The markets are going haywire, and consumer confidence is nosediving. You might be wondering why the Trump administration decided to burn down the healthy economy it inherited. Is it pure incompetence? Or is there a plan?
The answer to both questions appears to be yes. The incompetence is undeniable. But the administration does have a plan, or at least a vision, for what will spring up from the ashes. The trouble is that the long-term economic program is even worse than the short-term one.
The clearest picture of the new America that is meant to arise after the crash was provided by Treasury Secretary Scott Bessent in an interview last week with Tucker Carlson. Bessent acknowledged some short-term discomfort—the stock market plunged as he spoke—but in the service of something grand. “On one side, the president is reordering trade,” he said. “On the other side, we are shedding excess labor in the federal government and bringing down federal borrowings. And then on the other side of that, we will have the labor we need for new manufacturing.” Elon Musk shared the same idea on X: “We need to shift people from low to negative productivity jobs in government to high productivity jobs in manufacturing (as well as mining and refining of materials).” Think of the plan as a classic economic-development strategy, but run backwards.
[Jerusalem Demsas: There’s no coming back from Trump’s tariff disaster]
The typical pattern for economic development involves moving a nation’s economy up the value chain. A poor country develops export markets by specializing in low-wage manufacturing. Eventually, these industries develop higher levels of sophistication, adding more intellectual value—first they build toasters and cameras, then cars, then robots. These industries generate tax revenue that can support better schools and other forms of public investment, feeding back into the developmental cycle. That’s how the “Asian tigers” (Hong Kong, Singapore, South Korea, and Taiwan) enjoyed rapid economic growth over the past two generations, and it’s the pattern other developing countries are hoping to follow.
Donald Trump is basically running this play in reverse.
The tariffs, while putatively intended to promote industrialization, have the more direct impact of directing American production back into industrial inputs. Trump has raised tariffs on metals, which makes building things more expensive but creates an incentive to reshore the production of steel and aluminum. This moves the industrial economy down the value chain, rather than up, which only makes sense if the objective is to have an economy with more guys wearing hard hats.
Meanwhile, Trump is laying waste to basic scientific research. The administration has frozen or canceled billions of dollars in funds to the National Institutes for Health, slashed National Science Foundation grants, and canceled or threatened to cancel billions of dollars in research funding to elite universities (putatively in response to their handling of anti-Semitism).
This has had a catastrophic effect on a wide array of high-tech fields. A group of medical-innovation investors took the immense risk of putting their names on a letter to the administration warning that the research cuts “are an assault on the foundation of biomedical and technological progress.”
The cuts to the bureaucracy imposed by the Department of Government Efficiency have likewise targeted the government’s most specialized experts, whose work maintains the economy’s place at the technological frontier. Trump and Musk are slashing staff at the Food and Drug Administration, a regulatory body that allows new drugs to enter the market, and are reportedly planning to fire half of the Energy Department’s loan officers, who are needed to approve nuclear facilities.
The combination of tariffs and the mass cancellation of research funding threatens to lay waste to the tech and biomedical sectors with devastating precision, almost as if an enemy combatant had targeted key plants with a fleet of bombers. These industries are the envy of the world. What sense is there in driving them offshore?
[Phillips Payson O’Brien: Trump’s trade war handed China a strategic advantage]
The logic, as it were, is a rose-tinted view of the American past to which the administration wishes to return. In his interview with Carlson, Bessent brought up campaign stops with Trump where he communed with the working class: “There are the union workers, the steelworkers. They’ve got on their hats. They’ve got on their vests. They’re there with their children. It was very moving.”
Some of Trump’s conservative-media supporters, who inhabit the same information space as the president and his advisers, have expressed versions of this same nostalgia. The Fox News host David Asman delivered a soliloquy about his father, who, he said, earned $3,500 a year in 1954 and had a three-bedroom home and a stay-at-home wife. Trump, Asman argued, would bring back those times of plenty.
The economy was growing rapidly in the ’50s, but Americans back then did not have higher incomes than we do today. They were, in fact, much poorer. When Trump says he will make American great again, implying a return to the past, we should take him seriously. In economic terms, that is literally what he has set out to do.