Douglas Holtz-Eakin tells why Trump’ tariffs were (to put it mildly) a mistake. Two slices:
Of the many losers in this year’s midterm election, one stands out: President Trump’s populist economic platform. Many Republicans have always known that Trumponomics is a false promise. On Election Day, America showed that it agrees. The best course forward — for Republicans or any other politicians seeking a record of economic success — is a return to traditional limited-government values.
Trumponomics is a Frankenstein’s monster that mashes together progressive, conservative and origin-unknown economic and fiscal policies. The good elements are effective but few: pro-growth tax policy and a rollback of the regulatory overreach of past administrations. The bad list is lengthy: protectionist tariffs, government stakes in private industry, price-setting, payoffs to favored constituencies and the abdication of responsible fiscal stewardship.
Take tariffs. Imposing protectionist taxes on imports has had prominent supporters on the left, with generations of leaders from that side — John Dingell, Richard Gephardt, Bernie Sanders — who have built economic platforms including them. For the past quarter century or so, right-leaning populist commentators have pushed for aggressive use of tariffs, too. The idea of sweeping tariffs seems popular. The reality is not.
Mr. Trump began saddling the country with relatively limited new tariffs in his first term, and the Biden administration mostly continued them. On “Liberation Day” in 2025, Mr. Trump blitzed Americans with new tariffs on a scale and scope not seen for a century. Traditional conservatives understood what this really meant: large tax increases that hit low-income families hardest and damaged small businesses and entrepreneurs. The public response was also unsurprising: With costs going up, the tariffs became deeply unpopular.
Politically, this episode flipped the script. Democrats developed an anti-tariff fervor, spending nearly $60 million on ads attacking Republicans who supported the tariffs. The upshot? Tariffs are a political loser.
The administration can’t even argue that its tariffs have brought jobs and manufacturing back to America. Look at steel tariffs, initially imposed in Mr. Trump’s first term, retained by President Joe Biden and raised again by Mr. Trump in his second term. If Trump-style populist economics were right, the country should have had a surge in new steel mills and in employment in the industry. Yet after nearly a decade, the needle has barely moved on either. The nation has seen a large increase in steel prices, though, and that has driven up the costs of things such as housing and canned food.
Apparently still under the impression that government intervention can help the economy — or at least himself, politically — Mr. Trump has tried to appeal to key voter blocs with insalubrious handouts. The president has offered $5,000 checks, Medicare “rebates,” Obamacare “refunds,” diesel subsidies and aid to farmers to offset their losses stemming from tariffs. These failed to improve Republicans’ midterm chances — or enhance economic growth. The money would have been better spent if it had remained in the private economy rather than taxed and redistributed according to the president’s whim. Or the Treasury could have retained it and kept the deficit a little lower.
The lack of interest in fixing America’s increasingly dangerous budget situation is another irresponsible element of Trumponomics, which holds that huge, expensive entitlement programs such as Medicare and Social Security should remain untouched. The federal deficit in the 2026 fiscal year was about $2 trillion, or around 6 percent of gross domestic product. (By contrast, deficits averaged only 2.1 percent of G.D.P. from 1960 to 2000.) Publicly held federal debt now equals G.D.P. and is projected to rise uncontrollably in the future. Borrowing costs, faith in the government’s solvency and the security of the dollar are all on the line, and Mr. Trump has no plausible plan to deal with the problem.
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To be fair, the president’s agenda is not all bad. The Trump administration’s efforts to control the regulatory state have worked. It permits federal agencies a limited budget of regulatory costs that they may impose on businesses, and it enforces this restraint. In the past, Republicans spoke about the need to control red tape but often failed to act. Mr. Trump demanded action and got it. Future administrations should copy this regulatory budget policy, limiting the economically costly overgrowth of the state.
Similarly, the 2017 Tax Cut and Jobs Act delivered long-overdue business tax reforms, cutting taxes on corporations to a rate that enables us to compete internationally, rewards retention of intellectual property in the United States and promotes business research, development and investment. The G.O.P.’s 2025 reconciliation law fine-tuned business taxation and made the investment incentives permanent, so businesses now have the certainty they need.
There is a pattern here: Trumponomics worked when it removed government from economic decisions; when it put government rather than individuals and businesses in charge, it failed. The most damaging notion in populist thinking is that government is the source of material prosperity — that the state knows better than business about what investments are valuable or than families about how to achieve work-life balance.
A return to a traditional platform of contained, efficient government with a well-targeted social safety net and a responsible budget will best serve the country’s economic needs. Now that Americans can see that populist economics have failed, leaders who embrace this platform might win some elections, too.
The truth, however, is that discontent with Trump on inflation was growing pre-Iran. President Trump’s net approval on inflation in the Economist/YouGov poll slid steadily throughout 2025, even as real average hourly earnings were improving. By February 2026, before any strikes, Trump’s net approval on inflation had fallen to –28, a level not dissimilar to that Joe Biden suffered in the dying days of his presidency.
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Enormous ongoing budget deficits are putting upward pressure on interest rates. Demanding the Federal Reserve cut rates could’ve de-anchored inflation expectations somewhat, while Trump’s recent ode to inflating away the national debt sent the same signal. Deportations, and the fear of them, disrupted agriculture and construction.
In addition to tariff protection, which raises prices for everyone who buys anything made with steel, Mesabi Metallics is set to receive $1.3 billion in public support for the project. Iowa had to change its laws to allow for such generous corporate welfare. A handful of Republican lawmakers in Des Moines initially opposed the giveaway, out of concern for taxpayers, but most fell in line.
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Politicians in Washington don’t know what’s best for Lee County. Protectionism and corporate welfare always undermine the free market. If they can’t even deliver votes, they really serve no purpose.
Equity in education has come to mean something very different from equal opportunity. Rather than giving every student the same opportunity to succeed based on merit and hard work, equity increasingly focuses on producing equal outcomes, even when doing so means changing grading, discipline, curriculum, and academic expectations.
Consider equity-based grading, which can include giving students partial credit for work they never submit, eliminating penalties for late assignments, allowing repeated test retakes, and eliminating D’s and F’s from the grading scale. Teachers themselves have raised serious concerns about those practices. A 2025 Fordham Institute study found that 81 percent of teachers considered giving partial credit for assignments never turned in harmful, while only 8 percent considered the practice helpful. Students also understand how these practices undermine their education.
Arnold Kling rightly sticks to his libertarian principles regarding data centers.
My Mercatus Center colleague Rebecca Lowe reviews Rainer Zitelmann’s new book on space exploration.
Intellectual elites may imagine that they have all the consequential knowledge required to create the social justice world they seek, despite considerable evidence to the contrary. But, even if they were somehow able to handle the knowledge problem, there still remains the problem of having enough power to do all that would need to be done. That is not just a problem for intellectual elites. It is an even bigger problem – and danger – for the people who might give them that power.
When Americans buy clothing from Vietnam, the dollars we send overseas do not evaporate. Foreigners who receive dollars use them to buy American goods and services, to invest in American businesses and real estate, or to purchase American financial assets such as Treasury bonds. Every dollar that leaves the country to pay for imports creates a corresponding inflow of foreign demand for American exports, American assets, or American investment opportunities.
There is a critical distinction between the legitimacy of a right and the morality of exercising that right. The government should only be concerned with questions such as the domain of rights, the proper role of violence, and the definitions of aggression and criminality. The government should not be concerned with all personal moral principles. There is a huge difference between establishing the permissibility of an action and the goodness or morality of it. The state should be concerned with the rights of men and not with the oughts of men.
