Imagine this: One day on a walk in your neighborhood, you see several men in construction gear. “What are you guys up to?” you ask. “We’re rebuilding this dilapidated house!” the group’s leader responds. “It used to be beautiful, but the previous owners let it fall into disrepair.”
Admittedly, the home has been an eyesore for years. But as you watch the contractors at work, confusion and alarm set in. One guy is hauling furniture out of the living room and setting it on fire in the driveway. Another is smashing windows with a hammer and tossing glass shards into the neighbor’s yard. Yet another is holding an industrial-size hose hooked up to a tank labeled TOXIC WASTE, which he’s aiming ominously at the open front door. As the flames lick higher into the sky, you say to yourself: If these gentlemen think this is what rebuilding a house looks like, I don’t even want to know what they think destroying a house entails.
My allegory is not subtle, nor is it meant to be. Under the banner of attempting to fix the foundation of the U.S. economy, President Donald Trump has unleashed a whirlwind of chaos that could bring down our house.
In the interest of fairness, we should acknowledge the dilapidated structure that is American manufacturing. Manufacturing jobs have declined as a share of the economy in the past 20 years (and plummeted in the 50 years before that). Total U.S. industrial production has been roughly flat since 2007. Ford and GM stocks have barely increased since the 2010s. The U.S. struggles to produce high-tech machines that are crucial to our national security: We can’t build ships, our military arsenal is out-of-date, and we depend on other countries to churn out the most advanced computer chips. And as all of this is happening, China is plowing trillions of dollars into expanding its position as a manufacturing juggernaut.
A policy to grow U.S. manufacturing in areas core to our national interest would be fine. It might involve public subsidies for new manufacturers; a concerted effort to work with friendly trading partners in Europe, Asia, and North America to expand supply chains; and a clearly communicated set of rules to govern trade for the next generation, to encourage billions of dollars of private-sector investment. It might even look a bit like the CHIPS and Science Act. Passed under President Joe Biden, this law authorized hundreds of billions of dollars for the manufacture of high-end computer chips and other science and tech projects that could be central to U.S. national security, including unmanned aerial vehicles, spacecraft, and quantum computing.
The Trump plan, however, manages to achieve the opposite of all of these goals, all at once. Rather than build on the CHIPS and Science Act, Trump has called to destroy it. Rather than build a trade alliance with American allies, he kicked off this whole mess by announcing 25 percent tariffs on Mexico and Canada, alongside threats to conquer and annex the latter. Rather than deepen our supply-chain resilience in Europe to build a bulwark against China, he’s slapped tariffs on European countries without consultation or guidance. Rather than increase confidence in financial markets to encourage long-term investment in U.S. manufacturing, he’s unleashed chaos. Nobody from the White House can say what the tariff regime will look like in one day, much less one week, much less one year.
Trump’s policies are burning the very house he intends to save in so many different ways that it’s hard to keep track. Manufacturing firms typically rely on loans and access to credit markets to expand. But “cracks are forming” in loan markets, and “credit markets are paralyzed” because of the Trump tariffs, according to Bloomberg. On Sunday, The Wall Street Journal reported that Michigan’s economy seems to be “the first victim of Trump’s trade war.” Auto suppliers in the state are looking at higher prices on parts, including for hinges, brackets, and aluminum. “There is no way we can absorb these tariffs,” the chief executive of one supplier said. “The epicenter for job losses due to these tariffs is somewhere between Detroit, Michigan, and Windsor, Canada,” said the chief executive of a Michigan consulting firm that specializes in automotive markets.
Even if you were convinced that imposing tariffs on imports from every country in the world was a good idea, there is still no defense for the way this policy is being rolled out. The Financial Times reported today that cars and car parts from Mexico and Canada, which are supposed to be exempt from the tariffs, will still be assessed 25 percent duties at the border. This is causing automakers to stop shipments into the U.S., potentially holding up the final assembly of cars. It’s utter madness to suddenly freeze supply chains under the guise of trying to help America’s biggest manufacturers make more stuff.
Every defense of the Trump tariffs seems to be at odds with the actual underlying policy. Some of Trump’s most high-profile defenders, such as the investor and podcaster Chamath Palihapitiya, have claimed that the “singular goal” of the Trump tariffs is to reduce interest rates, which would help the U.S. refinance its debt. “Interest rates hit their low for the year, so I’m expecting mortgage applications to pick up,” Treasury Secretary Scott Bessent said on Sunday. But this plan doesn’t seem to be working at all. In the days after these comments, the 10-year Treasury yield shot up.
“We are under siege by hostile adversaries trying to erode our manufacturing and defense industrial base and disrupt our financial system,” Stephen Miran, the chair of Trump’s Council of Economic Advisers, said. But at this moment, the siege is coming from inside the house. Trump’s policies are hurting U.S. manufacturers. They are disrupting the U.S. financial system. Having identified U.S. manufacturing as a worthy renovation job, the president has unleashed a torrent of nonsense that threatens to destroy the very thing he insists on saving. If this is what it looks like when Trump decides he wants to save the economy, God help us if he ever decides to destroy it.
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