TRUMPXIT: The Bell Tolls for Thee
We were once indispensable. Now we’re just unpredictable. Economic power runs on trust. Trump has burned trust in America to the ground. Brexit slashed Britain’s growth. Trumpxit is now doing the...
We were once indispensable. Now we’re just unpredictable. Economic power runs on trust. Trump has burned trust in America to the ground. Brexit slashed Britain’s growth. Trumpxit is now doing the same over here. And it will do it even if no tariff is ever imposed…
The very sharp Matthew Winkler put a stake in the ground last year. He assessed the damage from Britain’s 2016 Brexit:
Matthew Winkler (2024): Brexit’s Lasting Damage Is Looking Inescapable <https://www.bloomberg.com/opinion/articles/2024-03-19/brexit-s-lasting-economic-and-financial-damage-looks-inescapable>: ‘By almost every economic and financial measure, parting ways with the EU almost eight years ago has been disastrous for the UK. Is there no end in sight?… The toll of the June 23, 2016, referendum was more than double any of the eight worst days since 1981….
Sterling's sudden collapse and failure to recover proved to be the signal that Britain's best days are fleeting. For most of this century, the UK was the biggest beneficiary among the 27 countries in the EU. Measured by gross domestic product, GDP per capita growth, unemployment and superior debt, equity and currency valuations, Britain was the perennial leader. All of these superlatives ended with “Brexit” almost eight years ago. The EU since then outperforms the UK, whose listless economy is now little more than an also-ran….
The average premium investors pay for the future profits generated by the stocks in the 20 countries… [in] the euro zone, is 25%…. Between 2006 and 2019… [it] was zero…. Investors perceived no difference between the… euro zone and… UK…. The market… got it right. More than 50% of the British electorate belatedly acknowledged sterling's June 2016 omen when they told polling firm YouGov in July they would vote to join the EU again…. British politicians instead show no hesitation offering prescriptions for the plight of Gaza 3,000 miles away and yet can't be bothered to discuss remedies for the failure to protect vital UK industries such as finance and data while the public increasingly blames rising shop prices, reduced health care and broken public services on the vote to leave the EU.
Far from being the bloated, inefficient bureaucracy derided by Euroskeptics -- led by former UK Prime Minister Boris Johnson when he was the fabulist journalist for the London Telegraph -- who colored the prevailing Brexit media narrative… the bloc’s per capita GDP increased 19%, or 2.19 percentage points more than the UK on annual basis since 2016…. Between 2000 and 2016 the euro zone trailed the UK by six basis points…. Britain had everything to gain from its EU inclusion and little to lose as the bloc expanded with the fall of the Soviet Union's Berlin Wall and rapid integration of Eastern European countries.… No one doubts now that Brexit hindered rather than helped the ailing British economy…
And now, for us Americans, it is very clear that we need to listen to the tolling of the bell that tells us what Britain has experienced over the past ten years as a result of that extremely unwise choice. And we need to remember John Donne: “Ask not for whom the bell tolls: it tolls for thee”.
It is becoming increasingly clear to me: Suppose Donald Trump were to stand before the cameras tomorrow and say “never mind” to all of his proposed tariffs, export restrictions, and trade-war bluster. Suppose he were to retreat from the abyss with a mischievous grin. Suppose he were to declare it all a test. Suppose he were to do all of that. Then the odds are the damage would have already been done, for we would still be living in a post-Trumpxit world.
What is Trumpxit? It is the rupture—already well underway—of the critical trust that undergirded the United States’ place at the heart of the global economy.
The term echoes Brexit, that act of political and economic self-harm that sliced the UK off from its most important economic relationships. But where Brexit was a sudden break with Europe, Trumpxit is a break with the world—and its consequences may be just as severe, if not worse.
As Winkler stressed, Brexit has already cost the UK dearly: at least 10% of its potential output gone, apparently for good. Since the 2016 referendum, Britain's economy has gone from outperformer to also-ran—its growth, investment, and productivity all trailing that of the European Union it so bitterly left behind. What makes this especially galling is that for the first 16 years of the 21st century, Britain was one of the best performers of Europe, drawing capital, talent, and innovation with the confidence that came from being an English-speaking, rule-of-law, finance-friendly EU member. And then… the fall.
The lesson? Confidence is easy to lose and hard to rebuild.
The same applies now to the United States. Even if Trump’s return were to result in no actual tariffs, capital controls, or regulator barriers forcing supply chain decouplings—even if his staff never gets around to drafting the executive orders—the mere fact of his rise, and the enthusiastic support of a large faction of the political class that knows much better for a wrecking of the globalization system, is enough. Enough to destroy what matters most: trust.
Why does this matter? Because modern globalization—our complex, interlinked world of just-in-time manufacturing, financial networks, and cross-border innovation—runs not just on container ships and data cables, but on trust. Trust that contracts will be honored, rules will be consistent, governments will not arbitrarily intervene. Trust that when you build a factory, establish a supply chain, or finance a project, the basic conditions under which you made that decision will still apply tomorrow.
That trust is gone. The United States is no longer a reliable economic partner. Its internal political volatility—symbolized but not limited to the rise of Trump—has created a situation where the rules can change at any time, by fiat, for reasons that have nothing to do with economics and everything to do with political grievance.
Even now, companies and countries across the world are scrambling to “de-risk” from America. Just as UK-based firms sought alternatives to EU supply chains after 2016, today’s global businesses are building redundancies, rethinking exposure, and rerouting trade. For decades, the United States was the keystone economy—the one counterparty everyone wanted, needed, and trusted. No longer.
This is not the end of globalization. Far from it. The global economy continues to grow. Supply chains reroute through Southeast Asia, Latin America, and Africa. Trade flows increase within Asia, led by China, India, and their peripheries. Cross-border data flows and financial capital keep rising. The world is adapting—just not around the United States anymore.
We are not indispensable. That was the conceit. We are now learning what Britain began to learn after 1870: that the world can—and will—move on.
The 19th-century United Kingdom was the world’s workshop, its financier, its empire. But it lost its edge through complacency, deindustrialization, and a political class too focused on imperial grandeur and too slow to adapt to a rising Germany and United States. From 1870 to 1913, Britain slipped from unchallenged global hyperpower to merely the third-largest industrial economy. The parallels today are disquieting. America in 2020 was still the central node of the world economy. By 2050, it may no longer be in the top three in real economic influence.
The United States has long attracted foreign investment, not just for its vast internal market, but for its legal stability and institutional predictability. Those days are ending. If capital still flows to the U.S.—and it may—it will seek only the safest, most liquid of instruments: U.S. Treasuries, perhaps. And other, opaque vehicles, mostly financial veils that mask real assets elsewhere. But not factories. Not tech campuses. Not long-term ventures.
This means less productive investment, slower growth, and a shrinking frontier for innovation. Why would a company build a chip fab in Arizona if, in four years, a government might decide it is hostile to trade with Taiwan, and might cut it off from critical parts and markets? Why build a car plant when tariffs might abruptly upend your cost structures?
We are approaching a moment when global investors may decide: better to build in Singapore, Seoul, Toronto, or Frankfurt, than in a country whose presidents govern via tweet.
Worse still, if Trump does return to power and actually imposes the tariffs his advisors have proposed—universal tariffs of 10%, China-specific tariffs of 60%—then the economic damage will be deeper still. These are not strategic trade policies. These are economic neutron bombs.
Tariffs would cause prices to rise (by raising import costs), while also dampening investment and consumption. It is classic 1970s-style stagflation: inflation up, growth down. The Federal Reserve, which is already struggling to balance its inflation and employment mandates, would be left with no good options. Raise rates, and worsen the slowdown. Cut them, and lose the inflation fight.
Monetary policy becomes a toothless instrument in the face of trade-policy madness. And that is to say nothing of the likely retaliation: Europe, Canada, Asia will not take 60% tariffs lying down. They will strike back—and American exporters, American farmers, American workers will pay the price.
In Slouching Towards Utopia, I wrote that the story of modern economic history from 1870 to 2010 was a story of growing material prosperity, of technological advance, and of the management of its distribution in the context of mammoth sociological and cultural shifts. But, I said, that story ended in 2010 and a new one began. I expected the new story to focus on managing the difficult transition to a decarbonized global economy—to tackle climate change while still spreading prosperity.
That story still matters.
But another has taken center stage: the story of America’s relative economic decline.
This decline, like Britain’s in the late 19th century that carried it from hyperpower down to industrial nation number 3 and technological laggard, is not inevitable. But it is a choice—a political and economic own goal driven by short-termism, nationalism, and political dysfunction. We could still turn this around. We could reaffirm our commitment to rules-based trade, multilateralism, and innovation. We could strengthen alliances rather than tear them up. We could trust in the world—and give the world reason to trust in us.
But that would require political leadership, vision, and humility—qualities in short supply today.
Six months ago, I imagined a world in 2050 shaped primarily by technological progress and the success or failure of decarbonization. A world where America might still be a leader—not just in GDP, but in norms, standards, and ideas.
Today, I imagine something very different.
Today my most probable scenario for 2050 is a world where not just China but India has surpassed the U.S. in economic scale, and China has overtaken it in global influence. Where global value chains are centered on Asia, not the Pacific. Where the dollar is no longer the unquestioned global reserve. Where America has turned inward, bitter, and poorer than it could have been. A world where the economic historian of 2100 looks back on 2025 not as the start of a great reshaping, but as a tragic inflection point.
Brexit cost the UK at least 10% of its wealth. The damage from Trumpxit could be larger. Perhaps much larger. The optimistic case is that the long-run effect is just the shattering of trust. The pessimistic case is that the tariffs come, the trade collapses, and the U.S. loses a generation of growth.
Trumpxit. Brilliant. Trademark it.
This has an awesome grasp of economic history, which makes it so depressing. As the Republicans often say: elections have consequences.