After China reduced the number of American films that can be shown there as part of its retaliation to US tariffs last week, Donald Trump laughed it off. “I’ve heard of worse things,” he said. But his flippancy over China’s targeting of US cultural exports — which are not only a source of income for Hollywood but also a projection of US soft power — illustrates the myopia of his trade war.

As investors raced away from the dollar, which is down about 8 per cent since Inauguration Day, and dumped US Treasury bonds — ten-year yields climbed above 4.5 per cent — they offered a glimpse of the nightmarish world that awaits if the United States continues to retreat from global leadership after 80 years underwriting stability and prosperity.

Despite his 90-day pause on new tariffs against every country except China, the President continues to insist that the United States is getting “ripped off” by the rest of the world. He portrays partners in Europe and Asia as parasites who have been freeloading off America. “Our allies have taken advantage of us more than our enemies,” Trump has said.

As evidence, he offers the US trade deficit, which reached $918 billion last year. He wildly exaggerates the US trade deficit with China, claiming that it is three times as large as it is. He also says over and over that Europe doesn’t buy “anything” from America — when, in fact, the European Union purchased $649 billion worth of goods and services from the United States last year.

But let us consider that some unfairness in trade does exist, that it’s easier for other countries to sell things in the US than it is for American companies to sell their goods in overseas markets. This imbalance does not call for an overhaul of a world trade system that very much benefits the United States.

If America were to stop tolerating small inequities, it would lose a great deal of influence over that system. Consider that, during the half-century that the United States has run an annual trade deficit, the size of the US economy has quadrupled. (That is adjusted for inflation.) It’s impossible to put a price on how much the US stands to lose by forfeiting its primary position.

No doubt, many Americans take for granted the country’s power to write the rules of global commerce; since the Second World War, this has been a constant. The US helped design the World Trade Organisation, and it wins almost 90 per cent of the cases it brings against trade partners there. The country also has enormous sway over international organisations that set standards, from accounting to technology.

Trump advisers have argued that the US dollar should be weaker — to boost exports and reduce the trade deficit. But the dollar’s role as the world’s reserve currency pays dividends that outweigh any marginal costs from being a financial haven. Close to 60 per cent of global foreign currency reserves are in dollars; 64 per cent of world debt is denominated in dollars; and the dollar is used in 54 per cent of foreign trade invoices globally, according to the Brookings Institution.

This means that other countries help finance US debt, which in turn lowers the cost of borrowing and debt service for the US Government and for American consumers. This also keeps prices of imported goods stable and lowers the risk of an American currency crisis.

Historically, when a country’s economic dominance wanes, it also becomes weaker militarily — because it has less money to spend on defence. The United States has long maintained the world’s most powerful military, and this, too, has enabled stability. It deters bad actors from starting needless conflicts and ensures freedom of navigation nearly everywhere. Another incalculable figure is the cost of wars that didn’t happen since the Second World War because US troops are deployed around the world.

What’s more, Americans can visit almost any country, knowing that their government can help them if something goes wrong. The same goes for investors.

Trump is now tinkering with all these benefits of world leadership. He is dismantling US primacy in global trade and shrinking away from defending US allies. If he continues, the United States risks losing more power and influence than anyone can put a price on. And the world risks becoming less safe.