“Whoever is careless with the truth in small matters, cannot be trusted with important matters.”
-Albert Einstein
Well, Einstein clearly never met 77,284,118 Americans, the number that took a gamble and entrusted Donald J. Trump with the presidency on November 5, 2024.
Donald Trump is an obsessive liar. Yet a majority of American voters entrusted Donald Trump with very important matters.
Talk about when genius failed.
It didn’t take long, however, for Einstein’s insight to become reality. America and the world are now realizing a simple truth. When trust is lost, it matters.
In what follows, we briefly consider the consequences of lost trust for America’s economy, its standing in the world, and its future.
The Economy
Donald Trump inherited a strong economy. Prior to his inauguration on January 20, 2025, the US economy had enjoyed 48 consecutive months of positive jobs growth, a 4.0% unemployment rate (widely seen as a marker of ‘full employment’), 19 months of rising real wages (wages rising faster than inflation), steadily falling inflation (which fell from a peak of 8.5% in June 2022 to 3% in January 2025), a falling budget deficit (from 14.7% of GDP in 2020 to 6.3% in 2024), and consecutive years of falling trade deficits as a percentage of GDP.
Under President Biden, the stock market advanced 45%, credit spreads tightened, the dollar appreciated in the world’s foreign exchange markets, and US consumer confidence rose.
True, not everything was great. In 2022-2023 inflation spiked and borrowing costs rose for homes, cars, and for businesses. More importantly, perceptions did not match reality. The economy was, after all, a key reason why Donald Trump won the election.
But it is nevertheless unquestionably correct that the economy Donald Trump was handed in mid-January was in good shape and moving in the right direction.
Seven weeks later that’s no longer the case. The stock market is wobbly, the dollar is slipping, the yield curve is inverting, commodity prices are falling, and market risk indicators are rising. The financial markets are signaling tougher times ahead.
The markets’ fears reflect the incoming data. Various measures of US consumer confidence have tumbled since January. Data on manufacturing, new orders, and supplier deliveries have soured. Less than two months ago, the Federal Reserve Bank of Atlanta’s current quarter real GDP indictor suggested the economy was growing at a healthy 3% clip. By early March, it had swung to a decline of -2.4%.
That’s not a small wiggle. That’s an alarming cliff event.
By all accounts, this never should have happened. Tax cuts and deregulation under Trump and the Republicans were supposed to unleash animal spirits. Falling oil prices were supposed to lubricate growth.
Well, ‘drill, baby, drill’ now feels more like a visit to the dentist’s office than to the oil patch.
What changed to change the economy?
Trust—or, more precisely, its disappearance.
How can businesses or ordinary Americans make decisions about capital investment or purchases of homes, cars, or vacations, when key policies such as tariffs or spending on basic government functions, including for Social Security, Medicaid, Education, Defense, Veterans Benefits, or Public Health become untrustworthy?
Should we buy an EV or install solar panels, or will their tax credits vanish? Shall we plan a summer vacation in a national park, or might it be shuddered by layoffs? Can we afford to remodel the house or replace its roof, or will the price of lumber soar due to tariffs? Should we build an auto transmission factory in the US to replace one in Canada, or are car tariffs just a bargaining chip? Shall we plant soy, corn, or something else, not knowing if our markets overseas will collapse because of retaliatory tariffs?
It doesn’t take Einstein’s level of genius to see that the inability of ordinary Americans to trust what their government is doing is throwing sand into the gears of the economy. That screeching sound you hear is the economy coming to a halt. And a lack of trust is to blame.
The World
It is wrong to say that America’s standing in the world is plunging. That’s only true with America’s longstanding allies. America’s standing with Russia has probably never been better.
For millions of Americans pained by death and disfigurement in pointless wars in Afghanistan, Iraq, or Vietnam, there is an understandable desire to leave messy and dangerous foreign affairs to others. George Washington’s farewell address, warning about foreign entanglements, strikes a deep chord in the American psyche. And never more than among generations of Americans who feel disrespected by the ingratitude of their neighbors and of our allies for their sacrifice.
But withdrawal has consequences. So does betrayal. It is impossible to see Donald Trump’s longstanding views toward Russia, much less his recent words and actions about Ukraine, as anything but a betrayal of 75 years of American commitment to the international rule of law, democracy, and self-determination. Whether anyone shall take his words seriously, or merely figuratively, about taking back the Panama Canal, making Canada the 51st state, or acquiring Greenland is, by now, moot discussion. The trust is gone.
America is no longer a reliable ally. That is readily apparent in Germany’s willingness to elect a plain-spoken incoming chancellor, who does not shy away from what since 1945 has been taboo—Germany leading Europe away from the United States. Defending itself.
This past week, Germany’s prospective government announced that it will work with other political parties to remove borrowing restrictions (its ‘debt brake’) to step up defense and security spending. The European Union is following suit with fresh security spending of its own. In an astonishing rebuke to the United States, the UK and Canada are publicly siding with Europe.
Special relationships, it appears, aren’t quite so special when the United States cannot be relied upon to protect the right of self-determination from invasion.
Seemingly, only despots now trust Trump. Or, more likely, they do not trust him. Rather, they relish how the mistrust he has sown has driven a wedge in the western liberal order. An opening, which they can now exploit.
A Matter of Trust
A majority of Americans voted for a liar, a convicted felon, and a man found civilly liable for sexual assault as their 47th President of the United States.
The result, thus far, is uncertainty bordering on chaos. The damage to the US economy and the US standing around the world is plain to see for anyone willing to look.
Just what were we supposed to expect?
Those who support Trump will argue this is exaggeration. They are entitled to their opinion, but the evidence suggests otherwise.
And then there are those who cling to the past, who see this is a national nightmare from which we will wake up one day and things will go back to the way they were.
Well, there is a familiar adage. It goes like this:
‘Trust takes years to build, seconds to break, and forever to repair.’
Some 77 million Americans took a bet on trust. Roughly 340 million, and generations to follow, will have to live with the consequences of that gamble.