It has been a chaotic few weeks in geopolitics.
At the beginning of the month, President Trump announced tariffs that threw the global economy into turmoil. Investors panicked, stock markets plunged, and analysts predicted an imminent recession.
Mr. Trump insisted that he would not change course, even as trillions of dollars in investments vaporized. It was only when the markets for U.S. government bonds began to show signs of distress that he recently issued a partial, temporary reprieve.
Although global markets became somewhat calmer after Mr. Trump stepped back from some of his tariffs, his apparent willingness to provoke severe distress in the stock market raises a crucial question: When governments make unpopular or ill-advised decisions, what can force them to back down?
The benefits of soft limits over hard ones
In healthy democracies, and even in many stable autocracies, leaders usually come under soft pressure to moderate their policies. They’re influenced not just by elections, but also by warnings from advisers, allies and powerful constituencies like business owners.
“We think of accountability as something that happens at the ballot box, or in a courtroom,” said Elizabeth Saunders, a Columbia University political scientist. “We vote leaders out of office, or we bring charges against them.”
But in fact, she said, leaders are more often kept in check by other, less formal types of pressure and limits, such as advisers who threaten to resign if an ill-conceived policy continues, or fellow lawmakers who warn of electoral consequences.
But if leaders amass enough power, they can ignore that soft pressure and push through unpopular policies — even if they are catastrophically damaging. In those cases, they may only respond to tougher forms of pressure, like impeachment, mass uprisings or upheaval in the bond markets.
The recent histories of countries like Turkey, India and, to some extent, Britain, offer lessons in how this phenomenon plays out.
When leaders respond quickly to hard limits
In 2022, Liz Truss, Britain’s newly appointed prime minister, announced a plan for sweeping tax cuts financed by government borrowing. Markets reacted very badly: Stocks, the British currency and demand for British government bonds all plummeted.
(A quick primer on bonds: When governments, companies or other institutions sell bonds, they are borrowing money from investors. So bonds are basically I.O.U.’s.)
Leaders of nations tend to be especially sensitive to turmoil in the market for government bonds, because they use bonds to finance their operations.
Faced with a bond market meltdown, Ms. Truss, like Mr. Trump, was forced to reverse course within days, and she resigned two months later. Under Britain’s parliamentary system, Ms. Truss’s fellow lawmakers had an easier path to pressure her to step down as her party’s leader. Mr. Trump, by contrast, isn’t under the same constraints.
Soft limits, soft landing
In the past, softer forms of pressure than bond market crises have often been enough to restrain American presidents.
In 1973, for example, the “Saturday Night Massacre” of resignations from President Richard Nixon’s Justice Department provoked a surge in public support for impeachment, contributing to the chain reaction of public disapproval that eventually led to Mr. Nixon’s resignation from office less than a year later.
In subsequent years, just the threat of mass resignations was often enough. “In a normal presidential administration, threats to resign might happen, but actual resignations in protest are very rare,” said Ms. Saunders of Columbia. “Far more common — yet mostly hidden until reported later in the press or in history books — are the threats to resign that never actually happen.”
In 2004, for example, President George W. Bush agreed to change parts of his surveillance policy after senior Justice Department officials, including the attorney general and the director of the F.B.I., threatened to resign.
But to work as a constraint, such resignations must have the potential to impose costs, such as damage to the president’s chances of re-election, or limits to a policy agenda.
That does not seem to be true for Mr. Trump, because these resignations also remove internal critics who might act as roadblocks to his policies, and cost him little support. The lesson Mr. Trump and his inner circle appear to have taken from his first term is that in his second, he should be more careful to surround himself with people who are loyal to his agenda, and should fire or punish those who are not.
When Danielle Sassoon, the acting U.S. attorney for the Southern District of New York, resigned in protest of the Trump administration’s decision to drop criminal charges against the mayor of New York City, in what she called a political quid pro quo, her actions did not lead to a substantial fall in public support for Mr. Trump. Nor did her resignation impede Mr. Trump’s policy agenda. In fact, it may have smoothed its path. Another attorney dropped the charges against New York’s mayor, who remains in office.
For Mr. Trump, resignations “are an upside,” Ms. Saunders said. “They are part of the point.”
Hard limits after harder consequences
Insulation from most forms of pressure is more typical of semi-democratic “hybrid” systems, in which leaders often manage to amass so much power that they are no longer sensitive to soft limits — or even to many harder ones. If leaders are unmoved by dissent or public pressure, they may stick to damaging policies long past the point of disaster.
In Turkey at the beginning of this decade, for example, President Recep Tayyip Erdogan pursued an unorthodox policy of cutting interest rates in the face of high inflation, the opposite of mainstream economic advice. He refused to change course even as inflation rates climbed to 80 percent and the cost of living soared. It was only after the 2023 election, in which he did worse than expected and had to go to a runoff against the opposition candidate, that he eventually changed course, installing a respected finance minister and a new head of the central bank to pursue a more traditional macroeconomic policy.
“I think Erdogan realized the extent to which economic grievances may have posed a threat to his re-election even on a playing field heavily tipped in his favor,” said Lisel Hintz, a political scientist at Johns Hopkins University who studies Turkish politics. But it was too late to reverse much of the damage. Turkey is still struggling with inflation, high government borrowing costs and a cost of living crisis.
The timing of elections can also blunt their effectiveness as a check. A leader years away from re-election may feel less pressure to keep voters happy in the short term. In India in 2017, Prime Minister Narendra Modi announced a sudden policy of “demonetization,” in which he effectively invalidated the country’s paper currency overnight, without warning.
The consequences were severe, including a cash shortage so acute that it drove some citizens to suicide, and the policy failed to achieve its stated goal of punishing criminals and tax evaders. But by the time India’s next national election arrived in 2019, the pain of the crisis had faded, and Mr. Modi’s party won handily.
Sometimes leaders refuse to change course for so long that they encounter one of the ultimate hard limits: being forced from office by a mass uprising. In Sri Lanka in 2021, the government banned chemical fertilizers, one of many policies imposed in an effort to shore up dwindling foreign currency reserves caused by years of economic mismanagement. The government faced a relatively weak opposition, and refused to lift the ban despite an outcry from farmers. “Gotabaya Rajapaksa was leading the administration at the time, and he had appointed his brothers and his nephew to his cabinet,” my New York Times colleague Emily Schmall, who covered the crisis, explained at the time. “He didn’t take a lot of counsel from outside his family.”
By the time Mr. Rajapaksa reversed the policy seven months later, it was too late. Cratering crop yields contributed to an economic crisis and high inflation. The government struggled to borrow money, and imports became scarce, causing shortages of fuel and food that brought mass protests to the streets.
Soon, it was all over. Protesters overran government buildings, and Mr. Rajapaksa, whose family had held power for most of the previous two decades, submitted his resignation in 2022.
For Mr. Trump, the last few weeks have revealed that his tolerance for risk and chaos remain high, leaving Americans uncertain about the future. And that could be costly. As Diane Swonk, the chief economist of KPMG, told my colleague Talmon Joseph Smith, “uncertainty is its own tax on the economy.”
Amanda Taub writes the Interpreter, an explanatory column and newsletter about world events. She is based in London.
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