Trump Isn’t the First President to Blow Up the Trading System


The article draws parallels between Richard Nixon's 1971 economic policy and Donald Trump's impact on the global trading system, highlighting the short-term gains and long-term consequences of such unilateral actions.
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Donald Trump isn’t the first president to blow up the global economy.

Half a century ago, Richard Nixon scuttled the international trading system and proclaimed a “New Economic Policy” for America. He broke the dollar’s connection to gold, levied a 10 percent tax on imports, and froze wages and prices for 90 days.

His plan worked—for a while. But within a few years it flopped, as controls created shortages and untrammeled federal spending fueled inflation.

What became known as the “Nixon shock” had global implications. Coming one month after Nixon stunned the world with his announcement that he had accepted Premier Zhou Enlai’s invitation to visit the Communist People’s Republic of China, Nixon’s economic speech placed additional burdens on U.S. allies. Foreign stock markets nosedived. Leaders bristled. Uncertainty reigned. America was charting an independent, unilateral course. No one knew the consequences.

Sound familiar?

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