My Take | Trump wants power without the responsibility, abroad and at home

It’s been called the Nixon shock. In August 1971, the late Republican president announced, without prior warning, that the United States would cut loose the dollar from gold. Since the signing of the Bretton Woods Agreement in 1944, the gold-linked greenback had been the bedrock of the global monetary system based on fixed exchange rates.

But by the late-1960s, the dollar was highly overvalued. Exports suffered; inflation and unemployment were starting to worsen, along with business competitiveness. Trade deficits were looking increasingly locked in. The US was printing more dollars than they could be backed by gold.

The “Nixon shock” was America’s ruthless response. Domestically, it was a big hit, despite some controversy. Globally, it created a complete mess, throwing the international monetary system into disarray. Presented as a fait accompli, foreign leaders had no choice but to adjust to the new reality. Sounds familiar?

What the episode teaches the world is that US leaders can overturn a regime, monetary or political, on a dime when it no longer suits its interests. Seen in this light, Donald Trump’s threat of “reciprocal” tariffs against anyone he claims is discriminating against US exporters – and that includes not only other countries’ formal tariffs, but their regulations, sales taxes and exchange rates – may be less shocking.

But you say, that’s just his negotiating tactic; it’s Trump being Trump. Well, there is negotiation, and then there is threatening to beat up someone. And we are not talking about just trade with the US. It’s defence spending (the European Union), territorial controls (Greenland and Panama), access to valuable minerals (Ukraine) and border disputes (Canada and Mexico) – the whole shebang.

What Trump is doing may be shocking to people with short memory or too young to remember. But in light of Nixon, it’s hardly unprecedented.