President Trump is redefining the bargain between America and its allies by radically altering post-World War II western security arrangements and the conditions for market-driven globalization.

He has successfully secured commitments from European nations to finally contribute their necessary shares to the common defense against Russia and its axis allies—and imposed asymmetrical arrangements for trade in goods by raising U.S. tariffs.

Regardless of how the Supreme Court rules on the legality of those tariffs, the president’s new arrangements are inherently unstable.

When the World Trade Organization was established in 1995, a General Agreement on Trade in Services was inaugurated. Americans anticipated it would enable our most competitive sectors—finance, high tech and creative media—to thrive without border taxes similar to tariffs on goods.

That expectation has been violated by arbitrary EU regulations that target U.S. high-tech companies.

Several nations in the European Union, United Kingdom, Canada, India and others have imposed digital services taxes that target the largest firms—specifically, American businesses like Alphabet and Microsoft who produce services here that are sold in their markets.

By mostly targeting American high tech, those taxes effectively become import tariffs on U.S. services.

Canada has abandoned its DST, but the trade agreements Trump has negotiated with the UK and EU don’t require the same.

Trump may be forcing our partners into accepting what most observers call uneven bargains on trade in goods by imposing tariffs of 10 to 20 percent on them while demanding they lower their taxes on our exports. But by letting them keep these odious DSTs on our most competitive enterprises, the overall arrangements for trade in goods and services are hardly one-sided.

Karin Karisbro, a EU Parliamentarian, lamented "free trade principles that have underpinned transatlantic prosperity since the end of World War II are being systematically dismantled” and German Chancellor Merz moaned “the German economy will suffer significant damage.”

Looking for blame, Europeans, Canadians and others should consult their makeup and shaving mirrors.

Trump hardly started this trade war, and the fire has been kindling for decades.

Presidents going back to John Kennedy, Ronald Reagan and Bill Clinton have been nibling at the edges of free trade by imposing arrangements to protect textiles, automobiles and chips fabrication.

Economic statecraft—the use of industrial policies and protective regulations of all kinds—has been on the rise across the globe for decades.

President Biden’s program to reshore semiconductor fabrication and the production of critical materials was merely America acknowledging forces it could no longer resist.

The defense spending side of Trump’s new strategic order is essential.

We are not going to reach an economic or security detent with China or Russia.

Our economy’s vulnerability to an export embargo of Chinese rare earth minerals and to losing fabrication in Taiwan for high-end semiconductors to Chinese conquest are threats no reasonable calculus of American security interests can ignore.

With Russia rearming, Iran still able to manufacture drones and other arms to supply a new generation of terrorists and China’s naval buildup, we simply can’t afford to carry the burdens of securing Europe, the Middle East and Pacific alone.

Once the Europeans have rearmed an important lever in the recent trade negotiations that Trump enjoyed—threatening to withdraw American support for Ukraine and more broadly the American commitment to defend Europe—will be gone.

Trump in the last years in office and his successor will face angry partners who feel justified to renegotiate the tariffs and broader terms of our trading relationships.

If we won’t accede, they will feel impelled to impose taxes on American exports unilaterally.

Given the size disparities between the combined NATO Europe and Russian economies, Moscow will be challenged to compete in a rearmament contest if the Europeans really spend 5% of GDP on defense and supporting infrastructure.

But achieving even a three-percentage point of GDP spending increase would require NATO Europe to radically scale back their welfare states, raise taxes or run American-scale national budget deficits.

The nature of most European parliamentary governments—multiparty coalitions—makes consequential social spending cuts virtually impossible, and Europeans already pay terribly burdensome taxes.

Lacking the American exorbitant privilege of issuing the reserve currency, they can’t finance the deficits exceeding the kind of deficits we do.

The logical choice then will be to tax Americans by imposing new tariffs or finding creative schemes like the DSTs that burden U.S. businesses but not their own.

Believing Trump wrecked the post-war trading system, they will feel justified.

Faced with these unsettling realities, the Trump administration has not articulated much about what should come next.

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Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.