School of War - Ep 186: Walter Russell Mead on Trump, Strategy, and Mercantilism

Episode Date: March 25, 2025

Walter Russell Mead, Alexander Hamilton Professor of Strategy and Statecraft at the University of Florida's Hamilton Center and columnist for The Wall Street Journal, joins the show to talk about the role of economic issues in Trump’s strategic views. ▪️ Times      •      01:34 Introduction     •      04:09 Mercantilism & physiocracy      •      08:50 Silicon Valley      •      14:01 Coalitions       •      16:26 How things worked        •      22:52 Post-war policy & China      •      33:17 Tariffs         •      42:50 Executive overreach      •      45:53 The dollar  Follow along on Instagram, X @schoolofwarpod, and YouTube @SchoolofWarPodcast Find a transcript of today’s episode on our School of War Substack

Today's episode is part of an ongoing effort here at School of War to wrap our minds around the current strategic moment. Today, we're going to focus on refining our understanding of how Donald Trump sees the world. In particular, we're going to talk about the role that economics plays in his revealed strategic preferences. And who better to talk about such things than Walter Russell Mead, joining us today for the first time. Let's get into it. A date which will live in history. A bloody experience of Vietnam is to end in a state. We continue to face the great situation in the ground.

We'll fight on the beaches. We shall fight on the landing grounds. We shall fight in the fields and in the streets. We shall never surrender. For more, follow School of War on YouTube, Instagram, substack, and Twitter. And feel free to follow me on Twitter at Aaron B. I'm Aaron McLean. Thanks for joining School of War. I am delighted to welcome to the show today,

Walter Russell Mead, who is the Ravenel B. Curry, the third, distinguished fellow in strategy and statesmanship at the Hudson Institute. He's also, and this is a new development and an exciting one, the Alexander Hamilton Professor of Strategy and Statecraft with the Hamilton Center for Classical and Civic Education at the University of Florida. And of course, he contributes the Global View column at the Wall Street Journal. Walter, welcome to school. of war. Good to be here. We are audio only, so I feel like I should inform listeners that you are showing already your Florida school pride with your gators tie. It's a pretty important piece of apparel, especially during March madness down there. How are we looking there? How are you

feeling? I'm really enjoying it. They do warn me that if you get a swimming pool in Florida, you can expect gators in it, not like students, but gators, four-fielding gators from the swamp. checking out your pool in the spring. So look before you leap seems to be a very important idea here. Well, the way students would also be alarming, you know, if you didn't invite them. You know, if you just walk out and some students in your pool, that's probably awesome. That would also, that would be a bad day, yes. So, Walter, I regret, and it is my fault entirely that we have not had you on the show up till now,

because there are so many subjects that we cover that you're really well positioned to speak to in a really thoughtful way. My subject today, though, you're perhaps one of a very small handful of people who could help me and help our listeners understand. And that's the subject of the role of economics in strategy and then in particular how Trump views the role of economics in strategy. And I have this theory that I want to run by you, which is that a lot of observers of America during the second Trump administration underrate the significant. of economics for Trump's thinking about the world. Strange as that may seem after all these years, but that when you see the news, for example, apparently just yesterday, he apparently said to Zelensky on the phone that he wanted some sort of American

ownership stake in Ukrainian energy facilities, the Ukrainian nuclear plants. Or if you look at the idea of the Trump Riviera in Gaza, that the United States is going to have some sort of, I mean, the flippant way of talking about it is like some sort of Trump resort. A different way of talking about it would be some sort of East India company type commercial concern. Like these are not the policy visions of an isolationist. They're also not exactly interventionism as we have come to understand it in recent American

history. There's something else entirely. And I just want to put it to you, you know, that Trump is not an isolationist, that he has some sort of economic vision that's central to his grand strategy and that has some. something to do with a very old idea, which is mercantilism. And I wanted to solicit your reaction to that. Yeah, I mean, certainly just that there is a clear way in which Trump is mercantilistic in his thinking and that he thinks that trade surpluses are good and trade deficits are bad. And that's almost the, you know, that's almost the definition of mercantilism, though.

Honestly, it's a little anachronistic since people didn't really talk about trade deficits and trade surpluses in the 18th century in the heyday of this. But he does clearly believe that a country that makes a lot of stuff and sells it to other people is in better shape than a country that just buys a lot of stuff from other people, more independent, is creating more jobs and so on and so forth. I'm not sure that I would, I mean, yes, it's more canalistic, But sometimes I think about physiocracy as almost a better analogy, another 18th century economic idea. You're going to have to spell that one out for me. I'm looking at you on the camera here and you were nodding so wisely.

You know, it was a perfect nod. I thought you were. My instinct to pretend that I know what I'm talking about. Did you go to a liberal arts program sometime in your youth? You have a seminar. We're nodding while the professor droid on about the reading. Well, it's a form of code switching because then also feigned ignorance often works well in the podcasting format.

But actually, in this case, it is real ignorance. Right, because it looked to me like to say, well, could you explain that for our reader, our listener? Yes, for those listeners who foolishly don't know what physiocracy is. Yeah. Well, this was an idea that a number of French thinkers had in the 18th century where the only real value was produced by farmers who produced food. And everyone else was kind of parasitical to that. So, you know, manufacturers making like silk gloves, they were eating food, but they

weren't making food. And there's a sense in which the approach to manufacturing in this administration is a little bit that sort of services aren't real, you know, real economic. activity. It's the people who make things. It's the manufacturer bashing metal is doing something more somehow than, you know, someone who is packaging something or designing something or another way selling a service. And so they want to, they want to step up our focus on, on manufacturing, making real things. And I think both of those in a way are, as economic ideas, a little bit simplistic, there obviously is some truth in both of them. If no one was growing food, we would all be in bad shape, no matter how many beautiful silk gloves we were making.

And also, if we always ran a trade deficit from here to the end of time, we would at some point get into a lot of trouble. So there's some truth in both of those. it's hard at, you know, we look at the stock market response to Trump's early moves in foreign policy, in foreign economic policy with tariffs and all. And we can see that not everybody buys the mercantiless theory of trade here. There is one way in which what you've been saying for the last couple of minutes seems to make a kind of sense. And it's when you think about national security concerns and the need for an industrial base that produces, as it were, real things in the form of ships, in the form of munitions, et cetera, where there is general

consensus that we have fallen radically behind. But that's a much narrower version of the idea. That is say, okay, well, maybe we shouldn't have outsourced all the production of critical defense items to China. That slightly overstates the reality, but unfortunately only slightly. Maybe we should have actually spent more and done things that were viewed in pure economic terms as a little irrational to make sure that we had an industrial base that could support the kind of war-making capacity that we need to stay safe. I don't think anyone, we're not going to be with much disagreement on that front right now. But what you describe, in my suspicion, you know, what Trump actually believes is much, much broader than that. Yeah. Because, you know, for Trump, this was his approach to Japan back in the 19. 70s and 80s was where there really wasn't a national security dimension to our trade deficits

with Japan at that time. But Trump was very exercised about them, about them, as were many Americans. But I, you know, I think there's also, there's something a little bit more going on here and in some always more interesting because if we think about the difference between the first Trump term and what we're looking at now, what we see is the big difference is Silicon Valley. That, you know, in the first term, yes, there was Peter Thiel and a few other voices, but that were in support of Trump, but they were seen as weirdos and the rest of the rest of the tech world was, you know, trying to disown them and whatever. But this time what we see is that some of the core figures, you know, whether you think of Mark Zuckerberg or obviously Bezos now, you know, Trump, Elon Musk,

that the tech universe, the techniverse has embraced the Magaverse. Well, how does that fit into the seeming embraced by the president and the administration to restore, you know, manufacturing, right? Is it the center of a lot of this? I guess Musk is an unusual case because he does make things. He makes cars and rockets and what have you. But a lot of these other companies or figures that you're mentioning or alluding to, you know, like these tech companies, you know, they don't make things for the most part.

They're making software to the extent they're making things. And they are providing services at a massive scale. So how did that help me understand how those? two things go together? Well, I think if you're, suppose you're one of the tech companies, it's more pure IT play, you don't import very many manufactured goods, a few chips here and there, or, you know, a lot of chips, and you're very concerned about security of supply, right? So definitely you're all about not getting a bunch of Huawei chips in your proprietary systems,

proprietary systems. But, you know, you don't necessarily really care if there's a bunch of tariffs on goods that you're not, that your business model isn't involved with. So you could, you know, in fact, that's a tax that other people are paying. It's almost a subsidy to you. if the federal, to the extent that the federal tax burden went from excise taxes on what you produce or income taxes that you pay went to tariffs on things that aren't key to your business model, that's lovely. But you would also say, if you're a tech company, do you really care that much about low-skill immigration? Honestly, you don't.

I suppose, you know, you get a MAGA president like Donald Trump. And he says, I'm going to close the border, no low-skill immigration. If you operate a chain of fast food franchises or a apartment building company or any other kinds of companies that rely on, you know, constant stream of low-wage labor, this is going to make you very unhappy. but Palantir is not hiring a lot of low-wage immigrants. And if because the border is closed, the landscaping companies have to charge more for labor. And so the landscaping bill at your campus is now 30% higher. This is not a real problem for you.

It's just a small incidental expense. So these companies actually do not care about some of the ways in which MAGA populism is seen by other Republicans and sort of conventional economic thinkers as some kind of anti-business populism. They don't see it that way at all. Same thing, by the way, on labor unions. I don't think that what keeps Andy Karp up at night is the fear that the employees, at Palantir are going to form a labor union and adopt all kinds of union work rules and drive up his labor costs. That's not his issue. And so if you want to let sort of populism have free reign, why wouldn't you go ahead and even be in favor of some of these things?

Well, the picture you're painting there then, I was about to say, is more one of tolerating things that don't affect you rather than advocating for things that directly benefits you. Yes, but that's, again, if you think about politics and coalitions, how do you get a coalition between kind of Jacksonian populism and the corporate world? If you think of it, that's been a continual problem for Hamiltonians in American history because, you know, Hamiltonians are not a mass constituent. That's been a problem since the Federalist Party. Where are the soldiers that are going to be, you know, they're going to fight for your party?

And it was a problem for the Whig Party. The Republican Party solved that for a very long time. Arguably, what you could be seeing here is not so much Trump as a backward-looking figure looking to, you know, mercantilism and 18th century ideology. but a 21st century figure who's thinking about a different balance between free market theory and American politics and corporate America's to-do list. That's really interesting. At the risk of define that possibility that you just outlined, I did want to ask you a

backward-looking question, though, just to kind of help listeners orient a bit better on the conversation that we're having, which is to say. say we live here in 2025 in a world where, or at least in America, I should specify, where all of a sudden going to a high tariff system where we are emphasizing trade surpluses, manufacturing at home, et cetera, seems sort of revolutionary. Of course, you go back far enough. It wouldn't have seemed revolutionary at all. And yet the world and the Anglo-American world did evolve from a more mercantilist place to a place

where something like free trade was more the dominating. principle. Would you mind talking for a moment about why that evolution occurred? You know, maybe start with, how did things used to work? You've written, people probably know your books, you know, your most recent book is Ark of the Covenant about the U.S. Israel relationship and then you're famous for special providence. You wrote a brilliant book called God and Gold about the Anglo-American strategic tradition in which economics plays a central role. How did things used to work and why did the Anglo-American tradition move away from them? Right. Well, a lot of it had to do with English.

politics in the 19th century, a subject that I know that all of our listeners are endlessly fascinated by. But traditionally in Britain, you had a kind of a landed interest of gentry, farmers, earls and dukes and whatnot, who owned large countryside estates and didn't really want to pay a lot of tax on their income. Land is easy to tax because everybody can see how much of it you have, and it's easy to more or less measure the income of a landed farmer. And then you had manufacturers and merchants in the cities, and who was going to pay how much tax?

one of the ways that the landlords had the landed interests had shaped things in their favor was to say, okay, we're going to have very high taxes on imports of grain because this will protect the security of our grain supply. Manufacturers hated that for among other things, since they had to pay workers enough to buy the food they needed to live on, the higher the tax for grain was, the more expensive bread was, so the more manufacturers were having to pay wages for it. This made free trade theory very popular among manufacturers and also among workers. You know, you tell somebody who's working in a factory or just trying to feed a family,

that the reason that the loaf of bread that you eat costs so much is because of tariffs that are men, to benefit the wealthy aristocrats living in splendor on the land, this does not make you happy. You get a lot of political agitation coming into repeal of the corn laws. Corn is what in England they often call it any grain of wheat of any kind. So this can cause a certain amount of confusion between Americans and Brits at various moments. But okay, repeal of the corn laws, big event in English political history. And then you shift over into free trade with the idea that goes back to, you know, Adam Smith has been, was advocating for this in 1776, saying that specialization of labor raises general

productivity, that if you can buy things more cheaply from somewhere else, that raises people's living standard, economists develop theories of comparative advantage, that if Ireland can grow potatoes better than France, and France can make silk gloves better than Ireland. They're kind of both better off if Ireland grows a lot of potatoes, and France makes a lot of silk gloves, however you cook it. So you go from that to also then English manufacturers really want to be able to sell a lot of stuff internationally, because in the 19th century, they had a technological lead. They had marketing leads. They really knew what they were doing. So opening markets in other countries to British commerce was a very big deal. And the Brits pushed for free trade policies,

not only for themselves, but for the whole world. And that made Britain a lot more prosperous, accelerated the rise of its manufacturing. But other countries, including the United States, caught on to something here, which is we'll have tariffs against British goods coming into our markets. This will encourage the development of our domestic manufacturers who'll get big in our markets, like in the U.S., we had a large national market, bigger than the British national market. And so then we will sell, you know, once our companies get really good and established, they'll be able to sell globally too. So free trade, you know, works really well at the zenith of British power, but as other countries catch up with Britain technologically and also aren't playing fair,

are having high tariffs themselves while enjoying the British free trade system. This ultimately, by around 1900, you start getting a lot more people in Britain beginning to, to think, wait a minute, is this really working? And they start looking for a thing, they call it imperial preference. The idea will give preference to other countries within the British Empire. So Canada can trade freely with Britain and Britain can trade freely with Canada, but the United States, well, maybe we should have some reciprocity going here. It's a big argument that the issue of trade after having been a very consensus thing in Britain, the zenith of the free trade era, starts becoming more controversial.

Well, it sounds a little bit like here in the United States, I mean, over time, over the course of the 20th century, moving to a more and more liberal, liberalized free trade system, which worked well at a kind of zenith until China was admitted into the WTO. And again, this is, I mean, if you sort of set aside Trump's sort of maximalist critique of the system, you'd find a lot more consensus, again, approaching, I think, near universal consensus, certainly on the right and probably to an extent on the left as well. It is the China shock that is the most significant factor here. It is the factor which is most important in the diminishment of American manufacturing. And if there's any place where there is a case for, for raising barriers on trade and economic exchange. It's with respect to China specifically. And then this administration and Trump seems to then take the idea much further and apply it to all sorts of other countries that weren't really in the conversation

before Trump became a major political force. Well, I think you have two eras of trade policy layered on each other. The first one is after 1945 as the U.S. is looking at how to, do you get the world economy back from World War II? And then as the Cold War takes shape, how do you solidify Western Europe and other countries in the free world for the fight against the Soviet Union, the Cold War, allowing other countries to discriminate against American goods to some degree. And while America accepted their exports, was seen as a worthwhile tradeoff for two reasons.

One is you had to get these economies going again. You know, they needed, they basically needed dollars. They, because that was the only currency with which you could really buy a lot of stuff back then. So they needed to be able to run trade surpluses with the U.S. or really cut their trade deficits. So we allowed our European allies, Japan, Taiwan, others to go right ahead and develop a discriminatory, discriminatory tariff system. And arguably in 1990, when the Cold War ends, and these countries, by and large, you know, the Germany's, the Japan's, don't really need a helping hand from the United States.

That would have been a really good time to rethink this stuff. But meanwhile, at the same time, also you have not just China, but you have India. You have a, you know, Singapore, Malaysia, Indonesia, a lot of countries who have adopted this development model of you become a cheap source of goods, which you then trade into a richer market. And that's how you bootstrapped yourself up. By the way, I think the place where this was really invented was in the American South after the Civil War, where the South didn't have any capital and so on. And so all it had to offer was lower wages, less regulation. And so it tried to entice northern capital in there. And then it could sell into the common market of the unified American national market behind a tariff wall

in many cases. And so the South kind of pioneered the strategy which other people have borrowed globally. Yeah, you wrote a great couple of pieces in tablet about this. I did. If I say so, myself. So in, but in 1990, you get this, you start getting the other thing, which is the pressure for China into the World Trade Organization, which is the new, a new organization that was going to really regularize trade. And here, this was a disaster. And Trump is absolutely right when he talks about it as a disaster. And there were several things wrong with it. You know, China, we did not insist on either rules that were tough enough to prevent systemic cheating by China or an enforcement mechanism that could enforce the rules that were there, very slow, very weak,

kind of like all international organizations. It just, it actually doesn't work very well because none of the parties to the agreement really want an organization that's strong enough that it can effectively make them do things they don't want to do. So it's kind of a worthless. It's a weak cop who's also enforcing a bad set of rules. But what I think makes a lot of Americans, ordinary Americans, mad is that the American corporate sector, rather than saying, wait a minute, this is atrocious. China's systemic cheating is going to be terrible, said, great, I'm going to build a factory in China and I'll take advantage of China's ability to cheat. I'll get subsidies.

You know, the Chinese in order to get me to invest there are going to give me subsidies, tax holidays. They're going to like kill any of my workers that don't like the working conditions that I have. They're going to push people off the land so that I can have a cheap, simple land purchase agreement, all of this stuff, right? And so corporate America bought into China's systemic cheating. that has set off a lot of a populist anger that Trump taps into. And it's legitimate.

It's legitimate. This has nothing to do with abstract theories of free trade. Now, under pure free trade and China weren't cheating, it would benefit from trading with the United States, but it would not have become a kind of an economic and geopolitical superpower and peer rival in 30 years. But it isn't just America that China cheated, obviously the Europeans and others, but we think about, you know, the failure, say, of the Arab world to industrialize, of Egypt, a country which has a lot of poor people in it, and which who, who, who, who, who, who, who, who, who, who, who, who, who, who, who, who, who, who, who, who, who, who, who, who, who. would be very, very happy to have jobs making goods for the European market, which is just across the Mediterranean from them. And it would be, Europe would be a lot better off if Egypt, if some of the factory development that had gone on in China had gone on in Egypt. But China was good

enough at what it did and ruthless enough at the way it did it, that it made it much more difficult for countries like Egypt to get onto that manufacturing path. You speak of this popular anger and justified anger with regard to China. You know, one thing that struck me some years ago was even though, you know, in general, foreign policy is not a common matter of, you know, conversation or concern for the average voter. And the numbers bear that out, whatever poll you look at. It was always striking to me that the exception to this, and, you know, I saw polls that indicated this was the case in perhaps surprising places. So China was the exception.

China, people did think about China and they knew they didn't like it. And they knew that if the politician that was representing them was tough on China, they liked that politician a little bit better. And, you know, the same people who felt that way would not be surprising to discover. There are also the people who feel like elites are screwing them. And as you lay it out, they were. There's some truth to the matter that there was a collusion between, collusion makes it sound perhaps more systematic and centrally controlled than in reality it was, but there was a natural following of incentives such that corporate America was in fact cooperating with a kind of Chinese mercantilism, which by the way was being centrally manipulated by Chinese authorities

to strategic ends, which are now really biting, really biting. Exactly. Right. In ways that massively disadvantaged Americans, but also now America. And it was not, again, it was not, it was not kind of Adam Smith case of using, you know, your comparative advantages, or Ricardian, I suppose I should say, that, you know, yes, China does have certain advantages. And in any free trading system, China would be a place where a lot of people would want to import, you know, import and export from. But what China does is it systematically direct state credit to certain things. It favors industry.

at all levels of government, as we say, it suppresses any kind of labor organization. It uses political prisoners or groups like the Uyghurs as, you know, low-wage laborers for things like this. You know, so that it, you don't just have, it's not one firm in America, factory in America, innocently competing with a factory in China. It's a country in China that is trying to destroy the factory in America for strategic ends. And so, and for people, sort of for the average American voter to be hearing all these years from the kind of business establishment and the intellectual establishment, some degree in a bipartisan way that, oh, well, this is just free trade, this is the invisible hand of the market. Okay. It wasn't true. It wasn't true. It wasn't true.

So, you know, taking a tougher line on China, tariffs on China, you know, one way or the other, trying to unscrew this situation and restore it to some kind of sanity. That on the right is like an 80, 20, 90, 10 issue maybe with pretty broad popular appeal, I would say across a lot of Americans. One of the interesting things about China is it is a kind of bipartisan issue to this day. And the labor unions and the human rights activists who tend to be more vocal on the left than on the right have always had kind of. of an anti-China streak, even if maybe not quite extending that, not always extending their

views to the security questions. That all said, this administration's going much broader than that. It's not all about China. It's about Canada. It's about Japan. It's about the Europeans. It's about countries that actually we kind of need if we're going to stand up to the Chinese desire to run the show. And I want to ask you about how you think this is all going to work out. I want to ask you related question what this is going to mean for the dollar, which is obviously central. Maybe you would speak to this. Like the role of the American dollar in international economics is central to American power. But if we want to jack up tariffs and we want a weaker dollar to help exports, you know, how is that going to play out?

The markets are, we'll just say they're nervous, though maybe that shouldn't. The president doesn't seem to think that that is going to hold him back in the way that maybe it did during the first. term. Walter, help us understand the stakes here and where things might go. All right. Well, I mean, you know, you just asked a very complicated set of questions. I did. I did. I'm sorry. You know, we live in a complicated world. So I would expect a question. Wouldn't be a simple question. But look, to distinguish several things, I talked about that post-World War II set of tariff arrangements. Part of what Trump, when Trump is talking to Germany and England and Japan about tariffs and South Korea. He's really saying, you know,

we don't need that 1948 deal anymore where in order to help you guys recover from World War II, we allowed non-reciprocal tariffs, right? And we, all right, and so that's an agenda item that he has that it strikes me as perfectly legitimate, considered abstractly, why should the EU charge higher tariffs on American cars than America charges on European cars? Now, you can argue that if we respond to, like, Europe has, let's just say hypothetically, Europe has a 10% tariff on American cars, and we have a 1% tariff on EU cars. I have no idea what the real numbers are, but here we go. We're both liberal arts majors here doing in a wicked world. You do a better job of faking it than me. So, all right, so if you raise our tariff on cars to 9%, right, to 10%,

you're basically just making it harder for Americans to buy that Mercedes-Benz state they want. They're not getting anything from it, right? So you could make the argument that just following their bad behavior makes everyone worse off. And so why should you do it? And that is the pure free trade argument against Trump's tariffs on these well-established allies. Trump would answer the only way, the only way to get them to reduce their tariffs is for us to give them a taste of their own medicine. And then, you know, when they see that, then they can agree. And he sort of repeatedly says reciprocity is a beautiful word. And I think if the EU were to seriously

come to the U.S. and say, let's do it. Let's be serious about reciprocity and do it. I think you might see a Trump administration coming with a very free trade approach. to the European Union, right, or Canada. Now, actually, with Canada and Mexico, there's another wrinkle, which is that some of that is really about Canada. Sorry, about China. And that because we have this North American free trade area, that China would love to get its nose under that tent.

And so have a factory in Mexico say that basically assembles a lot of parts that were made in China and then pushes them over the border and it gets free admittance to the U.S. That that's, and it says the higher, the more we try to change our trade relationship with China, the more China is going to look for loopholes like this. So I think to some degree, the Trump approach to Canada and Mexico is, all right, if we're going to have a North American free trade area, then it needs tougher rules about Chinese products, which, again, I think is legitimate. Now, if I were president of Mexico or the Prime Minister of Canada, it might say, Mr. Trump, Mr. President, you were president just one short

term ago when we revised NAFTA. And you told us we had a deal and it was a beautiful deal. And that's the deal you're challenging now. So I sign another deal with you. What guarantee do I have that 18 months from now you're not going to come at me again? So I think you can argue legitimately that even if the underlying goals there are smart, the tactics have not been stupendous, right? Okay, so that's the trade dimension of this stuff with our rich allies. Now, with our poorer allies, it's more of an issue because Indonesia and Malaysia and Thailand

and some of these other countries are going to say, look, okay, we're not as poor as Japan in 1948. We're not starving. But for our government to be stable, our economies need to grow. And our economies need to be able to grow by, we're a poor country. And we need to be able to export to rich countries in order to grow the way so many other countries have done. And you want us to align with you against China. Okay.

So like what's in it here? What's in it for us? And how do I tell my voters that this, that working with the United States helps them? So there's a other than, so there's a different case for tariffs. and poor countries. And arguably, there's a stronger case for allowing some carefully monitored and controlled non-reciprocal tariff arrangements with key allies, particularly close to China or whatever. There's that. But then at the same time that we're having these trade fights with our and getting back to our rich allies.

You know, if Trump is saying, I want Canada to be the 51st state and people go, oh, ha, ha, ha, ha, you're just kidding. He says, no, no, I really mean it. You know, I want them to be the 51st state. Ha, ha, you couldn't possibly mean that. Yes, I mean that.

Right. Then, and you put, you, you stir the trade stuff into that mix. You have something rather potent. And in the same way, if Trump is sort of flipping, you know, putting into question, where does NATO stand in the hierarchy of foreign policy? And so I'm going to fight the Europeans, not just about tariffs, but also about defense and whether, you know, how strong am I going to be for NATO, blah, blah, blah, blah,

blah, you have, instead of a sort of specific economic fight over a set of issues, you get into kind of a general fog of anger and polarization. I guess the president thinks in some ways this maximizes his leverage, because we should not forget that the way Trump has managed and Biden followed him in this to get trade law interpreted. The President of the United States can basically tariff anything he wants to any level he wants. Now, no president is going to want to give that power up. Among other things, it's like I can now say to almost every CEO in America what their stock price is going to be because I can tariff your business into a crisis or I can give

you some kind of relief and make you rich. Gosh, you know, I need some help with my reelection campaign. or I need with my presidential library or whatever. So this is huge power. And again, to any congressperson, like, I can devastate the industries in your district or I can make the industries in your district really prosperous. So that's a sort of another dimension to this whole tariff thing, which has nothing to do with free market theory, alliance policy, or anything other than

domestic politics. You know, it's sort of insane that the Congress effectively has given that power away, but it has. That ship has sailed and like a lot of other ships. There is a, there is an interesting potential future here, by the way. This is a bit more about domestic American politics than grand strategy, though. We're right now sitting here in, you know, March of 2025. Everyone is talking about Trump as an, you know, an expansionist force for executive power in some ways that's obviously true. In other ways, it's a continuation of trends that President Biden was happy to.

to embrace himself. But there's a future here where, you know, if things go wrong, there's a recession or whatever, the Republicans lose the Congress, maybe even the Senate, that that seems unlikely given the math. But you could see one outcome of this, one outcome of this administration's policies is actually a restriction, restriction of presidential power. Because if you have the Congress in the hands of the other party and so absolutely galvanized by what they see as executive overreach, I don't know. I could see it. I don't think it's likely because the trend line seemed to always run the other direction. But it seems possible at least. Well, it's interesting. If Democrats were smarter and more serious than they are, the time to have done something would have been, you know, during the lame duck session of Congress after the presidential election, you might have been able to get 60 senators to sign on. to a sort of, you know, ending certain national emergencies, you know, sort of looking very

seriously at the basis of these kind of massive executive orders and just taking away the legal foundation of these things. But for all the talk about how this is an existential fight to save democracy and Trump is a future autocrat, all of this stuff, as far as I can tell, there really wasn't any kind of effort. Republicans wouldn't have given the Democrats everything they wanted, but there are a number of Republicans in the Senate. The other word name Rand Paul comes to mind and others who in principle would like to see limits on the executive.

I think you could probably get 60 votes if you were very intelligent and very thoughtful. The fact that we didn't, you know, This just tells you in a sense how far the U.S. Congress is from being a body that can reasonably exercise the powers that it has under the U.S. Constitution. And because we actually do need a government and we're going to have a government, there's a law of nature stronger than any constitution or anything that society will have a government. and that government will do the things that society that must be done. And because Congress is just unable or unwilling to take to play the role the founders assigned to it, basically the executive and the judiciary are kind of carving out their own slices.

And while it's far less than ideal, we do in fact need government. I want to be respectful of your time, but one last question before I let you go. I want to come back to you on this issue of the dollar. I want to ask you to explain why the dollar matters to an audience that is mostly interested in military and security affairs, but how that question sort of underlies so much else that the United States is capable of doing. And then just speculate for, you know, a few seconds, if you would, on what everything we've been talking about in terms of Trump administration policies might mean.

for the role of the U.S. dollar in international economics. You know, presumably if you want to buy less stuff from the other guys and sell more of our stuff to them, that means you want a weaker dollar. Help us understand how this might play out here in the years to come. Well, I guess I am not as much of a dollar fetishist as some people are who follow these issues. A lot of our enemies think that the core of American strength is the reserve, the fact that the dollar is the international reserve currency. And there's certainly some things that we get benefits from. It's easier to sanction people who've annoyed you. I would feel that was a more important

power if I thought that sanctions accomplished very much. In general, I think personally that sanctions are a way of when you don't want to do something. You don't really want to do something serious about something, but you don't want to admit either to yourself or to anybody else that you're not going to do anything serious. Sanctions are the great way to go. It's the foreign policy version of sending something to committee for study, you would say?

It's a blue ribbon commission. I sanction this. I sanctioned that. It's especially important for Congress because people in an American In American society, people get mad and they want their congressman to do something. When it comes to foreign policy, there are not many things that Congress person can do, right? Congress's ability to legislate foreign policy is small.

Sanctions are something you could do. So I think that is fundamentally why we have as many sanctions as we do. And there, I would say that by and large, international reserve currency of the status of the dollar has exposed us to dangerous temptations. which we have signally failed to resist and led to a kind of indisciplined and careless use of sanctions which cumulatively undermine confidence in American competence and leadership, and which also create a kind of a delusional atmosphere in America and an American public opinion about what our country is and isn't doing in the world. So there's that. But also, you know, there is a great thing about, you know, being, having an international reserve currency,

which is that other people, you know, we issue dollars and other people keep them. There's a great story when Calvin Coolidge had retired from being president. He was in his cottage in Vermont, you know, his place in Vermont, his house. And a local carpenter came by because he needed his front steps fixed. Carpenter fixed him. And Coolidge says, well, how much does that cost? And the carpenter said, that's to be $5, Mr. President. And so Coolish picks out $5.

The carpenters, excuse me, would you got a request, would you mind autographing that for me? Just because I don't plan to spend it. I just want to, you know, show my kid that I did work for the president of the United States. We're going to keep it. As a member of that, the coach said, really? He said, you just want to keep it? You don't want to spend it?

Carpenter says, yes, sir, that's exactly it. And cool, he said, well, he says, in that case, would you take a check? And this is what, to some degree, having a reserve currency lets you do is write a lot of checks that won't be cashed. And so when the U.S. has a budget deficit, we just like issue paper. And it's a wonderful paper. You know, we issue certificates that say, and you can know that they're worth something, because they say, if you take this to the Treasury of the United States and present it to the Treasury Department, we will replace it with another certificate of equal value.

And that, you know, that's a good business. And it does, again, though, it tempts our politicians into amazing irresponsibility. Because if you can delude yourself into the fantasy that borrowing doesn't hurt, you lose any sense of prioritization and discipline about spending. And it is pretty clear that that's one of the kind of serious governance problems that we as a society have. We don't prioritize. We don't strategize. We just spend, spend, spent.

We're getting ourselves in a lot of trouble. So, again, for these reasons and some others, I don't actually think that the reserve currency status of the dollar is the kind of citadel of American strength. that we lose that, everything is gone. After all, the dollar was not a reserve currency when we became a global superpower, right? It was no obstacle to our becoming a superpower. To any degree, that role of the dollar was a consequence of our power,

much more than a cause of it. Now, I want our enemies to continue to believe that attacking the reserve status of the dollar, is like the most important way they could defeat the United States. I want them up all night scheming with these, you know, weaving complex plots, et cetera. And if they want to like add to that and the international Jews who control finance and, you know, let them go completely crazy on insane theories of how the world works, much better for them to do that than to be thinking about useful things.

All of that said, in general, you're better off if you're current, the more your currency is worth, the better off you are. And that's not just because we can all have much nicer travel overseas. It's an expression of the world's confidence in your economy fundamentally. It's their desire for the goods that you produce. People want to hold dollars because they want to buy goods in the ISIS, but also because they want to buy stocks in American government. The American stock market has been a terrific place to have your money. Do you want it to become a bad place for foreigners to put money? No, I think not.

You couldn't do that without reducing the wealth of Americans. So I'm in the odd position of not agreeing with the Trump administration's belief that it should be a concern of the United States to reduce the value of the dollar, but also not really in agreement with people who think that that defending the reserve currency status of the dollar should be the sort of, you know, the guide to our national strategy in any sense. Walter, this has been a really fascinating conversation. Obviously, we could keep going for a long time like this.

Maybe you'll come back sometime and talk about your own view. We've talked a lot about what others think is the wise thing to do in economic and foreign policy and critiqued it one way or the other. We should have you back to talk about what you think the wise thing to do is and your idea of patriotic markets. Oh, come on. Critiquing other people is so much more fun and easier than putting forward

constructive solutions of your own. And now that you are officially the Hamilton professor at the Hamilton Center. For strategy and statecraft, man. But it suggests that you have things to profess. And I guess it's a little on the nose. I suppose you might now finally conclude from a Hamiltonian perspective. There we go. Yeah, as the Alexander Hamilton professor at the Alexander Hamilton Center,

I do find myself thinking about what would Alex say. Walter Russell Mead, thank you so much for your time today. It was great. Good seeing you. This is a nebulous media production. Find us wherever you get your podcasts.