What is Trump trying to do? Even his most ardent supporters can’t really explain it. But after listening to his March 4th address to Congress I have a few ideas of what his grand vision for America might be.
Put simply, Trump wants to change the world entirely. The post WW II order, where the US subsidized and propped up much of the world economy, beginning with The Marshall Plan, is being dismantled. Long standing alliances are being stressed in favor of a more isolationist approach. US wealth and capital, which has been globalized in the past several decades will be repatriated. Western Europe, Japan, South Korea, Canada, Mexico and a list of other beneficiaries of US largess are being put on notice that the decades-long free lunch courtesy of the US taxpayer is over.
Europe and Canada, which have vastly underspent on their own defense since the fall of The Berlin Wall in 1989 must now build up their armed forces at their own expense. For many years now, Western European and Canadian armed forces and defense spending have been tiny, unable to defend themselves without the US.
Economic and security arrangements that favored our allies (and sometimes adversaries) are being demolished. NATO, the UN, subsidies to trading partners, and trade pacts like Trump’s own USMCA are being taken down in favor of a US-centric doctrine that envisions everything we buy is made here in America.
Trump’s vision is one where there are millions of new manufacturing jobs and hundreds of new industrial plants through the Midwest and Southern states where local economies have not kept up with the outsized economic growth and wealth formation of the East and West coasts. Trump’s supporters, many of whom live in the great interior and the south which have felt left behind by the booming technology and financial industries of the big East and West coast cities would now have their chance at prosperity.
The blunt instrument used by Trump to enact these tectonic shifts are tariffs. Most of Europe, Japan and Canada impose some tariffs on US goods, but many US goods and services are not subject to tariffs. Many US trading partners rely on tariffs as a fixed form of revenue. So why not “even the playing” field?
Why should the US give our trading partners a free ride on tariffs while the US continues to foot the bill?
This notion of international freeloading at US expense is at the heart of the resentment in many parts of the US against globalism and international trade, and there is an argument to be made that without US sponsorship, the international, globalized world we have today could not exist. This is the mentality of the Trump vision.
Historically, tariffs have a poor track record and not much good comes of them. They are however powerful negotiating instruments, especially when dealing with countries that have become dependent on US trade and “most favored nation status” (MFN under WTO rules) which is pretty much everyone except Russia Belarus North Korea and Cuba.
And how is the Trump economic order going to be realized? That is a question we are all asking now. Yes, our trading partners have been freeloading and taking advantage of America for far too long. But how does the US proceed in the New Economic Order? The massive changes Trump envisions are so enormous they would take much longer than his remaining term in office. How they are actually executed remains to be seen.
We need to maintain our diplomatic and economic relationships with our allies in order to remain secure in here in the US. America is only 5% of the world population. We simply can’t go it alone.
Strap in for a wild ride.
Article on Substack.com:
https://benjaminlupucfp.substack.com/p/the-trump-doctrine-a-new-economic