine where we will be in January of 2027.” — Daniel Dresner [22:26]

Timestamps for Important Segments

• Tariffs as a tool of Trumpism: [01:12]–[03:37]
• Contradictory aims of tariffs: [02:17]–[03:22]
• How Europe might respond: [05:43]–[07:19]
• Structural weakening of US credibility: [08:17]–[09:16]
• China’s strategic gains by default: [09:35]–[10:30]
• Dollar’s reserve status in jeopardy: [11:08]–[12:26]
• Demise of the US/EU alliance: [14:09]–[14:43]
• Checks and balances breakdown: [15:46]–[16:51]
• Markets as a check: [17:27]–[18:14]
• Debt default scenario: [18:36]–[19:37]
• Elite internal resistance and public dissent: [20:33]–[21:13]
• Elections as the last hope: [21:35]–[22:05]
• Level of damage and pessimistic outlook: [22:23]–[22:26]

Tone and Language

The conversation is analytical, candid, and at times darkly humorous (on trinkets for Trump, bankruptcy analogies). Dresner’s tone is matter-of-fact and at times deeply pessimistic, cautioning that the current trajectory under Trump’s second term presents risks both to US democracy and the international order. Rachman and Dresner punctuate their sobering analysis with sharp but accessible explanations, making complex issues intelligible without jargon.

For Listeners Who Missed the Episode

• Trump’s trade and domestic policies are uniquely volatile, often at odds with each other, and are straining both foreign alliances and internal US governance.
• Allies are recalibrating how much they can trust American commitments; China stands to benefit from US unpredictability.
• Key elements of the US government and broader liberal order are being rapidly dismantled with minimal resistance from Congress or the courts.
• The only near-term constraints may come from market panic or unforeseen electoral backlash—but both are distant or unreliable bulwarks.
• The episode paints a bleak, high-stakes picture of America’s place in the world in 2025, warning that even short periods of unchecked executive action can have long-lasting, possibly irreversible consequences.