The US is on its way to becoming a ‘failed state’  — but there’s hope

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Getty

  • “We are increasingly becoming a failed state because we cannot manage the economy to keep Americans safe and we cannot manage conflict among us,” Susan Aaronson, a professor of international relations at George Washington University, told Business Insider.
  • Trump’s trade war has alienated US allies and strained military relationships.
  • A new Dallas Fed study shows the steel and aluminum tariffs will shave a quarter percentage point from annual US economic growth in the long-run.

Punitive trade tactics against NATO allies. A looming trade war against China. Military threats against Mexico. War bluster on Twitter.

It all adds up to a United States that is no longer viewed as a reliable partner around the world, either in security, trade, or much of anything.

“We are increasingly becoming a failed state because we cannot manage the economy to keep Americans safe and we cannot manage conflict among us,” Susan Aaronson, a professor of international relations at George Washington University, tells Business Insider. “That is deeply worrisome.”

A new study from the Federal Reserve Bank of Dallas estimates the likely negative effect of Trump’s steel and aluminum tariffs on the US economy – and that’s a scenario well short of the possible trade war that Wall Street is worried about.

Trump’s proposed steel and aluminum tariffs “would likely trim a quarter percent from US gross domestic product over the long run,” the study finds.

“These materials are a direct input in the construction of large commercial and industrial structures and bridges and the production of automobiles and other transport equipment,” write Dallas Fed researchersMichael Sposi and Kelvinder Virdi.

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Dallas Fed

“They are also used extensively as inputs for machines that produce entirely unrelated goods or services such as robots that assemble computer chips, farm equipment that harvests wheat and X-ray machines used in medicine.Thus, policies that affect the scarcity, or ultimately the price, of steel or aluminum could ripple through the entire economy.”

For Aaronson, also a senior fellow at the Center for International Governance and Innovation says the consequences could be devastating because of their effect on eroding trust among US allies.

“Not only do you divide Americans but you basically undermine trust in the United States on multiple fronts,” she said. “If his job is to put our needs first in fact he’s doing just the opposite.”

Nevertheless, Aaronson sees plenty reason for hope and optimism:

“We also have a fabulous free press full of brave people, a very strong pushback from the court system, active and educated citizens who are committed to democratic means of nonviolent protests. So we have all these anti-corruption counterweights, which are really really important and which every day make me thrilled to be an American.”