Trump’s Vision Thing: Expanded Autarky

There May Be No Going Back

At first, second, or third glance, there seems to be no rhyme or reason to President Trump’s on-off-mostly on tariffs, which are being ratcheted up seemingly at random. Ditto with his repeated proclamations that Canada must be our 51rst state, while imposing tariffs on imports from both it and Mexico, in violation of the revised trade agreement with both that he negotiated in his first term (the UMSCA), and threatening to take Greenland and the Panama Canal by whatever means possible. Throw in for good measure his proposal to build an “Iron Dome” over the US to defend us from incoming intercontinental missiles.

I know it’s very risky to read any coherence into Trump’s mind, which seems to wander from subject to subject daily, and especially in his speeches, but I am detecting a unifying vision in all of the above seemingly unconnected policies and actions. To be sure, I may be giving Trump more credit than he deserves and/or giving Trump-supporting intellectuals a coherence they should be able to expand on and refine better than I, though so far the Trump team has been struggling to do so. https://www.washingtonpost.com/business/2025/03/17/trump-economy-trade/. Maybe they don’t want to tell or promote the unifying theme that seems to tie together the seemingly unrelated individual policies catalogued in the opening paragraph: namely, that either by design or by effect, the various Trump policies will remake an expanded America into a self-sufficient entity (autarky), much better insulated from dangers from the rest of the world, whether it is people Trump doesn’t want as immigrants, drugs such as fentanyl, or missiles carrying nuclear weapons from our former enemies (Russia, China, North Korea).

This isn’t to say that all of these measures will be fully carried out over the next four years, but as a vision, if pursued by Trump’s chosen successor, could be what Trump really means by making America (again, the expanded version) great again. Not turning the clock back to the 1950s but remaking America into an even more insular country than it was in the 19^th century. But here’s the big thing, which could make Trump’s autarchic agenda as significant and long-lasting (until Trump) as FDR’s New Deal: there may be no going back from most of the Trump vision, or at least very difficult for his successors, from either party, to do so. As one widely read substack columnist, Yascha Mounk, put it last month: it’s hard to put Humpty Dumpty back together after he’s had a great fall:

Humpty Dumpty Had a Great Fall

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Autarky and Protectionism

Trump has long embraced protectionism as a means to restore the US manufacturing base, to raise substantial revenue, to reduce or eliminate our trade balance, and to end our being “ripped” off by other countries. I will not rehearse here the standard economic reasons why each of these goals will not be achieved through higher tariffs, which most recently has been masterfully explained by economists Chad Brown and Doug Irwin: https://www.foreignaffairs.com/united-states/incoherent-case-tariffs. None of these fact-based arguments against protectionism, which have long been accepted by the economics profession with few exceptions, however, will shake Trump from his long-held views about tariffs, which really seem to spring from his core belief that the US doesn’t need anything from anyone else. And to try to buy goods and products from other countries is a zero sum affair: they “win,” we “lose.”

In fact, Trump is wrong that we currently can be totally self-reliant, most importantly with respect to Canada. The US depends on Canada for key minerals (https://www.csis.org/analysis/canadian-tariffs-will-undermine-us-minerals-security), including uranium and aluminum, and perhaps most importantly, imported potash, a collection of minerals containing potassium chloride, on which US farmers almost totally rely for fertilizer. https://nationalpost.com/news/canada/potash-canada-us. Absorbing Canada into the US, in Trump’s mind, would make an “expanded” US self-sufficient in these now imported products. Taking Greenland and its minerals would fill in the cracks of other raw materials we might be missing. https://foreignpolicy.com/2025/02/26/trump-rare-earth-critical-mineral-resource-ukraine-greenland-canada/. Getting 50% rights in Ukraine’s minerals would be icing on the cake, but unlikely to bear any material fruit for the U.S. for years even the Ukraine war ended.

Will a declining stock market or a tariff-induced recession deter from Trump from following through on his tariff “war of choice,” to use a phrase made popular by former Council of Foreign Relations President Richard Haass (from his book, “War of Necessity, War of Choice,” about America’s two Iraq wars: https://www.cfr.org/book/war-necessity-war-choice)? It is true that in the past Trump has measured the success of his or his opponents’ economic policies by the stock market’s performance. But his warning in his Congressional speech of March 4 about the nation’s having to suffer a “little disturbance” and his subsequent ambivalence about the prospect of a recession suggest that he is really committed to a long-term goal. And that goal looks like autarky, or something very close to it.

Tariffs are not just a negotiating tool to Trump, as his economic advisers claimed before he assumed office and have continued to argue since, but an end in and of themselves. It’s time to take Trump’s “love” of tariffs, which he proclaimed while running for president, not only seriously, but literally. That reading of Trump’s motive will be reinforced when Trump imposes on April 2 -- what the Administration is touting as “Liberation Day” -- reciprocal tariffs on most of America’s imports, especially those from the 15 countries with the largest trade surpluses with the US. The purpose of the reciprocal tariffs is to induce these “bad acting countries” to lower their tariffs to match those of the U.S. However, given the backlash against the tariffs that Trump has already imposed in Canada, Mexico and the EU, it is likely that many, if not most of the targets, of Trump’s tariff wrath will respond by raising (not lowering) their tariffs. In that event, tariffs will ratchet even higher, in tit-for-tat fashion, all over the world, persisting for a very long time, and thus will not be “transitory,” as Treasury Secretary Bessent has suggested. https://www.politico.com/news/2025/03/06/bessent-defends-trump-tariffs-00216320. This scenario, too, is consistent with an autarky objective.

What about the inflationary impact of all this? Would not Trump, who owes his presidential win in large part, to many voters’ blame of the Biden administration for higher prices (which were largely driven by pandemic and war-related supply side disruptions, a fact that much of the voting public nonetheless ignored) be hesitant about continuing his tariff war as inflation mounts as a result? It is one thing for Trump to believe his own rhetoric, that tariffs are paid by foreign countries. The reality is to the contrary: the overwhelming consensus of economists, reflected in the markets’ gyrations, is that the tariffs will be paid in part by U.S. importers and retailers (absorbing some of the tariffs through lower profit margins), but largely by American consumers. https://taxfoundation.org/blog/who-pays-tariffs/. Nonetheless, Trump could still ultimately be right about tariffs not adding to inflation, but not for the stated reason he claims. Instead, if the tariff war induces a recession, declining consumer and business demand, coupled with rising unemployment, would work to curtail inflation. Maybe that’s the “little disturbance” Trump had in mind, but didn’t speak out loud, when used those words in his March 4 address to Congress.

While broadly agreeing that tariffs are bad economic policy, economists are much less in agreement, however, about how unemployment the economy must suffer in order for inflation to be brought down to the Fed’s 2% target. Economists challenge maxim: For inflation to go down, unemployment needs to go up : NPR. Moreover, any recession-induced dampening of inflation would be temporary, given enlarged deficits created by the forthcoming Trump tax cuts that will not come close to being offset by even the expenditure cuts Congress is likely to enact later this year. House Budget Passage Tees Up Trillions in Borrowing | Committee for a Responsible Federal Budget. Larger deficits over time will eventually lead to higher long-term interest rates, which could get the US into a vicious debt spiral that may induce the Fed at some point to pursue a more expansive monetary policy that only would lead to more inflation. But the full inflationary bias built into the economy from unsustainable deficits, unless they are miraculously curtailed by a future Congress and President, however, will be felt only long after Trump passes from the political scene.

Speaking of the Fed, it has learned a lot in the century since the Great Depression, for which, as former Fed chair Ben Bernanke famously admitted to Milton Friedman in 2002, the Fed was mainly responsible by not printing enough money back then to combat the initial recession. https://www.federalreservehistory.org/essays/great-depression. So, even though he may replace Fed Chairman Powell in 2026, Trump can take comfort in knowing that even if his tariff war induces a recession before then, the Fed’s current Chairman, Jay Powell, will mitigate it. This is likely to be true even as the tariffs initially raise prices and inflation, since a tariff-induced downturn would have an offsetting effect on the inflation rate.

Insulating the US From Foreign “Dangers”

In addition to keep foreign goods and services out of the country through higher tariffs, Trump is doing his best to insulate the country from what he sees to be its three other greatest dangers: crime associated with illegal immigrants, especially those coming from or through Mexico; drugs; and missiles.

With respect to first two “dangers,” tariffs or the threat of tariffs have been Trump’s main policy levers, though he has invoked other reasons for tariffs. For example, Trump has opposed illegal immigration, principally from the South, not only for its own sake to ensure compliance with US law, but also, from the day he came down the escalator to announce his first-term candidacy in 2015, tying illegal immigrants to crime and highlighting high profile examples. The anti-crime theme driving Trump’s stance against illegal immigration resonated with the voting public both in 2016 and 2024. In 2016, Trump’s signature policy proposal for reducing illegal immigration was to build the Southern wall and to “make Mexico pay for it.” That didn’t exactly happen, so this time around, Trump has used tariff threats to induce source countries to halt the outflow of their emigrants headed for the US. Trump also has mounted a highly publicized deportation campaign, which has triggered legal pushback, and at this writing, is the subject of major court battles over presidential compliance with judicial orders.

Trump also has justified tariffs against Canada, Mexico and China as a way of inducing each of these countries to halt the flow of illegal drugs into the US, principally fentanyl. But that is not the only reason for those tariffs. Other reasons are consistent with the expanded autarky theme: in the case of Canada as part of a much larger campaign to weaken Canada economically so as to reduce resistance to it becoming our 51rst state; and with respect to China Mexico, to bring back manufacturing jobs to the US.

Trump’s proposed Iron Dome project is the military equivalent of economic autarky. In announcing Iron Dome in January 2025 in an Executive Order, the President said that the program, although named after Israel’s short-range missile defense system, was based on the Ronald Reagan’s Star Wars program aimed at thwarting intercontinental missiles, which the Order noted, had been “cancelled before its goal could be realized.” https://www.whitehouse.gov/presidential-actions/2025/01/the-iron-dome-for-america/. Trump envisions his Iron Done as protecting the US not only against intercontinental ballistic missiles, but also hypersonic missiles recently developed by China and Russia, which fly much lower, on a flat trajectory and thus are potentially even more difficult to thwart. One in-depth analysis of Iron Dome published in Scientific American argues that it nonetheless will meet the same fate as Reagan’s Star Wars for the same reasons: “it will cost too much, won’t work and will endanger us all.” https://www.scientificamerican.com/article/trumps-iron-dome-space-weapons-plan-ignores-physics-and-fiscal-reality/. Iron Dome supporters nonetheless will push back by claiming “that’s what they said about Israel’s Iron Dome, yet it worked.” But the Scientific American authors are hardly alone in their skepticism. https://thebulletin.org/2025/02/trumps-iron-dome-for-america-is-ambitious-it-also-has-some-serious-technology-and-policy-flaws/. I can’t settle whether the critics or Trump is right about Iron Dome and won’t try to do so. But I will submit that Trump’s aim in pursuing his Iron Dome proposal is consistent with his economic objectives: insulate the US from the rest of the world.

The same autarchic instinct is reflected in much of the rest of Trump’s foreign policy, which is hostile to America’s long-time alliances (principally but not only NATO), and to his decisions withdrawing the U.S. from the World Trade Organization, the Paris Climate Accord and efforts to close down America’s main instrument of soft power and humanitarian aids, USDAID. Trump’s plan for the U.S. takeover of Gaza, assuming peace there can be reached (a big “if” at this writing), seems to run counter to the autarky thesis, but on closer inspection, it is quite consistent with it. Trump seems to view Israel as a protector against terrorism and a possible joint venture military partner in any effort to eliminate or degrade Iran’s nuclear capabilities, not because Israel is the sole democracy (that is itself in some jeopardy) in a region of the world marked by autocratic rule.

What Trump’s Autarky Misses

As attractive as Trump’s autarchic vision may be to many Americans – not just his core supporters but perhaps some Democrats and independents -- it has major drawbacks. In earlier post, I highlighted security dangers of being “Home Alone.” https://robertlitan.substack.com/p/home-alone. Here, I supplement the analysis in that post with some observations about the economic downsides of moving toward autarky.

The trade war will depress economic growth here and abroad. In the short run, tariffs tax consumption and investment, by increasing prices of not only on imports, but also on domestically produced goods that compete with them. Indeed, the whole point of tariffs is to raise prices of domestically produced goods so that manufacturers of at least import-competing goods to produce them here. Higher prices, like taxes, depress overall demand for goods and services in the economy. Moreover, as even Fed Chairman Powell has acknowledged, https://www.reuters.com/markets/wealth/feds-balancing-act-gives-respite-tariff-struck-investors-2025-03-20/, the off and on way in which the Trump tariff war so far has been mounted, has caused uncertainty for both consumers businesses, adding to the demand suppressing effects of the tariffs themselves.

Over the longer run, moving toward autarky can also slow potential economic growth, often referred to as the “supply side” of the economy. That is because firms operating behind high tariff walls face less competition, by design, and thus have diminished incentives to innovate. In principle, foreign firms that invest here to jump over the tariff walls, one of the main objectives of those who advocate tariffs, can help offset the competition-reducing effects of tariffs and can also bring advanced technology and production techniques with them. But the uncertainty created by the fluctuations in tariff levels, or in the tariffs themselves, can reduce this offsetting effect.

More fundamentally, tariffs distort market signals that otherwise encourage countries to concentrate more of their resources, including workers, in industries in which countries have a comparative advantage. Tarriff advocates nonetheless claim that any resulting efficiency loss from higher tariffs is worth it, since in the end, tariffs save manufacturing jobs. That tends to be true for workers employed by importing firms, at least for a while until improving technology (such as robots) replaces them. But it is often overlooked that tariffs are not only a tax on imports, but also a tax on exports: for the U.S. items like heavy machinery, aircraft, software and a wide range of agricultural products, among others. This is the case because in discouraging imports, tariffs also have the effect of raising the value of the dollar, since reduced demand for imports reduces dollars sold to purchase foreign currencies, reducing the supply of dollars on foreign exchange markets. In turn, a stronger dollar discourages purchases of US exports, which are also penalized by tariff-induced increases in the prices exporting firms pay for raw materials (think tariff-induced higher steel or aluminum prices leading to higher car prices, or higher prices for potash for fertilizer used by American farmers).

When all is said and done, therefore, a tariff war, at best, is a zero endeavor for the nation as a whole, even without retaliation by foreign countries. With retaliation, which we are already seeing, tariff wars become negative sum. That’s essentially what happened during the first Trump presidency, which has been estimated to have reduced GDP by 0.2 percent and cost the country, on net, over 140,000 jobs. https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/. Much higher and broader based tariffs during Trump’s second term almost surely will be even more costly.

Is There Any Going Back?

The Humpty Dumpty metaphor that characterizes the multiple ground-breaking steps that Trump has taken in pursuit of an apparent autarchic vision, even in the short time that he has been in office, suggests that reversal of that vision, by whomever succeeds Trump, will be very difficult. That is because the US and the world are likely to change greatly in reaction to the steps that Trump has taken, which will create vested interests inside the US in retaining the new status quo, as well as making it more difficult for other apparently “former” allies to trust a future American Administration meant on returning to a more collaborative relationship.

At first glance, reversing trade autarky looks like a gift to Trump’s successor, should he or she be so inclined to use it. That is because unlike Congressionally approved higher tariffs, such as those imposed by the Smoot-Hawley Tariff Act that could only be removed through Congressional action, albeit through delegation to the President about when and how, a future President could remove or cut back on the Trump tariffs unilaterally simply by declaring Trump’s justification for imposing them no longer to be applicable. As a result, in raising tariffs Trump for the first time will enable a future President directly and on his or her initiative to lower both the price level and inflation, at least temporarily, without causing shortages, as wage and price controls have done in the past.

But in raising tariffs Trump also will create a new economic landscape for a future President. Over the next 3 plus years, new investments in US facilities will be made and new supplier relationships will form in response to the tariffs. As a result, new vested interests will form that will resist the disruption that the removal or reduction in the Trump tariffs would cause – unless I am wrong about the Trump autarchic vision. Moreover, Trump’s successor who may be inclined to reverse the Trump tariffs will be under heavy political pressure to do so reciprocally, so as not as to be seen as “giving away the store” through unilateral action, which economists likely would counsel, but political advisers could well resist. It is helpful to remember that although FDR removed some of the Smoot Hawley tariffs under the authority granted to him by the Reciprocal Trade Agreements Act of 1934, FDR wasn’t enthusiastic about doing so, reflecting the deep split within the Democratic party, and among FDR’s advisers, about even taking up the cause of tariff reduction. That same tension is likely to surface in a post-Trump world.

Looking ahead, my guess is that it will be very difficult, if not impossible, to roll back Trump’s tariffs globally. More likely, tariffs will be reduced reciprocally, country by country, or by groups of countries, or “coalitions of the willing.” All of this will take time. Maybe with enough time such coalitions could be expanded to rebuild the global structure represented by the General Agreement on Trade and Tariffs (GATT) and later the World Trade Organization (WTO), but that day seems very far off.

For other elements of the autarchic vision, there either will be no desire for going back to the status quo ante, or certain elements will be hard to reverse. As an example of the former, it is highly unlikely, given how illegal immigration powered Trump’s political rise, that any Trump successor would reverse any construction of the Southern border “wall” or technologies for thwarting illegal crossings at the Southern border. A kindler, gentler approach to deportations of illegal immigrants no doubt would be pursued by a Democratic successor to Trump, but much less likely with a Republican successor.

In the more difficult to reverse category will be Trump’s break with our allies, over trade and Ukraine. Anong other things, the new Trump approach has encouraged NATO allies to strengthen their defenses and to insource their nuclear strategy, moves that Europe and especially Canada, threatened on other fronts by Trump, will be reluctant to give up. With alliances shredded, our former friends justifiably will fear that a Trump-like successor could reverse any moves toward repairing those relationships by a Trump successor. The lack of trust from our former allies is likely to spill over into any future efforts to rebuild intelligence alliances. Other countries may be willing to resume cooperation in the areas of health and climate, since they would have nothing to lose and potentially a lot to gain by the U.S. rejoining those communities, even if a later successor comes along to withdraw the cooperation, again. As for the US withdrawal or severe cutback in foreign aid, through the demolition or scaling back of USAID, it too will be difficult to restart, given the loss of aid professionals, especially abroad, in the meantime. Moreover, aid recipients, like Europe, will take the next four years to become more self-reliant, though not without a lot of pain and likely huge loss of life due to the withdrawal of US-sponsored foreign health initiatives, in particular. And even if the US in the future were to return to providing more foreign aid as an instrument of our soft power, China is likely to expand its already ambitious Belt and Road infrastructure initiatives around the world, especially in Africa and Latin America, to provide more expanded foreign aid to fill the void left by the withdrawal of American soft power from these parts of the world.

Iron Dome may be reversible on either of two opposite conditions: (1) the investments in prove to be of limited or no value; or (2) alternatively, Iron Dome research does prove out, allowing it to become a valuable bargaining chip in any future arms control negotiations of China, Russia, or even North Korea and Iran (if the latter somehow acquires nuclear capabilities). On the other hand, given the likely proliferation of nuclear weapons in the meantime, a majority of the public then may not support efforts by successor administrations of either party to give up what would be perceived as valuable, though not complete, protection against existential threats to our homeland.

Conclusion

In running for President during the 2024 presidential race, President Harris famously repeated the phrase “We’re not going back” on the campaign trail. One of history’s ironies is that the person who defeated her, President Trump, is now rapidly creating an environment marked by a vision, one of autarky across multiple dimensions, that in many, if not most respects, will make it difficult, if not impossible, for a future President to “go back” to the more globally interconnected world Trump inherited.