ANALYSIS — President Donald Trump and top aides have signaled a major overhaul of the U.S. economy — one that would be backed by industry executives, and partly fueled by nostalgia and trade retaliation, as Democratic lawmakers warn economic hardship looms.
As the United States and Canada this week engaged in a tit for tat triggered by Trump’s 25 percent tariffs on most items produced by America’s northern neighbor, the president and his aides used words such as “rebuild,” “manufacturing superpower” and “re-industrialize” to describe his vision for the U.S. economy. The top White House spokesperson this week suggested Canada had been shifted from economic ally status to “competitor.”
The Biden administration made moves aimed at shifting the U.S. economy into new sectors, including artificial intelligence, electric vehicles, microchip production, climate-related industries, advanced medical research and others. While Trump in his second term has taken his own steps on AI and microchips, his administration appears to be looking backward as much as toward the future.
To hear the 47th chief executive and some of his top lieutenants describe it, Trump’s economic vision includes costly new factories across the country — and American workers eager to return to life on the assembly line. Their words suggest a vision, and the policies to bring it about, that amounts to one part nostalgia for America’s past — before multiple administrations tried steering the economy headlong into the information age — and one part anger with its top trading partners.
U.S. Trade Representative Jamieson Greer said Wednesday in a statement criticizing the European Union for issuing retaliatory tariffs: “For years, the European Union has opposed the United States’ efforts to re-industrialize.”
On Tuesday, White House press secretary Karoline Leavitt was asked by a reporter if Trump’s decision to increase his Canada tariffs was based on a “specific economic metric” or “impulse.”
Leavitt said the president had “made his position on this quite clear … and it was a retaliatory statement due to the escalation of rhetoric that we’ve seen out of Ontario, Canada. The president saw the premier, Doug Ford, make an egregious and insulting comment, threatening to shut down electricity for the American people, for hardworking American families.”
“(Ford) made that threat,” Leavitt said. “The president saw that and has an obligation and a responsibility to respond accordingly and represent the interests of the American people.”
(The Ontario premier had announced a 25 percent fee on electricity it supplies to several U.S. states in response to tariffs on Canadian steel and aluminum, which Trump then threatened to increase to 50 percent. Following Leavitt’s news conference, both threats were put on hold after Ford spoke with Commerce Secretary Howard Lutnick.)
The Trump blueprint is also based on a number of assumptions. For instance, the president and his team rarely talk about how long it would take and how much it would cost to build new manufacturing plants, train workers and ramp up production.
“Our steel and aluminum industries have actually applauded these tariffs, because, again, they know it’s going to grow their industry here. It’s going to allow them to export more steel that is made right here in the United States with American workers egregious and insulting your words here,” Leavitt said Tuesday.
‘Thriving industries’
The emerging vision came into greater focus this week just when a CNN/SSRS poll found that most Americans (56 percent) disapproved of Trump’s handling of the economy, with 44 percent approving. His job approval rating was also underwater in the same survey (54 percent approved, 45 percent disapproved).
An Economist/YouGov survey released this week suggested Trump now fully owns the economy, with 44 percent of respondents saying he was responsible for its current state and 34 percent pinning it on his predecessor, Joe Biden. The poll also showed respondents souring on the health of the economy, with a plurality of 48 percent saying it was getting worse. That was an increase from 37 percent in the same survey from late January.
On Capitol Hill, most Democratic lawmakers have assessed that Trump’s early second-term policies and tariffs could severely hurt the U.S. economy. And that, by extension, could undercut his plan to “rebuild” America into a manufacturing hub.
Democratic Sen. Mark Warner, also a former Virginia governor, offered a downbeat assessment of Trump 2.0’s early economic record, asserting this week that unemployment and inflation were both “up” while stocks were “down.”
“Tariffs will be a tax on middle class families,” Warner, a member of the Finance and Banking, Housing and Urban Affairs committees, wrote on social media. “Who is this economy working for, exactly?”
Earlier this month, House Minority Leader Hakeem Jeffries told reporters he believes GOP members were “going down, particularly as it relates to the economy. Republicans are on the run as it relates to the economy. … They’re not even having town hall meetings anymore.”
Team Trump often discusses this planned economic makeover as something of a cure-all for struggling rural areas — many of which have broken strongly for him in the past three presidential races.
“Just think about what the tariff policy long-term will do for our country,” Leavitt told reporters Tuesday. “What the president envisions for this country is for the United States of America to be a manufacturing superpower, where there are American factories and businesses owned by Americans producing goods that are exporting to the rest of the world.”
“Those revenues will stay here. It will increase wages for people here in our great country,” she added. “It will ensure our national security, and it will boost the morale of the American people to have thriving industries.”
‘Little bit of volatility’
Later Tuesday, Trump offered more details of his overhaul vision during remarks at a Business Roundtable event in Washington.
“Very importantly, the tariffs. They don’t want to pay 25 percent or whatever it may be — it may go up higher, maybe go up higher. Look, the higher it goes, the more likely it is they are going to build, and ultimately the biggest win is not the tariff,” Trump told the business group. “The biggest win is if they move into our country and produce jobs.”
Eighty percent of Americans, according to a poll released in August and commissioned by the libertarian Cato Institute, said the U.S. would be better off if more people worked in the manufacturing sector. But “just 25 percent stated that they would personally be better off in a factory instead of their current work,” according to a Cato summary of the same survey.
“Americans love the idea of people working in manufacturing, but most don’t think they would benefit from such work themselves,” the think tank found.
One economic force that could undermine Trump’s overhaul vision of factory smokestacks darting the American landscape: a recession. The president recently did not rule out one setting in this year.
“If there is one thing that economic agents abhor, it is uncertainty. In an uncertain environment, investors cut back investing for want of being able to make reliable investment decisions. At the same time, consumers cut back consuming, instead focusing on saving for a possible rainy day,” Desmond Lachman, a senior fellow at the American Enterprise Institute, wrote for the conservative think tank this week.
“For those reasons, heightened uncertainty causes the economy to slow down and raises the risk of a recession,” wrote Lachman, a former senior official at Salomon Smith Barney and the International Monetary Fund. “Our one hope that Trump might make a policy U-turn soon in the direction of a more orthodox economic and foreign policy approach is that he places great store on the stock market’s performance.”
But as Trump told reporters Tuesday, the stock markets dropping “doesn’t concern” him. Why? Because he wants to build, as he called it, a “real economy.”
And Treasury Secretary Scott Bessent in a Thursday CNBC interview summed up the administration’s sizable gamble, given what polls show is an antsy public: “I’m not concerned about a little bit of volatility over three weeks.”
