--- description: Trump’s tariffs are splintering U.S. manufacturing, global trade, and alliances—causing hidden costs, inflation, and economic stagnation. title: Why Trump's Tariffs Are Like Termites image: https://static.time.com/v3/assets/bltea6093859af6183b/bltfed3749611a09b69/6998ccd883ec371904c7b41b/260105cradle_v1.jpg?branch=production&width=3840&quality=75&auto=webp&crop=16:9 --- Jan 15, 2026 # Why Trump's Tariffs Are Like Termites by [Robert Lawrence](/author/robert-lawrence/) ## Robert Lawrence Update your preferences in [Account Settings](/account/preferences/) Close Lawrence is a professor at the Harvard Kennedy School  Illustrations by Chris Gash for TIME Trump made lofty claims about the benefits of [raising tariffs](https://time.com/7312977/stanford-economists-trump-tariff-inflation/ "undefined"). They will reshore American manufacturing jobs and encourage domestic spending, he promised. “Tariffs are the greatest thing ever invented,” he declared. Virtually no experts agreed, projecting that [Trump’s tariffs](https://time.com/7321194/trump-tariffs-pharmaceuticals-trucks-furniture/ "undefined") would raise inflation, cut wages, impose an additional drag on U.S. manufacturers, and weaken the [stock market](https://time.com/7308590/trump-economic-chaos-stock-market/ "undefined"). Many economists issued warnings about a recession at home and the decline of globalization abroad. Yet almost a year on, the global economy has not tanked, raising the question: Was Trump right? In my view, it’s not that tariffs are not damaging but rather, their effects are being stretched over a longer period of time. Negative consequences are currently being offset by low levels of retaliation and high levels of [AI investment](https://time.com/7340901/ai-history-bubble-benchmarks/ "undefined"). **Read More:** [_How Doubling Tariffs on Steel and Aluminum Will Hit U.S. Businesses and Consumers_](https://time.com/7291234/trump-tariffs-steel-aluminum-prices-businesses/ "undefined") Although the U.S. is the world’s largest economy, it is responsible for just [13% of global goods](https://www.dhl.com/global-en/microsites/core/global-connectedness/tracker.html#:~:text=Current%20forecasts%20show,board%20tariff%20increases. "undefined") imports and just 9% of exports. The result: Trump’s targets around the world have been able to shrug off turbulent American trade policy. Plus, the backlash many economists feared never fully came to fruition. Astoundingly, with the exception of China and its retaliatory use of rare earth metals, no countries have very successfully fought back against American tariffs. Trump has been remarkably fortunate in stemming immediate pushback. This likely has more to do with America’s strategic importance for the E.U., through [NATO](https://time.com/7344268/us-trump-greenland-annexation-denmark/ "undefined"), and in providing national security to Japan and [South Korea](https://time.com/7317953/south-korea-president-lee-jae-myung-cover/ "undefined") under its “nuclear umbrella.” But Trump ultimately forced numerous countries to accept headline tariffs of around 15%. There is a myriad of evidence of American economic stagnation and declines in American manufacturing. Employers have cut jobs and are reluctant both to hire and to invest domestically—especially in sectors that are vulnerable to tariffs. These weaknesses are the results of Trump’s economic policies, but regardless, AI optimism has so far carried the stock market and data-center construction has bolstered investments. Trump’s isolationist policies have not ended globalization. But the nature of globalization is changing. Countries are now looking for markets other than the U.S. And strategically, they are looking for other alliances. We have shifted from a unipolar system under American guidance to a fragmented system in which the U.S. no longer plays a leadership role. Who will assume that leadership role is yet to be seen. [China’s economy](https://time.com/6576849/china-social-policies-negative-economic-effects/ "undefined") is growing and threatens to overtake the U.S. in the AI race. And long loyal, but now spurned, American trading partners such as [Canada](https://time.com/7297490/trump-plan-to-annex-canada-51st-state-mark-carney/ "undefined") and the E.U. have strengthened their relationships with each other and fostered their own internal markets. This transformation of globalization leaves trade fragmented with more regional clubs being formed as opposed to a comprehensive and multi-lateral system. Trump’s tariffs and extractions of tribute investments are breeding resentment toward the U.S. and will weaken its strategic impact as other countries replace its markets and its leadership—but the protracted nature of these adjustments also means that the negative economic and political consequences have been less immediately apparent. [The President’s tariff policies](https://time.com/7305626/chaotic-world-of-trumps-tariffs/ "undefined") have introduced termites into the woodwork of global trade: not easily seen, but likely to make any structure crumble over time. 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