Trumponomics is about Trump far more than it is about economics
Is Donald Trump a staunch capitalist, a secret socialist, a blend of the two, or none of the above? Depending on the day, it’s hard to tell.
Some of his initiatives are pure Ronald Reagan, such as his corporate-income tax cuts and deregulation efforts targeted at oil and gas. Some of his interventions would impress a Democratic Socialists of America chapter, such as demanding a public stake in Intel, requesting 15 percent of revenues from Nvidia’s chip sales to China, and securing a “golden share” of U.S. Steel to retain veto power over its decision making. As for the rest of Trump’s economic policy, it is a hodgepodge of 19th-century mercantilism, developing-world authoritarianism, and extremely online weirdness. The U.S. tariff rate stands near a 100-year high. When Trump isn’t firing the statisticians who calculate unemployment, he’s waging war against the independent central bank or posting about the fierce urgency of corporate-logo design.
To put it simply, or at least as simply as one can: Trump’s economic agenda is deeply Reaganite and deeply anti-conservative; somewhat capitalist and frequently socialist; declaratively obsessed with “American greatness” yet constantly sidetracked by online outrages that do nothing for the country.
So, what is Trumponomics?
The most interesting answer I’ve heard is “state capitalism with American characteristics,” which The Wall Street Journal’s Greg Ip defined as “a hybrid between socialism and capitalism in which the state guides the decisions of nominally private enterprises.” This diagnosis makes Trump’s economic policy seem more evolutionary than revolutionary. In the past 70 years, the U.S. government has frequently intervened in corporate affairs, especially in response to emergencies such as World War II (the Defense Production Act), the Great Recession (the bank bailouts), and COVID (the Paycheck Protection Program). Under Joe Biden, Democrats waded into industrial policy with subsidies for clean energy and semiconductors. By one interpretation, Trumponomics doesn’t stand out in history; it’s just the latest example of the federal government taking a more activist role in directing the economy, especially as we try to compete with the juggernaut of authoritarian China, whose modern development was known as “socialism with Chinese characteristics.”
But Trumponomics is too erratic to deserve any comparison with state capitalism, especially in relation to China. As the author Dan Wang writes in his new book, Breakneck, China is an “engineering state,” where Beijing’s control over the economy both emerges from long-term planning and radiates outward through millions of local-government representatives. “The core characteristic of China’s state capitalism is discipline,” Wang told Ip. “Trump is the complete opposite of that.”
Consider, for example, two simple questions: What are Trump’s tariffs supposed to accomplish, and what are they actually accomplishing? The White House, including the economic adviser Stephen Miran, has repeatedly stressed that higher import taxes will bring back manufacturing and revitalize exports. Neither is happening. Manufacturing output has declined every month since the tariffs were announced, and many firms have explicitly blamed Trump’s tariffs. Meanwhile, the president recently struck a deal requiring Nvidia and AMD to pay the government 15 percent of revenue on the sale of AI chips to China. The logic is genuinely hard to follow on a week-to-week basis. Promoting exports with global tariffs (which might be illegal) is one thing. Taxing exports (which might also be illegal) is another thing. But taxing imports and exports simultaneously doesn’t really comport with any coherent economic strategy. As the economy lists toward stagflation, the White House is not doing “state capitalism” so much as it’s doing “step-on-a-rake capitalism”—a tragicomic bungling of economic growth that fails to advance the very objectives it claims to prioritize.
The problem with evaluating this administration’s economic agenda is that Trumponomics is about Trump far more than it is about economics. There is no clear theory of growth steering the U.S. economy, just one man’s desire to colonize every square inch of American attention and experience, which happens to include international markets.
Trumponomics, then, is best understood as Trump’s formula for controlling everything around him, rather than an ideology with a telos. That formula has three main components. The first is declaring an emergency to justify intervention. The second is making threats to force private actors to do his bidding. The third is demanding tribute. [Continue reading…]