The foreign policy of Donald Trump in historical perspective

ELI5/TLDR

Historian Niall Ferguson argues the popular comparisons for Trump — Hitler, Caesar, the would-be emperor — are lazy and useless. The figure who actually explains Trump, he says, is Richard Nixon: same enemies (Harvard, the press, the bureaucracy), same playbook of tariffs, a weaker dollar, a surprise opening to China, and a Middle East war with an oil shock attached. Ferguson’s bigger warning is structural: America now spends nearly as much servicing its debt as on defence, China has caught up economically in a way the Soviet Union never did, and a closed Strait of Hormuz plus a vulnerable Strait of Taiwan could turn a familiar-looking crisis into something far worse. The puzzle he keeps circling is why the stock market is shrugging at all of it.

The Full Story

Stop reaching for Hitler and Caesar

Ferguson opens by clearing the table of the analogies everyone reaches for. People have called Trump a fascist since 2016 — he assigns the audience Sinclair Lewis’s 1935 novel It Can’t Happen Here, in which a folksy populist named Buzz Windrip wins the presidency and turns out to be a dictator. Others cast Trump as a would-be emperor carving up the world with Putin and Xi, like Napoleon slicing a pudding in an old cartoon.

He finds all of this childish and, worse, redundant.

Trump is Hitler. Trump is Caesar. These are, I think, somewhat infantile analogies that tell us very little indeed about the United States in the 21st century.

The emperor framing is especially slippery, he notes, because the Financial Times that drew the emperor cartoon also coined “TACO” — Trump Always Chickens Out. An emperor who keeps backing down is not much of an emperor. And the chickening-out is only half-true: by Ferguson’s reckoning Trump is bluffing on social media “roughly half the time,” a coin toss between retreat and actually sending stealth bombers to hit Iran’s nuclear sites — which he did.

Two puzzles for the economists

Before getting to his main argument, Ferguson flags two things his economist colleagues can’t explain. First, Trump’s tariffs and the wars haven’t wrecked markets — equities sold off briefly after the April “Liberation Day” tariffs and again when war with Iran broke out, then rallied both times. Second, US equity performance since Trump’s first election in 2016 has crushed Germany, Japan, the UK and China. By the usual rules, none of this should be true.

The real model is Nixon

Here is Ferguson’s central claim. Trump’s foreign policy makes sense only as an unconscious re-run of Richard Nixon. The two men knew each other — Nixon wrote young Donald a flattering letter in 1987 predicting he’d win any office he ran for — and they share a roster of enemies.

Nixon called it the bureaucracy. Trump the deep state.

The parallels are specific. In the summer of 1971 Nixon dropped two “bombshells” on America’s own allies: he announced he’d go to Beijing to meet Mao, and a month later he cut the dollar’s last link to gold and slapped a 10% tariff on all imports — the move Japan still calls the “Nixon shock.” Ferguson maps last year’s events straight onto it: Vice President Vance’s blunt speech at the Munich Security Conference (a blow to European trust in the alliance), then “Liberation Day” tariffs even higher than Nixon’s 10%.

Then 1973: Nixon got a surprise Middle East war (the Yom Kippur war) and an Arab oil embargo that took Kissinger four months to unwind. Ferguson’s read is that Trump is “subconsciously or perhaps consciously re-enacting” this — war with Iran, oil shock attached.

But the re-enactment keeps failing on the details. The tariffs don’t do what Nixon’s were meant to do. Quick chaperone on a couple of terms: the current account deficit is roughly the gap between what a country sells the world and what it buys; the fiscal deficit is the gap between government spending and tax revenue. Tariffs nudged the first one down but can’t touch the second, which the budget office projects climbing from under 6% of GDP toward 9% by the 2050s. Manufacturing jobs have actually fallen since Trump’s re-election. And the weaker dollar that was the whole point of Nixon’s 1971 move? Under Trump the dollar has barely budged — “a nothing burger.”

He also leans on work by a former Oxford roommate, now governor of South Korea’s central bank, showing the global economy is a dense network of supply chains. Goods that face a tariff simply re-route through Mexico or Vietnam. Tariffs, he says, are “a 19th century policy tool” applied to a 21st century web that just shape-shifts around them.

Ferguson’s Law

The structural worry is what he calls Ferguson’s Law — named, he insists, after the 18th-century thinker Adam Ferguson, not himself.

Any great power that spends more on interest payments on the national debt than on defense won’t be a great power for much longer.

It has held, he claims, for every empire since medieval Venice — Spanish, Dutch, French, Ottoman, Austro-Hungarian, British. The United States crossed that line in 2024. On current projections, by 2036 it will spend twice as much on debt interest as on defence. Historically novel for America; utterly familiar to anyone who studies declining empires.

This is happening, he stresses, against the most formidable economic rival America has ever faced. China’s GDP has gone from 10% of America’s in 1980 to over 70% today. The Soviet Union never got past about 44% even on a generous measure. And China now produces nearly twice the manufacturing output of the US — a complete role reversal from twenty years ago. “The arsenal of democracy is no longer an arsenal. There’s an arsenal of autocracy and its capital is Beijing.”

The two straits

The heart of the talk is geography — two narrow stretches of water.

The Strait of Hormuz, through which roughly a fifth of the world’s oil passes, has been choked by the Iran war. Even after Saudi pipelines, lifted sanctions and other workarounds, Ferguson reckons 10% of global oil is still knocked out — a bigger supply shock, he says, than the 1973 embargo or any Gulf crisis since. His warning is about speed: a pandemic moves at the pace of a jet plane, but an oil crisis “moves at the speed of a tanker,” and this one hasn’t fully reached American shores yet. Half of US recessions since 1902, he notes (citing economist Tyler Goodspeed), were caused wholly or partly by energy shocks.

Which sets up his favourite puzzle: if the shock is this bad, why is the market up — the NASDAQ 14% higher than before the war? He offers three explanations. One, investors are geniuses and the war is genuinely over. Two, the market is clueless, as it was in July 1914, September 1929, February 2020 — months when everything peaked just before the floor gave way. Three, “never mind the Strait of Hormuz — feel the AI.” He’s sceptical that AI optimism can offset a real energy crisis: cool for Lego videos, not a war-winning weapon.

The Strait of Taiwan is the one that actually keeps him up at night, because almost every advanced semiconductor (chips smaller than ~5 nanometres) is made on that island by TSMC. He argues Xi Jinping has reasons to move sooner rather than wait for Taiwan’s 2028 election: America just burned through roughly half its Tomahawk missiles fighting Iran (the “empty bins” problem), and stockpiles take many months to refill. The likeliest move isn’t a D-Day-style invasion — he doubts the purged Chinese military could pull it off — but a “gray zone” legal manoeuvre: send the Coast Guard to “collect the customs” on the grounds that Taiwan is a Chinese province, daring the US to be the one that escalates. He asked a French advisor how many European countries would side with America in a Taiwan crisis. The answer: zero.

Where it ends

In the Q&A Ferguson sharpens his verdict. He draws an explicit parallel to Suez 1956 — a conservative leader (Eden, then; Trump, now) attempts regime change alongside Israel, wins militarily, then watches a blocked waterway trigger economic unravelling. He thinks Trump made a “grave strategic blunder” by not seizing the Strait by force when he had the chance, handing Iran leverage it never had. He expects the Iranians to drag negotiations out until the economic pain lands.

His closing frame is two competing scripts. Either this is a full re-run of the Nixon presidency — scandal (Epstein), a market crash, impeachment, and JD Vance inheriting the office the way Gerald Ford did. Or, given the assassination attempts, “maybe we’re in the early Cold War” and the analogy is Kennedy, with a Taiwan crisis as the Cuban Missile Crisis of the AI age. Either way, he predicts whoever wins 2028 — likely a Democrat nobody has heard of yet — will quietly continue most Trump policies and “deeply disappoint the Europeans,” exactly as Biden did.

In the history of war, things start faster than you could possibly imagine, but then they take much, much longer to end.

Key Takeaways

Ferguson’s Law: a great power that spends more on debt interest than on defence is on its way out. The US crossed that line in 2024; by 2036 it may spend twice as much on interest as on defence.
The best historical lens on Trump isn’t Hitler or Caesar but Nixon — same enemies, same toolkit (tariffs, weak dollar, China opening, Middle East war + oil shock). Nixon’s 1971 moves (Beijing trip + dollar-gold break + 10% tariff) are still called “the Nixon shock” in Japan.
China is a genuinely peer rival in a way the USSR never was: ~70% of US GDP (vs the Soviets’ ~44% peak) and nearly twice US manufacturing output — a full reversal from 20 years ago.
Tariffs are “a 19th-century tool” against a 21st-century supply-chain network. Goods just re-route (China → Mexico/Vietnam → US), so tariffs barely change real trade flows; they can shrink the current-account deficit but can’t touch the fiscal deficit.
An oil crisis “moves at the speed of a tanker,” not a jet — so the damage from a Hormuz closure lags by weeks/months. Roughly half of US recessions since 1902 were energy-shock driven.
The likely China move on Taiwan is not invasion but a “gray zone” legalistic play — e.g. Coast Guard “collecting customs” as if Taiwan were a province — forcing the US to be the visible escalator. Precedent: Trump revoked Hong Kong’s separate WTO status in 2020.
America burned ~half its Tomahawk missiles on Iran; refilling stockpiles takes months. That “empty bins” gap is itself an incentive for an adversary to move now.
The TACO paradox: Trump bluffs on social media roughly half the time, making any given threat a coin toss — which is exactly what makes the bluffs occasionally credible.
Suez 1956 as the cautionary template: military victory + a blocked waterway + economic pain = strategic defeat for the imposing power. A major strategic defeat is what erodes appetite for a country’s currency and debt.
Continuity beats rhetoric in US foreign policy: Biden kept Trump’s tariffs and tech war; Ferguson expects the 2028 winner to do the same to Trump’s.

Claude’s Take

This is Ferguson doing what Ferguson does well — a confident, chart-heavy sweep across centuries delivered with dry wit and a salesman’s instinct for the memorable frame. The Nixon-as-Rosetta-Stone argument is genuinely the most useful thing here. It’s a real analytical handle, not just a provocation, and the specific 1971/1973 mappings (Munich speech = Beijing announcement, Liberation Day = the dollar shock) are tidy enough to be worth remembering. Ferguson’s Law is a clean, sticky idea, though “clean and sticky” is also its risk: empires are complicated, and a single ratio that supposedly predicts decline across seven centuries is the kind of thing that survives by being unfalsifiable. He name-checks the mechanism (lenders lose confidence) but doesn’t really stress-test it against the obvious counter — that the US borrows in its own currency and runs the world’s reserve asset, which earlier empires did not.

The honest move in the talk is that he keeps surfacing his own puzzle — markets are up when his thesis says they should be cratering — and doesn’t fully resolve it. That’s to his credit; a lazier version would have buried it. But it also quietly undercuts the alarm: if the smartest aggregate signal we have is shrugging, “the market is clueless like it was in 1929” is the explanation that conveniently lets the pessimist stay right. Worth weighing against his track record, which he’s keen to remind you was correct on 2007 and 2020.

Score is a 7. It’s a sharp, well-organised lecture from a serious historian with a coherent through-line and several portable ideas, and the Q&A is unusually substantive. It loses points for being heavily forecast-driven (a lot of confident predictions about a fast-moving present that will age unevenly), for the showman’s habit of presenting contested calls as settled, and for a clear ideological tilt that the listener has to mentally correct for. Treat the framework as a thinking tool, not the chart-backed certainties as facts. Note also that several specifics here — a 2026 Iran war, Anthropic’s “Mythos” cyber model, a Trump Beijing trip — read as a mix of real events and Ferguson’s speculative scenario-building, so verify before repeating any of them as established.

The foreign policy of Donald Trump in historical perspective | LSE Event