Speaking at the Economic Club of New York on Thursday, Donald Trump sketched the outline of a new policy fusion, bringing together elements of traditional Republican economics and populist priorities. A titanic clash between “Reaganism” and “Trumpism” is catnip for American pundits, but Trump builds on longstanding Republican economic themes.
The goal of this new populist fusion is capacity. Like his Republican predecessors, Trump has pledged to expand energy production at home. This would at once bring down bills for American families and make it easier to build back the US industrial base, which Trump has set as a key priority. The former president’s emphasis on deregulation is another note in harmony with Reaganite policymaking; as with energy production, this is pitched as a way of expanding economic growth.
Trump is also attempting to build bridges with the tech sector. In addition to saying he would appoint ally Elon Musk to lead a commission on Government efficiency, Trump has specifically highlighted how he would promote cryptocurrencies and make the United States a world leader in AI. This is a fusion of Silicon Valley and the Rust Belt — aiming to strengthen the industrial base while taking the lead in cutting-edge technologies.
Republicans have long used tax policy as a major lever for economic policy in general, an approach on which Trump puts a distinctive spin. His first term was characterised by standard-issue GOP thinking on taxes; Paul Ryan was, after all, a singular influence on the 2017 tax bill. So far this campaign season, Trump’s tax policies have evolved. He had long pushed for another cut to the corporate tax rate — from 21% to 15% — but his New York speech suggested that he would make this more targeted. He said that only companies that “make their product in America” would enjoy this new, reduced rate, as well as receive other tax incentives for research and development.
How to apply that selective rate would be unclear, but tax incentives for domestic manufacturing would dovetail with another policy measure which Trump has talked up: tariffs. With Joe Biden extending many of Trump’s tariffs on the People’s Republic of China, the GOP nominee perhaps feels that his approach to trade has been vindicated. Now, he seems intent on trying to push the tariff agenda even further in a second term.
Besides raising tariffs on China, Trump has also indicated some sympathy for boosting tariffs across the board in order to encourage more domestic manufacturing. Many of the 2017 tax cuts for individuals are set to expire in 2025, and he has pledged further cuts such as exempting Social Security payments from income tax. Tariffs, he claims, could help pay for these other efforts.
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