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“The direct cost of President Donald Trump’s trade war will be borne by American consumers and businesses—of that, there should no longer be much debate.

But trade wars also come with indirect costs and unforeseen consequences. Some of those show up on balance sheets in the form of lower profits, losses in the stock market, or stagnating wages. Some are best counted under the Christmas tree, where higher prices might mean fewer toys (as the president now admits) and other goodies that make life a little more joyful, as tariffs squeeze wallets and reduce discretionary income.

Others are trickier to sum up, but that doesn’t mean they don’t exist.

“The administration’s trade policy sends a message to the world: America is an unreliable ally that sees you only as a source of wealth; and if you don’t have wealth, you’ll pay for it,””

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“”The United States’ role as a linchpin of this system has enhanced its position as the pre-eminent global power,” writes Murray. “Yet the new administration’s curious tariff policy threatens all of this, for no discernible benefit.””

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“American soft power rides on the back of the global trading system. American investment and purchasing power help build factories and lift people out of extreme poverty. For the countries that benefit from all that, American interests are first and foremost. Take away the benefits of trade, and the rest fades too, warns Murray.

Higher tariffs and reduced global trade “kills US soft power with these nations and leaves a geopolitical vacuum into which US rivals like China will expand,” he writes. “High tariff rates on south east Asian countries, for example, will exacerbate the drift of those countries towards the Chinese sphere of influence that has been happening in the wake of trade uncertainty since the first Trump administration.””

https://reason.com/2025/05/26/the-trade-war-is-eroding-americas-soft-power/