Yves here. This article gives a high-level overview of Trump’s economic policies. It argues they weren’t a mystery, even though Trump didn’t talk meaningfully on the stump about tariffs or the idea that Americans would be expected to suffer higher inflation. In addition, Trump then, as he does now, said so many contradictory things that one could go back and find him having foreshadowed pretty much anything on the economic front.
Note that the key elements of this program were in Project 2025, Trump distanced himself from it publicly (even though it is conceivable that his key allies winked and nodded otherwise). And again, Project 2025 itself had numerous contradictions and inconsistencies, so it is hard to depict it as presenting a coherent program.
With all that as a quibble, the post distills the core elements of what Trump sees as his new order.
Originally published at the Institute for New Economic Thinking website
In a series of high-level discussions in Rome and Berlin, Thomas Ferguson—a leading authority on money and politics—offered a sweeping analysis of the deeper forces driving President Donald Trump’s tariff agenda. Far from a spur-of-the-moment decision, Trump’s economic moves reflect a broader political realignment and years of behind-the-scenes preparation.
Ferguson, who serves as Director of Research at the Institute for New Economic Thinking, reveals that what is unfolding now is more than just a trade war—it’s the unraveling of a decades-old global order. Trump’s tariff moves signal the rise of a new coalition of economic and tech elites—a “red tech” bloc—and a scramble to control the future of money, energy, and AI.
To understand where things are headed, and why the stakes are so high, here are seven key takeaways from Ferguson’s analysis.
1. The tariff bombshell didn’t just drop from the sky.
Trump’s plans for changing the world economic system are massive—on the scale of FDR abandoning the gold standard or Nixon closing the gold window in 1971. By contrast, comparisons with the 1985 Plaza Accord, which devalued the overstrong U.S. dollar, are somewhat misleading, since that really represented a lower-order realignment among friendly allied countries. The perception that Trump is simply improvising misses the mark: the DOGE initiative was quietly debated for some time, while the broader international economic strategy was telegraphed several months in advance, with key drafts circulating rather widely.
2. An end to the Post-World War II global economic era is the aim.
This crisis of the global economic system is different from earlier ones, for example, in the 1970s. This time, the aim is to terminate a system that allows countries like China and Germany to accumulate large trade surpluses year after year, while the U.S. runs persistent deficits to support global demand. The administration believes that this dynamic has benefited surplus countries at the expense of American manufacturing and workers, hollowing out industries and increasing reliance on debt. As the system unravels, the U.S. risks losing economic leverage and faces rising pressure to rebalance without the global structures that once cushioned the blow. Trump believes domestic dissatisfaction arising from these imbalances was the primary reason he came to power. Objections about how the administration arrived at the various tariff levels it proposed miss the key point: the tariffs are really the first stage of a broader realignment of the whole international monetary system.
3. Key Trump policies reveal his agenda.
Ferguson notes that Trump embraces a unitary executive theory—the belief that the Constitution grants the president full control over the executive branch, limiting congressional checks on presidential power.
He is devoted to re-balancing the international economy, and he has been executing a diplomatic revolution with friendlier relations with Russia as a tactic to throw China off balance and a decided cooling of relations between the US and Europe.
Trump recognizes that the era of low interest rates is over—4 to 5% poses a serious challenge to funding deficits. But he supports extending his earlier tax cuts, which would balloon deficits without much larger spending cuts. Enter DOGE: a political tool both to target opponents and help fund tax cuts, aligned with his broader goal of rolling back New Deal-era social policy, though as Ferguson notes, far more money could be saved by scrutinizing the health care system and defense procurement.
Trump is also fostering an energy counter-revolution, aiming to slow the transition away from fossil fuels—driven in part by the high energy demands of AI, which is critical for defense and other sectors, and his deep support among oil and gas producers.
4. Mainstream political science and economics have largely misunderstood Trump’s appeal.
Democrats’ failure to improve life for workers slipped under many analysts’ radar. Ferguson highlights that, despite many claims to the contrary, real wages actually fell during the Biden administration—not because hourly wages didn’t rise, but because average working hours declined, dragging down weekly earnings and real median household income. While Trump’s tax cuts were a boon to the rich, establishment economic analysts failed to pay enough attention to how increased working hours (if not higher wages) raised incomes for many groups during the first Trump administration.
Ferguson argues Biden’s Green New Deal rhetoric met party resistance and collided with AI’s energy demands—then, amid inflation, Biden dodged tougher steps like cracking down on commodity speculation. His administration also embraced the geopolitical logic of continuing to promote exports of oil and natural gas even while investing in a more sustainable economy.
Though Biden initially showed interest in tougher bank regulation, he retreated as Trump’s political momentum returned. These issues trace back to Obama, who campaigned on change but largely maintained the status quo—favoring bank bailouts over assistance to the population, extending Bush-era tax cuts, and generally failing to deliver for many voters, as reflected in the steep drop in turnout in the 2014 midterms.
5. The coalition that elected Trump is a new and evolving force.
It brings together major industrial sectors like steel and metals with a rising faction of Silicon Valley figures increasingly anxious about China and put off by the Biden administration’s efforts to regulate tech. Tech elites like Elon Musk, Marc Andreessen, and Ben Horowitz, along with defense-focused tech players like Peter Thiel, Palantir, and Anduril, are all part of this emerging bloc. It’s a powerful alliance of industry, tech, finance, and national security interests—united by a shared concern over competition from China and a belief that Trump will back a more aggressive and strategically assertive economic agenda. Ferguson refers to the emergence of a “red tech” bloc (the color associated with Republicans) bringing together champions of AI, startups in defense, and crypto.
6. There are big crypto plans afoot.
Crypto billionaires are rapidly rising—many now appearing on the Forbes 400—and are an integral part of Silicon Valley culture, wherever they locate their home offices. They believe they can run global payment systems more efficiently than traditional banks, and they deeply distrust the Federal Reserve. Their goal is ambitious: to replace the current financial infrastructure, dominate global payments, and profit by controlling the pipes through which money flows. Ferguson noted marked differences within the crypto industry. “A major part of it is basically another form of gambling, or less politely, tulip selling,” he said. Ferguson doubts that stablecoins can actually remain stable for very long, absent regulatory oversight and guarantees that will rest in the final analysis on intervention by the Federal Reserve or some other state entity. Crypto’s popularity among real criminals – it is the medium of choice for most ransomware – is also deeply concerning and should give conscientious regulators nightmares.
7. The AI factor is key.
Ferguson emphasizes that “everyone in defense now needs AI—it’s a new backbone of modern military power, so welcome to a new kind of 1890s-style race for critical raw materials and minerals, but this time driven by algorithms, not iron.” The race is on for rare earths and critical minerals, the essential resources powering this AI arms race. Right now, most rare earths are processed in China. The Trump administration is clearly intending to change this, and its preoccupation with containing China is obvious. It is certainly a driving force in its determination to alter the global trading system, and it will likely lead to major escalations in military spending on both sides.
