JEFFREY GOLDBERG: Two months into his second term, President Trump is destabilizing the world order.

The U.S. now treats adversaries like allies and allies like adversaries.

And Trump's unpredictability is causing economic turmoil that threatens his popularity and your 401(k).

The Democrats, meanwhile, struggle to find ways to challenge him.

Tonight, making sense of our strange new reality, next.

Good evening and welcome to Washington Week.

If you asked me two months ago who I thought Donald Trump would be fighting with come March, I would definitely not have answered Canada, Panama, or Denmark, because that would make no sense.

But it is March, and Trump is threatening the sovereignty of all three countries, countries that are notable because, until January, they were our friends and allies.

I want to talk about this and about Trump's apparent sympathy for Russia tonight with Laura Barron-Lopez, the White House correspondent for the PBS NewsHour.

Stephen Hayes is the editor of the Dispatch.

And David Sanger is a White House and National Security Correspondent for the New York Times.

Thank you all for joining me.

We've got a lot to talk about.

Laura, you're going to explain the averted shutdown, just averted this evening.

Many Democrats think that Chuck Schumer, Democratic leader, capitulated to Donald Trump.

Can you explain what happened and what the fault lines here are within the Democratic Party?

LAURA BARRON-LOPEZ, White House Correspondent, PBS NewsHour: Yes.

So, Congress averted a shutdown until September or through September and Minority Leader Chuck Schumer essentially said that he felt like Democrats would take the blame if they voted against the government funding bill, that he didn't want to exert more pain on federal workers.

And so he rallied enough votes essentially to support this bill that Democrats had no part in shaping or forming.

Republicans control all of government.

They did it without Democrats and essentially said, you either vote for it or you don't.

And, yes, so many House Democrats are really upset with Schumer because they feel as though he kind of left them out to dry, that there were a number of Democrats in Trump-won districts who voted against this bill.

And they wish that they had been told previously, oh, maybe Senate Democrats are going to end up supporting and providing the votes for this, because they felt as though it was a betrayal.

I mean, that's what you're hearing from people like Alexandria Ocasio-Cortez, who is really launching this campaign against Schumer, saying that they feel as though that the Democratic Party leadership is not up to the task.

JEFFREY GOLDBERG: Steve, the Democrats not a unified or very effective opposition at this point.

STEVE HAYES, Editor, The Dispatch: Not at all.

I mean, they've been very quiet.

They're trying to figure out what the heck to say.

They don't know what to say at this point.

And I think that's part of the challenge that Chuck Schumer faced.

I think he made a number of mistakes getting to this point by not, you know, giving some cover to these vulnerable House Democrats, by not, you know, coming up with an actual plan that they could follow.

He was, as recently as yesterday, offering a different solution and then he sort of capitulated.

I think the real problem is they didn't have much leverage.

And, strategically, what does this get them?

What would they have gotten had they not done what Chuck Schumer did?

And I don't think that's clear.

JEFFREY GOLDBERG: Yes.

I want to move to the economy and to the world order, if you will.

The uncertainty over tariffs, among other things, are causing a stock market selloff, came back a little bit today but the markets are moving into correction territory.

David, you wrote earlier this week that, quote, Mr. Trump is eroding the old order without ever describing the system he envisions replacing it with.

His actions suggest he is most comfortable in the 19th century world of great power politics, where he, President Vladimir V. Putin of Russia and President Xi Jinping of China negotiate among themselves and let lesser powers fall in line.

This is all pretty head-spinning stuff, I got to say.

DAVID SANGER, White House Correspondent, The New York Times: It is, and we'll get to the alliances part in a moment.

You know, if you think back a million years ago to Trump's inaugural speech, it does seem a long while ago.

Who was the president who was most venerated in that speech?

It wasn't Washington.

It wasn't Lincoln.

It was McKinley.

McKinley, the man who loved tariffs and expanded the United States, ended up being the winner of the Spanish-American War, ended up with the Philippines, which he really didn't know what to do with once he got it.

Pretty fascinating that he is the one who Trump has chosen to go follow.

And I think part of the market upheaval that you saw this week came from investors and certainly business leaders, and there were a lot of them in Washington this week, who thought that the Trump of the second term was going to be like the Trump of the first term.

And in the first term, the market went dramatically up at this point into his presidency.

In fact, now that it's gone that down, what's the difference?

It's these tariffs, and no real understanding of what he's using them for.

Is he doing it to raise revenue?

Is he doing it as a negotiating ploy?

Or is he doing it because he actually thinks this is the way the economy should operate?

JEFFREY GOLDBERG: Right.

Laura, it's impossible to know how far he can go, how much pain he could cause economically, not only in 401(k)s, but in every aspect of the economy.

Are they banking in the White House on the loyalty of his core supporters to sustain his support through some bad times that seem to be here?

LAURA BARRON-LOPEZ: Yes, that's what you hear from them, which is essentially that the base is still with him, that even though, yes, there are polls out this week showing that a majority of voters disapprove of his handling of the economy, that the base is still there.

And you also see that Republicans in Congress are still there.

I think one of the more important stories of this C.R.

bill to fund the government is that Congress abdicated their ability to provide any challenge to Trump on tariffs.

That's in the bill that funds the government.

Republicans essentially said, oh, it's okay, we're not going to use that power to challenge the tariffs at all, one of the only oversight tools they have on these tariffs.

So, I think Congress, along with the base are still -- Republicans in Congress, along with the Republican base, are still with Trump on this.

JEFFREY GOLDBERG: Right.

Let's talk about allies and adversaries.

I want you to watch President Trump here for a minute talking about Ukraine and Russia.

DONALD TRUMP, U.S. President: You're gambling with the lives of millions of people.

You're gambling with World War III.

Russia has a large group of Ukrainian soldiers, as we speak, surrounded.

I've asked them not to kill those soldiers, please, not to kill those soldiers.

We don't want them killed.

JEFFREY GOLDBERG: Okay, Steve, we've known each other a long time, I've known you to be tracking the Republican foreign policy ideology and the different strains within Republican conservative ideology for many, many years.

Explain how the party of Reagan has moved to this moment when the president, the Republican President of the United States, has pretty overt sympathy for the Russian position.

STEVE HAYES: Yes.

I mean, the second comment you just played there was basically taken from Russian propaganda.

These are the things that the Russians were saying about having these Ukrainians surrounded.

And you saw him berate Volodymyr Zelenskyy in the Oval Office in a way that I don't think was accidental.

JEFFREY GOLDBERG: Can I just pause for a second?

I want to ask David, who's been watching foreign leaders come to Washington for quite a long time.

Have you ever seen anything like that treatment of Zelenskyy that we saw the other day?

DAVID SANGER: 30 years of covering the White House, lots of pool sprays in that time, never a moment where I have seen a president basically try to humiliate a foreign leader along the way and make it clear that he's not getting any American support, particularly one who, two years ago, was venerated here as a democratic hero, you know, Churchill in a T-shirt.

JEFFREY GOLDBERG: Yes.

You know, but it's funny when you say democratic hero, Donald Trump hears that as Democratic hero, Democratic Party here.

But, anyway -- yes, capital D Democrat.

But anyway, Steve, go on with your analysis there.

STEVE HAYES: Yes.

Look, I mean, I think, if you look at the Republican Party today, you have Republicans increasingly at least willing to side with Donald Trump and sound like they are skeptical of Zelenskyy, sound like they believe that the time has come for the president of the United States to get tough with the solitude to, you know, have a minerals deal so the United States gets something so that we're not giving things away for free.

You hear them sort of mimic the president's language.

But there's an entirely different conversation that takes place if you're talking to Republicans privately.

And most Republicans still to this day believe that Volodymyr Zelenskyy is the right leader if you're choosing between them.

JEFFREY GOLDBERG: He's the friend, He's the guy we're for.

STEVE HAYES: He's the friend.

They understand that Zelenskyy did not in fact start the war.

They understand this reality.

And I've been talking to several, one today's long time Republican, you know, smart guy, I would describe him as a Reagan Republican, said he was watching the press conference and felt physically sick watching this humiliation of, you know, a longtime ally.

JEFFREY GOLDBERG: Yes.

Well, let me read to you and to everyone at home something you wrote that was just bracing.

Donald Trump is unquestionably pro-Putin, and has been for years.

He doesn't merely want to end the war.

He wants to end the war on terms favorable to Vladimir Putin.

What you're describing in that recent piece in the Dispatch, what you're describing is essentially the Manchurian president, not in the sense that he's been captured and brainwashed, but that he's actually doing the bidding of a hostile power.

STEVE HAYES: I mean, whatever the reasons, right?

I won't speculate about the reasons.

JEFFREY GOLDBERG: Yes, and I'm not suggesting anything.

I'm just saying that that's what we're actually seeing.

STEVE HAYES: Right.

Look at what he said last Friday.

He had this stark warning tweeted out or Truth Socialed out a warning saying Russians are pounding the Ukrainians.

I might have to think about bank sanctions.

And people said, whoa, is he -- this is the toughest we've heard him be on Putin in a long time.

Might we anticipate a change?

And then what happened this week?

Nothing.

Putin, they stepped up their attacks.

They mocked our emissary to Moscow.

I mean, they've done everything they can to sort of thumb their nose at the United States president and he's not getting tough.

There are no repercussions.

He's never talked to Vladimir Putin the way that he talked to Zelenskyy in that first clip.

LAURA BARRON-LOPEZ: And you just have to listen to what the president also said yesterday, which speaks to this.

Yesterday in the Oval Office, when he talks about the leaders that he gets along with, he says, I get along great with Vladimir Putin, Xi Jinping and Kim Jong-un.

Those are the three that he repeatedly mentions, dictators and autocrats, when he talks about who he gets along with and when he has favorable things to say.

JEFFREY GOLDBERG: David, make it make sense.

DAVID SANGER: Sure, I wish I could.

So, part one of this may simply be his admiration for the fact that these dictators, as Laura has suggested, can do what they want to do.

JEFFREY GOLDBERG: Admiration or jealousy?

DAVID SANGER: A little bit of both, you know, and a little bit of a wish here that he could reorient the presidency more in that direction.

I can't psychoanalyze a man for how he got there, but here's one thing you certainly can say, that 50 days into this presidency, we have seen him do more to eat away at the foundations of the system the United States built up after World War II, one that was based on Institutions and laws that made it harder for small countries to be completely forgotten, gave them some purchase that created some minimum standards of human rights, you've not heard the president discussed that, that moved us toward democratization and that used soft power because it helped the United States basically guide where the world was going.

He has done everything he could from USAID to the way he is working with trying to get to a relationship with Putin and he's tearing those to pieces.

Now, the question is, do you just hunker down for four years and hope these institutions come back or do you conclude, as many Europeans are, that, in fact, he is making a fundamental change?

And there is a reason that the president of Poland came out last week and said, we may need to think about our own nuclear weapons, that the new chancellor of Germany, or incoming chancellor of Germany, said, we need to design a system that makes us independent of the United States.

We've never heard things like that from Europeans before.

JEFFREY GOLDBERG: Right.

I want to ask Laura and Steve a question.

I've been particularly fascinated by Marco Rubio, the secretary of state, in part because I know him a bit, I covered him and I know how much of an anti-Russia hawk he has been.

How do you explain to non-Washington centric Americans the seeming complete shift in worldview of people like Marco Rubio, it's not just Rubio obviously in the administration, to from a position that we all understood to a position now of, well, you know, maybe Zelenskyy isn't so great and maybe Putin is, you know, not so bad?

LAURA BARRON=LOPEZ: Well, I'm not sure that I can explain it very well but other than he's not alone, you're right.

NSC Adviser Mike Waltz is also in this same camp.

There are other Republicans, those in Congress, who, like Rubio, have been Russia hawks, that, as Steve said, publicly are in Trump's corner, privately say another thing.

I think that Rubio has decided that, like many Republicans, the majority of the party now, that if they are going to stay within this party and hold any kind of power, or any kind of influence, although it's questionable how much influence the secretary of state actually has now, given the fact that he used to be a supporter of foreign aid, talked about it a lot on the Senate floor, championed it, and now USAID is dead.

So, it's questionable how much influence and power they actually have in this exchange that they've made.

JEFFREY GOLDBERG: Steve, you know the guy.

STEVE HAYES: I would say the shorthand is ambition over principle, right?

I mean, if you want to be cynical about it, he wanted to be a big player in the administration, he wants to come in, he wants to sit at the right hand of Donald Trump on the world stage, and that ambition trumps everything that he once believed, many of the things that he once believed.

The more charitable, you know, what you'd hear from Rubio folks, is that he thought he could go in and make a difference.

And if he were one of the people in the room at a crucial moment, where the United States is, you know, in a crisis, an international crisis, it would be good to have Rubio in the room giving that advice, because the other people who could be there might be much worse, might not have even ever had the kind of views that Rubio wants.

JEFFREY GOLDBERG: David, that sounds like the theory of the first term.

DAVID SANGER: First term, yes.

That was supposed to be Rex Tillerson, Jim Mattis, that's right.

It didn't work for any of them, right?

He went through four national security advisers.

He went through two secretaries of state, pretended that he actually was listening to Mike Pompeo, the second one, and now has pulled his Secret Service protection, right?

So, I doubt that Rubio is going to find, particularly in a second term Donald Trump, that he is able to do that.

Now, maybe at the crisis moment, having him and Waltz there will be sort of steadying hands.

We haven't seen a big crisis moment yet.

Maybe we will with Canada.

I mean, who knows?

JEFFREY GOLDBERG: Speaking of Canada, thank you for the transition, I want you to watch something that the president said about our neighbor to the north, our friend, friendly neighbor to the north just the other day.

DONALD TRUMP: To be honest with you, Canada only works as a state.

It doesn't -- we don't need anything they have.

As a state, it would be one of the great states anyway.

This would be the most incredible country visually.

If you look at a map, they drew an artificial line right through it.

DAVID SANGER: So, look, Greenland, I can sort of understand.

It's got a strategic purpose.

The United States thought about buying it in 1867, thought about it again in 1947.

Trump thought about it.

I mean, you know, taking military action, which he said to me in January he would think about, doesn't seem to make any sense.

Panama -- JEFFREY GOLDBERG: That would be, by the way, just to be clear, Denmark, which is sovereign over Greenland, is a member of NATO, so that would be a NATO country attacking a NATO country over a territorial -- DAVID SANGER: That was why I asked him the question to see if he was willing to go that route.

It turned out he was.

JEFFREY GOLDBERG: Yes.

DAVID SANGER: Panama, treaty ally, but at least I can understand the strategic element to this.

There's nothing strategically that we need from Canada that we don't get from having them as one of our closest allies.

We run NORAD with them, the North American Air Defense Operation.

It's the most seamless air defense operation between two countries you can possibly imagine.

So, the Canadians are sitting here and saying, what is this?

And the only answer I can come up with, Jeff, is that line in the inaugural address about Manifest Destiny.

We're out of space in the west.

The only thing you can do is go north.

LAURA BARRON-LOPEZ: The Canadians are taking this seriously.

I mean, this is the thing.

DAVID SANGER: As they should.

LAURA BARRON-LOPEZ: Right.

This is the thing though.

You know, the White House has given all these reasons for why they've done tariffs.

So, whether it's fentanyl coming across the Canadian border, even though it's less than 1 percent, fentanyl comes across from Canada, whether it's because the president wants companies to come back to the U.S. or, you know, a host of reasons, but this is the one that Canadians believe is the actual reason.

The president wants the annexation of Canada.

He wants it as a 51st state.

And Commerce Secretary Lutnick is out there repeating it over and over and over again.

JEFFREY GOLDBERG: Steve I want to find a diplomatic way of saying this, but, I mean, it's nuts.

STEVE HAYES: Crazy.

JEFFREY GOLDBERG: Okay.

I mean, it's like, we have our ally, we've had a stable relationship with this ally with a long -- we have a huge trade relationship, obviously tourism and interaction, like, across a 3, 000 mile peaceful border.

It seems like a totally extracurricular kind of project.

Maybe it's diversionary.

Maybe it's a way of talking about things that he wants to talk about.

But what's the -- tell us the -- what's the secret?

You've got two minutes to tell us the secret.

What is the impulse here that makes him do -- say a thing that no American president in our lifetimes, or really any lifetime, would ever imagine?

Seizing Canada, taking Canada as a state?

STEVE HAYES: The challenge, I think, for people who do what we do, has been, in some ways, for the past decade, to try to figure out when to take Donald Trump seriously, when to take him literally, and when to just blow it off, because it's silly.

And I will admit, this fell into that last category for me, sort of taking a shot at Canada, probably because he doesn't like Trudeau.

They've had a personal beef going back.

Trudeau's gone now and he's elevated Trudeau's party over the conservatives.

STEVE HAYES: But, you know, a lot of these things start with some personal beef that Donald Trump has with the leader of a foreign country.

That would be my guess as to where this goes, but there's been good reporting that he's been raising these things privately and saying this is sort of an arbitrary border.

We saw him say it in public.

DAVID SANGER: He wants to renegotiate a treaty that we signed 120 years ago that set the line out there.

And he keeps coming at three times this week.

He has mentioned this borderline.

STEVE HAYES: It's something that's on his mind.

He wants to renegotiate the U.S.-Mexican-Canada treaty that he himself did just a few years ago.

JEFFREY GOLDBERG: David, in the minute that we have, explain the consequences of these continuing attacks on the dignity and sovereignty of Panama, Denmark, Canada, for starters.

DAVID SANGER: The first part of this is you have an alliance that basically is built on trust.

And the trust is that if you ran into a bigger problem, if the Europeans saw the Russians coming across the border after Ukraine settlement, if the United States and Canada were attacked together, you have the trust that the United States and its nuclear umbrella cover.

The moment you pull that trust away, people begin to get their own nuclear weapons.

They begin to operate on their own agendas.

JEFFREY GOLDBERG: So, we've done something impossible.

We're making Canadians angry.

Is that what you're saying?

DAVID SANGER: It is pretty remarkable, yes.

JEFFREY GOLDBERG: Unfortunately, we need to leave it there for now, but I'm sure we're going to be revisiting these questions again.

I want to thank our panelists for joining us and our viewers as well.

For more on what ketamine does to the human brain, and I'm not saying whose brain, please visit theatlantic.com.

I'm Jeffrey Goldberg.

Good night from Washington.

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