Great article. These are bold moves. We'll see how it all shakes out. Money aside, if things continue to go south, it could potentially crush the Republican party for many, many years. Trump ran on this; if nothing else, he does what he says he will do. Articles and videos are popping up from the 90's and early 2000's, from staunch Democrats, Warren Buffet, and many others who warned about the need to use tariffs and address the trade deficit. No one had the guts to do anything. So here we are.
The article presents Trump’s tariff strategy as a bold, high-stakes economic and geopolitical reset—disruption with a purpose. It’s an ambitious attempt to reduce U.S. borrowing costs and reassert global leverage. But what’s missing is the steep and immediate price paid by ordinary Americans. Since the tariffs were announced in March 2025, the U.S. stock market has dropped nearly 20%, wiping out an estimated $5.5 trillion in household wealth—much of it from 401(k)s, IRAs, and retirement portfolios. That’s eight times the $700 billion in annual interest savings the policy aimed to achieve.
If bold action was the goal, there were smarter, less destructive ways to get there. The government could have issued “Patriot Bonds” with safe, tax-advantaged returns to raise capital from citizens voluntarily. A small tax on high-frequency Wall Street trading could have raised tens of billions annually without touching middle-class savings. Or, a targeted effort to repatriate offshore corporate profits to fund Treasury debt could have aligned business incentives with national interest.
Bold doesn’t have to mean reckless. There were better ways to strengthen the economy without asking millions of Americans to sacrifice their future in the process.
I get where you're coming from. I'd argue that the strategy isn't just to simply raise small portions of revenue- the aim is to fix the root cause and rejuvenate the whole economy. For that we need to vastly improve the trade balance, and more importantly cut govt spending meanwhile unlocking new levers to sustain growth.
completely disagree, without bold radical steps the status quo would’ve gone on forever and we would’ve collapsed under financial debt. And the stock market? We need to stop domestic and foreign policy based on quarterly financial goals of American companies and shift to long-term strategic goals.
Could someone please explain why similar strategies by historical leaders Harding,Coolidge, Mellon, Hoover created massive disaster ? Austerity, Tax Cuts, Tariffs ? Data suggest that these policies precipitated the Great Depression and WW2?
In the end, America started to heal led by Roosevelt's New Deal.
Taxing and Spending and Federal Job Guarantee while using inflation as a throttle, #MadeAmericaGreat
Essentially MMT and WW2 produced those all for one and one for all, happy days in America.
I guess it's Scott Bessent who is the Andrew Mellon in this story and Russ Hannigan
..hmmm
Scott Bessent (2025)T Scott Bessent (2025)
T America First economic nationalism, strategic intervention
T Supports Trump’s tax cuts, populist measures (e.g., no tax on tips)
T Supports extending 2017 TCJA, which gives 45% of benefits to top 5%; proposes further corporate tax cuts (21% to 15%), disproportionately benefiting the wealthy
T Supports high tariffs as a tool for revenue, protection, and leverage
T Not a deficit hawk; prioritizes tax cuts for corporations/wealthy over immediate deficit reduction, accepting $4.5 trillion deficit increase, but aims for long-term reduction via growth
T Advocates deregulation, focuses on banking and energy sectors
T Post-COVID recovery, inflation, market volatility
T Accepts short-term pain for long-term growth (e.g., tariffs)
T Acknowledges short-term economic pain (e.g., market volatility) as a necessary “detox,” but frames it as a path to future growth
T Loyal implementer of Trump’s agenda, potential moderator
T Russ Hannigan, the OMB Director, is likely the biggest deficit hawk in the administration, advocating for deeper spending cuts to offset the deficit impact of tax cuts, though his public statements are limited as of April 2025.
Andrew Mellon (1921–1932)
T Laissez-faire capitalism, minimal government role
T Tax cuts for the wealthy, reduced top rate from 73% to 24%
T Focused on tax cuts for high earners (top rate cut from 73% to 24%) and corporations, exacerbating inequality
T Favored low tariffs, global economic integration
T Deficit hawk; cut federal debt by $8 billion through surpluses
T Anti-regulation, dismantled wartime controls
T Roaring Twenties boom, then Great Depression
T Austerity during Depression, resisted intervention
T Never owned up to role in Great Depression; blamed external factors
The path we were on was complete economic failure and destruction of the dollar to the point that it would be destroyed even domestically. The global economic pain was and still is coming. I think the dollar will still eventually lose much, yet function domestically.
There is talk of some 3 to 5 trillion in new investment to the US.
Trump's actions are not taking place in a vacuume and Eurepean decisions, both economic, domestic and culturalregarding globalism and Ukraine, may well exasperate a global depression that was baked in the cards long before Trump 2.0.
This reset of balanced trade may well allow the US to survive better then most, the globalists policies of politics, economics, and domestic policy that have welcomed extreme deficit spending in most nations, inane internal cultural destruction, and massive leverage economic protection to favored connected corporations. These policies are aimed at main street more then Wall Street, yet do not fail to allow Wall Street to grow if successful.
Russia has resisted this trend, trying to protect culture, spend rationally, and operate a less controlling global economics with BRICs.
I am very uncertain how Europe will respond, as their leadership is rather committed to policies that are doomed.
Other factors of the globalists past may well come to haunt all. Covid was a globalists policy involving the " rule the world" crowd. However it main players were the US and China, and the old but now admitted US responsibility for Covid and the broken global response, again led by the same inane "rule the world" crowd, yet functioning within the US and international agencies, was cause to massive pain and death. The globalists will be happy to attempt to divert the pent up frustration and pain to Trump and the US in isolation, instead of more appropriately to the globalists controlling these policies at the time. They will likely be partially successful.
Why is no one from the administration communicating this strategy? And can you please explain how it is “responsible fiscal policy” to raise undefined revenues from tariffs while simultaneously cutting taxes?
This is going to be an abject disaster. Investment will move outside of the country and domestic capacity will not come close to alleviating the short and medium term financial strain on American consumers.
Even if somehow American produces were able to close some of the gap, prices will remain extraordinarily high. The midterms will be an absolute slaughter of the republicans. You can’t plunge the market 10% in two days intentionally and expect to hold on to power.
Also, the absurdity of “at this rate Musk and Doge will have cut $1trn”. There’s no indication that this rate will hold, and DOGE is quickly losing favor in and outside of the administration.
The administration is not walking a tightrope juggling knives. They have a BAC of 0.25 and are driving the wrong direction on the freeway in the middle of the night. They might end up somewhere, but it’s not going to end well.
Because there is no strategy. Every Trump whim is followed by breathless reportage from for-profit Trump whisperers who pretend to have divined his intentions, usually based on their own strategic biases. Ratna is no different.
It would be helpful to hear your views on reducing our national debt, reducing our trade deficits, reducing inflation, reducing unemployment, reinvigorating our industrial complex, bolstering funds for Social Security and Medicare, reducing size of the Federal government, reducing income taxes on the middle class, reducing our foreign partners high tariffs on our imports (including. VAT), reducing cost of university tuition, building up STEM graduates, growing our skilled in high-demand labor pool, etc., etc., etc.
You’ve asked a difficult question. I can assure you that the current administration, if their tax bill passes, will send the national debt higher relative to GDP than any president in history, except possibly Trump 1.
1. Reducing the national debt requires reducing the deficit. I am pro government efficiency and would have gladly supported a systemic review of major expenditures of the federal government, not the slash and burn of DOGE.
2. We don’t need to reduce our trade deficits. We are the richest country in the world by a substantial margin. It’s okay to import more than we export from many countries. But I’ll play ball and say that I am pro natural gas development and exporting, which could help there.
3. Reducing inflation. Inflation has been coming down, and I would be looking to reduce barriers to trade even further to lower prices. But that’s a difficult, multi factorial problem.
4. We should have a stronger industrial complex but it doesn’t need to be what it was in the 1940s and 1950s. Bills like the CHIPs act were leading to significant domestic investment, and pre tariffs the Trump admin was also promoting it. Economic suicide is not necessary.
5. Bolster social security by removing the income tax cap. That will easily fund it for decades.
6. Medicare costs are extremely efficient, so I’m not as worried about reducing that.
7. The size of the federal government is not inherently a problem, but I’m sure there are many roles to cut that aren’t saving lives around the world like at USAID.
8. Reduce middle class taxes by introducing a 80-90% marginal tax rate on Americans making more than $5mn a year.
9. I think that negotiating for tariff reduction is fine and appropriate, Trump is doing that.
10. Reduce cost of university tuition by redirecting federal and state funds for private universities into public ones to further reduce the cost of education. Create incentives to reduce the administrative burden at universities.
11. Modify H1B programs and enforce rules so that it is more difficult to import cheap STEM labor from other countries
12. Sponsor state trade schools and lead cultural campaigns to raise awareness and standing of tradesmen and their crafts.
I am begging you to return to this comment in two years and report the Trump Admin’s progress
Danny Papes, I appreciate your response. Your preference of how to make our federal government more efficient is aligned with my own. Yet, in 40 years as a voter, no party, and no administration, and no congess has had the political or moral will to do it. I’m grateful it is finally being tackled. Musk applied a familiar iterative approach to improving Tesla, SpaceX, X, and now the Starship. Look under the hood of DOGE’s method and you will see a lot of back steps, aware of previous mistakes. Like in the examples I listed, once the process (methodology, tools, etc) for making government more efficient has settled down, and maybe codified by Congress, we’ll have a DOGE that works for all future administrations. Democratic leaders such as Clinton and Obama were in support of making government more efficient. I wish Democratic leaders stepped out to Musk to participate in DOGE, but their anger against Trump (my opinion) blinded them to the opportunity. Regarding tariffs, Trump is a transactionalist, deal maker, and Tanvi’s article today sheds light on who is willing to play. I’m confident in the approach so far. IMHO
Gutting USAID is one of the most immoral acts in the history of the United States. Millions will die or suffer needlessly from cured or controlled diseases. Thousands of careers of the most compassionate and intelligent people ended or redirected.
I am close to many people who work for academic hospitals as researchers and physicians, and there are literally dozens of labs that have been completely shuttered. Scientific careers ended in an instant with no review. These were not woke labs, these were run by doctors who are pushing the limits on medicines, surgical techniques, recovery protocols, etc.
It’s an absolute disaster. If you’re confident with the approach so far, you’re just not looking hard enough.
He's doing all acts out of revenge and the reason he will fail miserably and by using our economy and funding...when his first act was to gut the Consumer Finance organization...we could see his waste, fraud, and abuse of the system quite plainly
Hubristic #Trump2025 policies are alot like the stuff that Harding, Coolidge, Hoover did in the 30's aided and abetted by Mellon;
Austerity, Deficit Reduction, Tax Cuts for Wealthy, Big Tariffs
Hopefully you recall that these precipitated Global Great Depression and caused WW2.
What's the argument that Trump,Bessent and Navarro aren't going to create similar disaster, dedollarization, massive global economic depression, and cyber WW3 with china?
America is going to ramp up domestic manufacturing, right when manufacturing becomes fully automated. Why didn't Republicans spend government money to train folks in the automaking and coal mining states. Pay folks to make machines to make stuff with Federal Guaranteed Jobs.
FDR ushered in those "all for one, one for all happy days" that MAGA pines for, by raising taxes, spending big while keeping one hand on the inflation lever.
Trump's "Deliberate Destabilization" reminds me of Mao's hubris and "The Great Leap Forward"
In South Carolina, for the past 20 years we saw a resurgence in manufacturing following the death of the textile industry in our state. We have over 7 technical colleges that ramped, in conjunction with SC and manufacturing to retrain our people. Bring us a dozen more plants, and we'll train even more. The Federal government helped but our SC did the bulk of the work, especially lobbying companies to build here. My point is we don’t think this responsibility belongs to Trump, but to your state/territory governors. Keep federal government out of our way with over-regulations and high taxes.
VAT is applied to goods and services irrespective of country of origin. I'm amazed that Trump and others see it as a protectionist measure. It's nothing of the sort. It's just a general tax on consumption and an important means of raising state revenue.
Looks like the author is in full-on awe of Trump and his “virtues”. The article is riddled with contradictions — tariffs might eventually trigger domestic substitution (in years!), but only if businesses believe they’re here to stay. Yet the author can’t contain their excitement, calling tariffs some kind of global “art of the deal” leverage (what deals exactly, by the way? Besides fan fiction?). Who in their right mind would invest billions in building factories not knowing what mood swing the “deal-maker” might have next? The author gushes about plans to cut $1T in spending, yet can’t explain why we haven’t even seen a fraction of that (2 full month down). And that $700B in tariff revenue? Basic econ says hi ever heard of elasticity, supply, demand🤦? This isn’t analysis, it’s cheerleading with a blindfold on.
Oh, please. Two months in and you’re melting down over Trump’s latest half-assed deal with some country just to “push back” the disaster, with zero talk of reindustrialization. Supply chains are already shot, and shortages with skyrocketing prices are about to hit hard - weeks away. Good thing you weren’t calling shots in WW2—talk about tossing in the towel.
Excellent article ... makes sense. However the "IFs" in your statement are telling and a more than likely reality
"But the risks are equally stark. If inflation spirals, if trade wars escalate uncontrollably, if voters rebel against higher costs, the consequences could be severe: economic instability, political defeats, and a severely weakened global position."
The one issue you fail to take into consideration is the possible retaliation by country blocks who may opt to join forces to address a perceived bully tactic. The global response will be calculated, measured, initially compromising but then will come the backlash ... after alliances have been formed for retaliatory purposes. The damage of such an approach will likely have decade long implications for the US.
Even if a few manufacturers move their plants to the US the practical benefits will not be seen until after the President's four year term.
Listen to the Prime Minister's of Singapore's address to his nation.
I do mention it in my next post, and yes- Singapore's PM has raised valid points.
Many geopolitical strategies have unfolded, and geopolitics is the driving factor in negotiations. For ex. China has used the sale of U.S. Treasuries to raise yields and disrupt the U.S. strategy.
PS: This is a trade war; things will change rapidly.
For all who are critical of Trump and these actions, what we old you do? D ping nothing is not an option. We are paying $1T in interest on our debt. Our whole country will collapse if w we keep the status quo. So please explain what you would do.
Accept the end of US hegemony, unwind the exorbitantly expensive global military base network, and spend the money taking care of actual people. Ones not named Gates or Musk or Bezos.
They're not accepting the end of hegemony. On the contrary, they're making threats left and right, as if they can face no consequences.
Plenty interventionist in Iran. Not seeing evidence of deal with China, just re-raised. Trump just signed biggest military budget in history, and bragged about it too.
Supporters getting the bait-and-switch as far as I can tell.
The one back-away is with Russia, and I'm certain it's to create space for next war in Iran. (ie those ships aren't exactly safe)
Actually do stuff to help. Trump has said that entitlements are off the table despite being the largest parts of the budget. He also wants the 2017 tax cuts extended at a cost of 3.6 trillion dollars over the next nine years.
Those tax cuts should be allowed to expire cutting the deficit by 400 billion dollars a year. Then they should do a social security reform that lifts the cap on the payroll tax and delays retirement a year. This would save social security.
First of all, tax cuts do not have a cost. Tax collections actually increased after these tax cuts were implement. If you want to see a stock market crash and decreased global competitiveness, let those tax cuts expire. That would be a nightmare that will hurt everyone badly.
What incurs debt is spending. Tax cuts do not have a cost. Cost is something you pay for. Tax cuts mean less revenue, but that is not a cost because the money was never the governments to begin with. Remember, this is our money. The government needs to stop
One thing to add is that for the overall Bessent 3-3-3 plan to work, it is vital to support growth to manage the downside of cutting budget drastically. Tax cuts - both income & corporate will help spur consumption/investment-led growth.
Thank you! My aim is to present my individual views on policy issues with a holistic lens. I believe people should be more involved in objective discourse around governance issues- only then we reap real benefits of democracy.
I just read your article on Fox Digital and I was driven here and X to follow you. You have nailed here. I hope you will continue the theme with updates on the actual progress of tTrumps daring plan. Thank you for pulling it all together!
Hey thanks for the follow. And yes, I do plan to keep tracking this closely. I actually have posted on the first phase of countermoves by other nations. Will put out more soon as things are rapidly changing, everyday.
Great article Tanvi! I would love hear your take on some of the following related points.
1) Do you think there is any likelihood that countries holding large amounts US treasuries try to dump them in retaliation for tariffs and thus make short term debt refinancing more difficult?
2) What role do you see AI and automation in rapidly scaling up domestic manufacturing? Will it come quickly enough and how will that be play out with respect to Trump's working class support base?
3) Where will the roll out of Central Bank Digital Currencies (CBDC's) fit into this scenario? Do you think a BRICs issued CBDC (for example) could challenge USD dominance any time soon?
2) Critical, simply reshoring won't be enough. We need to massively enhance productivity to achieve competitive pricing and sustain the required growth.
3) US empire is evolving right now (& shedding its monetary hegemony burden) amidst a multipolar global order. But that doesnt necessarily mean BRICS is united enough to meaningfully create a counter.
One thing I'd like to add is that the US is trying to realign akin to 1870s, while the world in 2025 has changed a lot - multipolarity is real. The neoliberal globalization paradigm is America's own creation, we're deeply integrated across global supply chains. So a pureplay tariff-based economy is extremely difficult.
Tanvi, I appreciate your ability to reduce the economic and geopolitical complexity of the U.S. into an easy to digest viewpoint. It allows us to reflect and debate these various points you highlighted. Many of the comments below, in support and opposition to what you have written is refreshing and are important to this discussion. Thank you.
Most cogent and balanced analysis and explanation of the administration’s logic I have read. All I hear is “what is he thinking,” and this explains it. Whether one likes it or not, that’s up to them. Thank you for your insight!
Thanks! My aim is to present how I see things playing out from an interdisciplinary lens. And I appreciate folks sharing feedback- both in support as well as counters (which actually enrich the discussions a lot).
#DonaldsDeliberateDisruption is gonna MakeAmericaGreatAgain ....hmmm interesting theory
Sounds more like Mao's Great Leap Forward .....
Can someone please explain to me why similar strategies by historical leaders Harding,Coolidge, Mellon, Hoover created massive disaster ? Austerity, Tax Cuts, Tariffs ? Data suggest that these policies precipitated the Great Depression and WW2?
In the end, America started to heal led by Roosevelt's New Deal.
Taxing and Spending and Federal Job Guarantee while using inflation as a throttle, #MadeAmericaGreat
Essentially MMT and WW2 produced those all for one and one for all, happy days in America.
Thank you for this kind remark. I do agree that with more objective discourse we can generate fresh insights and help everyone along the way gain solid understanding of policy issues.
(I am very un-educated in this area so take this with grains of salt) To everyone saying that this is a dumb strategy. I think i get it. And to those saying that there is no clear direction coming from white house i get that. but what i dont get is why the skeptics of what the author has laid out look at the status quo and think its worth maintaining or at best leaning into.
The reason i dont get it is because every year that i can remember for past 20 years everyone talks about the coming recession if something isnt done, the looming debt if something isnt done, and the solutions put forth have always been "grow the economy" "more capitalism" "more consumerism" "ore innovation" and yet the same warnings still persist. 'Recession if something isnt done, the looming debt if something isnt done'
why is that ? what if doing more capitalism better is not getting us where we want to be?
the one thing that no one still wants to talk about is entitlement reform. so, red marks across the board on that issue.
Totally get your point, doom warnings have always been present- no matter how the economy is doing.
More importantly on the budget spending & deficit cuts - yes the entitlement reforms are one of (if not THE) most important reforms Congress has to act on. The $1T interest payments owing to our debt-fueled growth are a ticking time bomb.
Haha, appreciate you sharing this here. I do find the Mad King theory (Napoleon tendencies) a really interesting angle though - on creative leverage - especially when one's up against the world.
One’s up against the world? If you’re referring to Trump, isn’t that a story he entirely made up? It’s a populist narrative: you’re feeling poor and confused, it’s everyone’s fault, and I’m here to help you!”
Thank you so much! Seriously. I don’t usually get into politics but sometimes the dots are too bright and the lines too weak. Sometimes it feels like it might be good to add, or share, some thought. Just to counterweight the Orwellian narrative 🤨
Great article. These are bold moves. We'll see how it all shakes out. Money aside, if things continue to go south, it could potentially crush the Republican party for many, many years. Trump ran on this; if nothing else, he does what he says he will do. Articles and videos are popping up from the 90's and early 2000's, from staunch Democrats, Warren Buffet, and many others who warned about the need to use tariffs and address the trade deficit. No one had the guts to do anything. So here we are.
The article presents Trump’s tariff strategy as a bold, high-stakes economic and geopolitical reset—disruption with a purpose. It’s an ambitious attempt to reduce U.S. borrowing costs and reassert global leverage. But what’s missing is the steep and immediate price paid by ordinary Americans. Since the tariffs were announced in March 2025, the U.S. stock market has dropped nearly 20%, wiping out an estimated $5.5 trillion in household wealth—much of it from 401(k)s, IRAs, and retirement portfolios. That’s eight times the $700 billion in annual interest savings the policy aimed to achieve.
If bold action was the goal, there were smarter, less destructive ways to get there. The government could have issued “Patriot Bonds” with safe, tax-advantaged returns to raise capital from citizens voluntarily. A small tax on high-frequency Wall Street trading could have raised tens of billions annually without touching middle-class savings. Or, a targeted effort to repatriate offshore corporate profits to fund Treasury debt could have aligned business incentives with national interest.
Bold doesn’t have to mean reckless. There were better ways to strengthen the economy without asking millions of Americans to sacrifice their future in the process.
I get where you're coming from. I'd argue that the strategy isn't just to simply raise small portions of revenue- the aim is to fix the root cause and rejuvenate the whole economy. For that we need to vastly improve the trade balance, and more importantly cut govt spending meanwhile unlocking new levers to sustain growth.
completely disagree, without bold radical steps the status quo would’ve gone on forever and we would’ve collapsed under financial debt. And the stock market? We need to stop domestic and foreign policy based on quarterly financial goals of American companies and shift to long-term strategic goals.
Trade deficit is here due to lack of competitiveness...Something must be done about it.
Could someone please explain why similar strategies by historical leaders Harding,Coolidge, Mellon, Hoover created massive disaster ? Austerity, Tax Cuts, Tariffs ? Data suggest that these policies precipitated the Great Depression and WW2?
In the end, America started to heal led by Roosevelt's New Deal.
Taxing and Spending and Federal Job Guarantee while using inflation as a throttle, #MadeAmericaGreat
Essentially MMT and WW2 produced those all for one and one for all, happy days in America.
1922: “Fordney-McCumber (40%) – Harding shields U.S., strains Europe”
1925: “Coolidge/Mellon Tax Cuts – Wealth booms, workers lag”
1929: “Crash – Bubble bursts under Hoover”
1930: “Smoot-Hawley (60%) – Hoover craters trade, global chaos brews”
1933: “FDR’s New Deal – Spending jumps, recovery starts”
1934: “Reciprocal Trade Act – Tariffs ease, trade heals”
If you want to scare yourself listen to the recent Peter Navarro interview.
Gives the feeling that there is no one in the cockpit.
Yeah, I don’t believe he’s the frontman any longer. Not a reassuring speaker!
I guess it's Scott Bessent who is the Andrew Mellon in this story and Russ Hannigan
..hmmm
Scott Bessent (2025)T Scott Bessent (2025)
T America First economic nationalism, strategic intervention
T Supports Trump’s tax cuts, populist measures (e.g., no tax on tips)
T Supports extending 2017 TCJA, which gives 45% of benefits to top 5%; proposes further corporate tax cuts (21% to 15%), disproportionately benefiting the wealthy
T Supports high tariffs as a tool for revenue, protection, and leverage
T Not a deficit hawk; prioritizes tax cuts for corporations/wealthy over immediate deficit reduction, accepting $4.5 trillion deficit increase, but aims for long-term reduction via growth
T Advocates deregulation, focuses on banking and energy sectors
T Post-COVID recovery, inflation, market volatility
T Accepts short-term pain for long-term growth (e.g., tariffs)
T Acknowledges short-term economic pain (e.g., market volatility) as a necessary “detox,” but frames it as a path to future growth
T Loyal implementer of Trump’s agenda, potential moderator
T Russ Hannigan, the OMB Director, is likely the biggest deficit hawk in the administration, advocating for deeper spending cuts to offset the deficit impact of tax cuts, though his public statements are limited as of April 2025.
Andrew Mellon (1921–1932)
T Laissez-faire capitalism, minimal government role
T Tax cuts for the wealthy, reduced top rate from 73% to 24%
T Focused on tax cuts for high earners (top rate cut from 73% to 24%) and corporations, exacerbating inequality
T Favored low tariffs, global economic integration
T Deficit hawk; cut federal debt by $8 billion through surpluses
T Anti-regulation, dismantled wartime controls
T Roaring Twenties boom, then Great Depression
T Austerity during Depression, resisted intervention
T Never owned up to role in Great Depression; blamed external factors
T Trusted advisor to Harding, Coolidge, Hoover
T
he has no guts - everything is fine when you're using other people's money - no risk...
The path we were on was complete economic failure and destruction of the dollar to the point that it would be destroyed even domestically. The global economic pain was and still is coming. I think the dollar will still eventually lose much, yet function domestically.
There is talk of some 3 to 5 trillion in new investment to the US.
Trump's actions are not taking place in a vacuume and Eurepean decisions, both economic, domestic and culturalregarding globalism and Ukraine, may well exasperate a global depression that was baked in the cards long before Trump 2.0.
This reset of balanced trade may well allow the US to survive better then most, the globalists policies of politics, economics, and domestic policy that have welcomed extreme deficit spending in most nations, inane internal cultural destruction, and massive leverage economic protection to favored connected corporations. These policies are aimed at main street more then Wall Street, yet do not fail to allow Wall Street to grow if successful.
Russia has resisted this trend, trying to protect culture, spend rationally, and operate a less controlling global economics with BRICs.
I am very uncertain how Europe will respond, as their leadership is rather committed to policies that are doomed.
Other factors of the globalists past may well come to haunt all. Covid was a globalists policy involving the " rule the world" crowd. However it main players were the US and China, and the old but now admitted US responsibility for Covid and the broken global response, again led by the same inane "rule the world" crowd, yet functioning within the US and international agencies, was cause to massive pain and death. The globalists will be happy to attempt to divert the pent up frustration and pain to Trump and the US in isolation, instead of more appropriately to the globalists controlling these policies at the time. They will likely be partially successful.
Excellent summary
Thanks Luke
Why is no one from the administration communicating this strategy? And can you please explain how it is “responsible fiscal policy” to raise undefined revenues from tariffs while simultaneously cutting taxes?
This is going to be an abject disaster. Investment will move outside of the country and domestic capacity will not come close to alleviating the short and medium term financial strain on American consumers.
Even if somehow American produces were able to close some of the gap, prices will remain extraordinarily high. The midterms will be an absolute slaughter of the republicans. You can’t plunge the market 10% in two days intentionally and expect to hold on to power.
Also, the absurdity of “at this rate Musk and Doge will have cut $1trn”. There’s no indication that this rate will hold, and DOGE is quickly losing favor in and outside of the administration.
The administration is not walking a tightrope juggling knives. They have a BAC of 0.25 and are driving the wrong direction on the freeway in the middle of the night. They might end up somewhere, but it’s not going to end well.
Because there is no strategy. Every Trump whim is followed by breathless reportage from for-profit Trump whisperers who pretend to have divined his intentions, usually based on their own strategic biases. Ratna is no different.
I couldn’t agree more. If there was actually a cognizant thought process it would’ve been articulated.
It would be helpful to hear your views on reducing our national debt, reducing our trade deficits, reducing inflation, reducing unemployment, reinvigorating our industrial complex, bolstering funds for Social Security and Medicare, reducing size of the Federal government, reducing income taxes on the middle class, reducing our foreign partners high tariffs on our imports (including. VAT), reducing cost of university tuition, building up STEM graduates, growing our skilled in high-demand labor pool, etc., etc., etc.
You’ve asked a difficult question. I can assure you that the current administration, if their tax bill passes, will send the national debt higher relative to GDP than any president in history, except possibly Trump 1.
1. Reducing the national debt requires reducing the deficit. I am pro government efficiency and would have gladly supported a systemic review of major expenditures of the federal government, not the slash and burn of DOGE.
2. We don’t need to reduce our trade deficits. We are the richest country in the world by a substantial margin. It’s okay to import more than we export from many countries. But I’ll play ball and say that I am pro natural gas development and exporting, which could help there.
3. Reducing inflation. Inflation has been coming down, and I would be looking to reduce barriers to trade even further to lower prices. But that’s a difficult, multi factorial problem.
4. We should have a stronger industrial complex but it doesn’t need to be what it was in the 1940s and 1950s. Bills like the CHIPs act were leading to significant domestic investment, and pre tariffs the Trump admin was also promoting it. Economic suicide is not necessary.
5. Bolster social security by removing the income tax cap. That will easily fund it for decades.
6. Medicare costs are extremely efficient, so I’m not as worried about reducing that.
7. The size of the federal government is not inherently a problem, but I’m sure there are many roles to cut that aren’t saving lives around the world like at USAID.
8. Reduce middle class taxes by introducing a 80-90% marginal tax rate on Americans making more than $5mn a year.
9. I think that negotiating for tariff reduction is fine and appropriate, Trump is doing that.
10. Reduce cost of university tuition by redirecting federal and state funds for private universities into public ones to further reduce the cost of education. Create incentives to reduce the administrative burden at universities.
11. Modify H1B programs and enforce rules so that it is more difficult to import cheap STEM labor from other countries
12. Sponsor state trade schools and lead cultural campaigns to raise awareness and standing of tradesmen and their crafts.
I am begging you to return to this comment in two years and report the Trump Admin’s progress
11.
3.
And it took us to get to 36T in debt to find a president willing to act . Is it perfect. For sure not. But the same old same old isn’t the answer.
Danny Papes, I appreciate your response. Your preference of how to make our federal government more efficient is aligned with my own. Yet, in 40 years as a voter, no party, and no administration, and no congess has had the political or moral will to do it. I’m grateful it is finally being tackled. Musk applied a familiar iterative approach to improving Tesla, SpaceX, X, and now the Starship. Look under the hood of DOGE’s method and you will see a lot of back steps, aware of previous mistakes. Like in the examples I listed, once the process (methodology, tools, etc) for making government more efficient has settled down, and maybe codified by Congress, we’ll have a DOGE that works for all future administrations. Democratic leaders such as Clinton and Obama were in support of making government more efficient. I wish Democratic leaders stepped out to Musk to participate in DOGE, but their anger against Trump (my opinion) blinded them to the opportunity. Regarding tariffs, Trump is a transactionalist, deal maker, and Tanvi’s article today sheds light on who is willing to play. I’m confident in the approach so far. IMHO
Gutting USAID is one of the most immoral acts in the history of the United States. Millions will die or suffer needlessly from cured or controlled diseases. Thousands of careers of the most compassionate and intelligent people ended or redirected.
I am close to many people who work for academic hospitals as researchers and physicians, and there are literally dozens of labs that have been completely shuttered. Scientific careers ended in an instant with no review. These were not woke labs, these were run by doctors who are pushing the limits on medicines, surgical techniques, recovery protocols, etc.
It’s an absolute disaster. If you’re confident with the approach so far, you’re just not looking hard enough.
He's doing all acts out of revenge and the reason he will fail miserably and by using our economy and funding...when his first act was to gut the Consumer Finance organization...we could see his waste, fraud, and abuse of the system quite plainly
Hubristic #Trump2025 policies are alot like the stuff that Harding, Coolidge, Hoover did in the 30's aided and abetted by Mellon;
Austerity, Deficit Reduction, Tax Cuts for Wealthy, Big Tariffs
Hopefully you recall that these precipitated Global Great Depression and caused WW2.
What's the argument that Trump,Bessent and Navarro aren't going to create similar disaster, dedollarization, massive global economic depression, and cyber WW3 with china?
America is going to ramp up domestic manufacturing, right when manufacturing becomes fully automated. Why didn't Republicans spend government money to train folks in the automaking and coal mining states. Pay folks to make machines to make stuff with Federal Guaranteed Jobs.
FDR ushered in those "all for one, one for all happy days" that MAGA pines for, by raising taxes, spending big while keeping one hand on the inflation lever.
Trump's "Deliberate Destabilization" reminds me of Mao's hubris and "The Great Leap Forward"
Ummm... Biden just started returning manuf back to the US and training Americans to do the jobs...without the horrible approach...
In South Carolina, for the past 20 years we saw a resurgence in manufacturing following the death of the textile industry in our state. We have over 7 technical colleges that ramped, in conjunction with SC and manufacturing to retrain our people. Bring us a dozen more plants, and we'll train even more. The Federal government helped but our SC did the bulk of the work, especially lobbying companies to build here. My point is we don’t think this responsibility belongs to Trump, but to your state/territory governors. Keep federal government out of our way with over-regulations and high taxes.
VAT is applied to goods and services irrespective of country of origin. I'm amazed that Trump and others see it as a protectionist measure. It's nothing of the sort. It's just a general tax on consumption and an important means of raising state revenue.
Looks like the author is in full-on awe of Trump and his “virtues”. The article is riddled with contradictions — tariffs might eventually trigger domestic substitution (in years!), but only if businesses believe they’re here to stay. Yet the author can’t contain their excitement, calling tariffs some kind of global “art of the deal” leverage (what deals exactly, by the way? Besides fan fiction?). Who in their right mind would invest billions in building factories not knowing what mood swing the “deal-maker” might have next? The author gushes about plans to cut $1T in spending, yet can’t explain why we haven’t even seen a fraction of that (2 full month down). And that $700B in tariff revenue? Basic econ says hi ever heard of elasticity, supply, demand🤦? This isn’t analysis, it’s cheerleading with a blindfold on.
Two months into it and you have tossed in the towel. Glad you weren’t commander in Chief in WW2.
Oh, please. Two months in and you’re melting down over Trump’s latest half-assed deal with some country just to “push back” the disaster, with zero talk of reindustrialization. Supply chains are already shot, and shortages with skyrocketing prices are about to hit hard - weeks away. Good thing you weren’t calling shots in WW2—talk about tossing in the towel.
This is a great summary of what is going on. It is a gamble aiming to resolve real problems. You did a good job explaining it. I look
forward to read your future posts.
Many thanks!
Excellent article ... makes sense. However the "IFs" in your statement are telling and a more than likely reality
"But the risks are equally stark. If inflation spirals, if trade wars escalate uncontrollably, if voters rebel against higher costs, the consequences could be severe: economic instability, political defeats, and a severely weakened global position."
The one issue you fail to take into consideration is the possible retaliation by country blocks who may opt to join forces to address a perceived bully tactic. The global response will be calculated, measured, initially compromising but then will come the backlash ... after alliances have been formed for retaliatory purposes. The damage of such an approach will likely have decade long implications for the US.
Even if a few manufacturers move their plants to the US the practical benefits will not be seen until after the President's four year term.
Listen to the Prime Minister's of Singapore's address to his nation.
https://youtu.be/A3hS93y7C0I?si=GncY__05AoCoCNQu
I don't disagree with your post...ty.
I worry about the "IFs" of standing by and watching. Our past fiscal decisions have caught up with us.
We either take a few cards and play another round...or fold.
I do mention it in my next post, and yes- Singapore's PM has raised valid points.
Many geopolitical strategies have unfolded, and geopolitics is the driving factor in negotiations. For ex. China has used the sale of U.S. Treasuries to raise yields and disrupt the U.S. strategy.
PS: This is a trade war; things will change rapidly.
For all who are critical of Trump and these actions, what we old you do? D ping nothing is not an option. We are paying $1T in interest on our debt. Our whole country will collapse if w we keep the status quo. So please explain what you would do.
Accept the end of US hegemony, unwind the exorbitantly expensive global military base network, and spend the money taking care of actual people. Ones not named Gates or Musk or Bezos.
Curious to hear why do you think its different from what the current administration is doing?
- Shedding the ambitions of total monetary hegemony, accepting a multipolar world order
- less-interventionist, Pulling away from NATO and pressuring EU to share burden
- Opening up to "deals" from Russia, even China.
- Efforts to cut spending ~DOGE
- POTUS has repeatedly said his focus is on main st. not wall st.
They're not accepting the end of hegemony. On the contrary, they're making threats left and right, as if they can face no consequences.
Plenty interventionist in Iran. Not seeing evidence of deal with China, just re-raised. Trump just signed biggest military budget in history, and bragged about it too.
Supporters getting the bait-and-switch as far as I can tell.
The one back-away is with Russia, and I'm certain it's to create space for next war in Iran. (ie those ships aren't exactly safe)
Actually do stuff to help. Trump has said that entitlements are off the table despite being the largest parts of the budget. He also wants the 2017 tax cuts extended at a cost of 3.6 trillion dollars over the next nine years.
Those tax cuts should be allowed to expire cutting the deficit by 400 billion dollars a year. Then they should do a social security reform that lifts the cap on the payroll tax and delays retirement a year. This would save social security.
First of all, tax cuts do not have a cost. Tax collections actually increased after these tax cuts were implement. If you want to see a stock market crash and decreased global competitiveness, let those tax cuts expire. That would be a nightmare that will hurt everyone badly.
Tax cuts without commensurate spending cuts incur debt which is a cost. Income tax hikes would cause much less disruption than the tariffs.
What incurs debt is spending. Tax cuts do not have a cost. Cost is something you pay for. Tax cuts mean less revenue, but that is not a cost because the money was never the governments to begin with. Remember, this is our money. The government needs to stop
Spending like drunken sailors.
One thing to add is that for the overall Bessent 3-3-3 plan to work, it is vital to support growth to manage the downside of cutting budget drastically. Tax cuts - both income & corporate will help spur consumption/investment-led growth.
Intelligent, balanced analysis. If only we could get this from the mainstream media, we would have a far more well-informed public.
Thank you! My aim is to present my individual views on policy issues with a holistic lens. I believe people should be more involved in objective discourse around governance issues- only then we reap real benefits of democracy.
I just read your article on Fox Digital and I was driven here and X to follow you. You have nailed here. I hope you will continue the theme with updates on the actual progress of tTrumps daring plan. Thank you for pulling it all together!
Hey thanks for the follow. And yes, I do plan to keep tracking this closely. I actually have posted on the first phase of countermoves by other nations. Will put out more soon as things are rapidly changing, everyday.
Great article Tanvi! I would love hear your take on some of the following related points.
1) Do you think there is any likelihood that countries holding large amounts US treasuries try to dump them in retaliation for tariffs and thus make short term debt refinancing more difficult?
2) What role do you see AI and automation in rapidly scaling up domestic manufacturing? Will it come quickly enough and how will that be play out with respect to Trump's working class support base?
3) Where will the roll out of Central Bank Digital Currencies (CBDC's) fit into this scenario? Do you think a BRICs issued CBDC (for example) could challenge USD dominance any time soon?
Thanks!
1) Except China, highly unlikely.
2) Critical, simply reshoring won't be enough. We need to massively enhance productivity to achieve competitive pricing and sustain the required growth.
3) US empire is evolving right now (& shedding its monetary hegemony burden) amidst a multipolar global order. But that doesnt necessarily mean BRICS is united enough to meaningfully create a counter.
Great post. Looking forward to more of your writing and work. Cheers
simple excellent, happy I found you on twitter ! will be watching out for your takes (on everything it seems including tech !)
If I am right, then tariffs mean more things made in America and lower taxes, then I am going all in. https://torrancestephensphd.substack.com/p/to-tariff-or-not-to-tariff-that-is
Excellent read. Thanks for sharing it here.
One thing I'd like to add is that the US is trying to realign akin to 1870s, while the world in 2025 has changed a lot - multipolarity is real. The neoliberal globalization paradigm is America's own creation, we're deeply integrated across global supply chains. So a pureplay tariff-based economy is extremely difficult.
Tanvi, I appreciate your ability to reduce the economic and geopolitical complexity of the U.S. into an easy to digest viewpoint. It allows us to reflect and debate these various points you highlighted. Many of the comments below, in support and opposition to what you have written is refreshing and are important to this discussion. Thank you.
Most cogent and balanced analysis and explanation of the administration’s logic I have read. All I hear is “what is he thinking,” and this explains it. Whether one likes it or not, that’s up to them. Thank you for your insight!
Thanks! My aim is to present how I see things playing out from an interdisciplinary lens. And I appreciate folks sharing feedback- both in support as well as counters (which actually enrich the discussions a lot).
#DonaldsDeliberateDisruption is gonna MakeAmericaGreatAgain ....hmmm interesting theory
Sounds more like Mao's Great Leap Forward .....
Can someone please explain to me why similar strategies by historical leaders Harding,Coolidge, Mellon, Hoover created massive disaster ? Austerity, Tax Cuts, Tariffs ? Data suggest that these policies precipitated the Great Depression and WW2?
In the end, America started to heal led by Roosevelt's New Deal.
Taxing and Spending and Federal Job Guarantee while using inflation as a throttle, #MadeAmericaGreat
Essentially MMT and WW2 produced those all for one and one for all, happy days in America.
1922: “Fordney-McCumber (40%) – Harding shields U.S., strains Europe”
1925: “Coolidge/Mellon Tax Cuts – Wealth booms, workers lag”
1929: “Crash – Bubble bursts under Hoover”
1930: “Smoot-Hawley (60%) – Hoover craters trade, global chaos brews”
1933: “FDR’s New Deal – Spending jumps, recovery starts”
1934: “Reciprocal Trade Act – Tariffs ease, trade heals”
Thank you for this kind remark. I do agree that with more objective discourse we can generate fresh insights and help everyone along the way gain solid understanding of policy issues.
(I am very un-educated in this area so take this with grains of salt) To everyone saying that this is a dumb strategy. I think i get it. And to those saying that there is no clear direction coming from white house i get that. but what i dont get is why the skeptics of what the author has laid out look at the status quo and think its worth maintaining or at best leaning into.
The reason i dont get it is because every year that i can remember for past 20 years everyone talks about the coming recession if something isnt done, the looming debt if something isnt done, and the solutions put forth have always been "grow the economy" "more capitalism" "more consumerism" "ore innovation" and yet the same warnings still persist. 'Recession if something isnt done, the looming debt if something isnt done'
why is that ? what if doing more capitalism better is not getting us where we want to be?
the one thing that no one still wants to talk about is entitlement reform. so, red marks across the board on that issue.
Totally get your point, doom warnings have always been present- no matter how the economy is doing.
More importantly on the budget spending & deficit cuts - yes the entitlement reforms are one of (if not THE) most important reforms Congress has to act on. The $1T interest payments owing to our debt-fueled growth are a ticking time bomb.
*what if doing more Global* capitalism*
Great read! Although I have to say, it felt like something a bit mono.
It sparked - in me - the need for a touch of stereo, so here's my reply :)
https://open.substack.com/pub/prismaticalab/p/not-the-art-of-the-deal?r=59rto4&utm_campaign=post&utm_medium=web&showWelcomeOnShare=true
Haha, appreciate you sharing this here. I do find the Mad King theory (Napoleon tendencies) a really interesting angle though - on creative leverage - especially when one's up against the world.
One’s up against the world? If you’re referring to Trump, isn’t that a story he entirely made up? It’s a populist narrative: you’re feeling poor and confused, it’s everyone’s fault, and I’m here to help you!”
Great article! I hope people read this and wake up to what’s really really really going on.
Thank you so much! Seriously. I don’t usually get into politics but sometimes the dots are too bright and the lines too weak. Sometimes it feels like it might be good to add, or share, some thought. Just to counterweight the Orwellian narrative 🤨
Another great perspective!