The economists were wrong before
Most economists would disagree with Donald Trump's new reciprocal tariff policy, unveiled yesterday as the cornerstone of his second term. They would argue, with furrowed brows and stacks of data, that tariffs distort markets, inflate prices, and invite retaliation — textbook heresies against the gospel of free trade. Yet most of those same economists spent decades nodding along to the previous approach, the one that sent jobs and manufacturing overseas in a slow bleed that transformed the Rust Belt into a mausoleum of shuttered factories.
The Rust Belt seems to trust Trump, delivering him the presidency based on his promise to enact the very tariff policy announced yesterday. Why are the voters mistaken and the experts correct? This is an important question that experts and the media must answer, as they show no hesitation in expressing their excitement at the prospect of Trump's failure. They may end up being right — the consensus is overwhelmingly in their favor at the moment — but isn’t it worth exploring how and why they were wrong in the past?
The irony is thick: the consensus that once promised prosperity through globalization now stands accused of hollowing out the very nation it claimed to enrich. The story of how we arrived at Trump's tariff gambit involves hubris, unintended consequences, and a populist backlash that has been simmering since the giddy years of the last century.
Let’s return to the late summer of 1999. The dot-com bubble was swelling, Y2K paranoia was a faint hum, and America stood atop a unipolar world. The Soviet Union was a ghost, and globalization — free markets unfettered, borders softened — was the triumphant creed. Bill Clinton, with his Cheshire grin and third-way swagger, had already shepherded NAFTA into law five years earlier, cracking open the continent for a flood of goods and capital. The World Trade Organization, which the U.S. joined in 1995, represented the next step: a global pact to weave the planet into one vast, efficient bazaar. Economists cheered, pointing to GDP spikes in nations that embraced the gospel. Corporate chieftains salivated over labor costs that plummeted when you relocated a factory from Toledo to Tijuana. It was, as the think-tank clerics at Brookings called it, the era of the "Washington Consensus" — a belief that open markets would lift all boats, from Wall Street to Main Street.
That faith was a mirage, the wreckage undeniable. The middle class, once a broad and sturdy plank of the American edifice, has splintered. Manufacturing jobs — six million of them — vanished between 1990 and 2010, sucked into the maw of China's WTO-enabled rise. Towns like Youngstown and Flint became sepia-toned postcards of a lost age, with their steel mills and auto plants replaced by Dollar Generals and despair. The COVID-19 pandemic laid bare the folly of it all: supply chains, stretched gossamer-thin across oceans, snapped, leaving America begging for masks and chips from a China it now regarded as a rival, not a partner. Globalization, the golden calf of the nineties, morphed into a scapegoat for a nation unmoored.
The nineties didn’t just create legendary country music; it was also a time when the U.S., drunk on post-Cold War confidence, viewed itself as the architect of a borderless utopia. NAFTA was the opening shot, a deal that filled shelves with affordable TVs but devastated factory towns. The WTO established the rules, prioritizing efficiency over sovereignty. Corporations flocked to Shenzhen and Bangalore, seeking wages far lower than the American norm. The Brookings crowd celebrated the benefits — lower prices and global growth — while overlooking the fine print: the American worker would bear the burden. And bear it they did. The data is grim: income inequality widened, the top one percent thrived on global profits, while the bottom half saw their share diminish. The Atlantic, reflecting on this period, described it as a "Roaring Nineties" for some — a roaring disaster for others.
Enter Trump, stage right, with a policy as retro as it is radical. Tariffs aren't new — Alexander Hamilton loved them, and they bankrolled the government for a century — but they're a middle finger to the past thirty years of orthodoxy. Robert Lighthizer, the owlish ex-lawyer who's spent decades brooding over trade deficits, is the brain behind it. On The Tucker Carlson Show last month, he laid it out with a flinty clarity: "A country that doesn't make things is a country destined to lose." For him, tariffs aren't just a tax; they're a defibrillator for an industrial heart that's flatlined. Trump's pitch is simple: slap duties on imports, force production back home, and watch the mills hum again. It's a vision that's less about economic fine-tuning than about national resurrection — one that's found fertile ground in a populace fed up with elite promises.
There's a cultural thread here that runs deeper than spreadsheets. Globalization didn't just offshore jobs; it eroded something intangible — pride, identity, and the quiet dignity of a "Made in America" stamp. Lightizer frames this as a moral struggle: A nation that can't stand on its own is a nation adrift. Trump understands this. His tariffs, along with tax breaks for domestic companies, aim to rebuild not only the economy but also a narrative — a story of strength that globalization's bland uniformity erased.
Back in 1999, the dream of a borderless world felt invincible. Markets would solve everything; sovereignty would be a relic; workers would adapt. It was a beautiful theory — until it wasn't. Trump's tariffs, blunt and brash, represent a repudiation of that hubris — a bet that America can reclaim its footing not by retreating but by remembering what it once knew: that a nation thrives when it builds, not just when it buys. Most economists might scoff, but it’s worth remembering they have been wrong before.
The tapestry of globalization is in shreds, and Trump is threading a new one, stitch by stubborn stitch. Whether it holds is anyone's guess.