In 2024 Donald Trump based his reelection campaign’s rhetoric on deregulation and tax cuts to free the private sector from burdensome regulations and to stimulate economic activity. In practice, Trump 2.0’s economy has looked less like that small-C conservative ideal and more like the protectionist and mercantilist status quo of the early 20th century.
“This is the most interventionist government of my lifetime,” Justin Wolfers, an economist at the University of Michigan, told progressive news network MeidasTouch in an interview released Sunday. “It’s the least conservative government of my lifetime.”
Wolfers—whom the IMF once named one of the 25 young economists in the world “shaping the way we think about the global economy”—said that Trump’s undermining of federal institutions’ independence and propensity to insert himself in private sector decisions is reorienting the economy away from a productive and predictable path. The result, Wolfers warned, could be a generation of missed opportunities and lost growth.
Wolfers has previously compared Trump’s economy, particularly its tariff regime, to the U.K.’s departure from the European Union. “Brexit is a lovely case study for my friends over here in the United States,” he told CNN last year. Wolfers has criticized Brexit’s isolationist effect on the U.K., resulting in years of stagnant growth and higher unemployment. “That’s pretty much the script America’s gonna have to follow as well,” he said, amid the U.S.’s escalating trade war rhetoric last spring directed at the U.K. and Europe. (In fact, Wolfers has compared Trump’s election to Brexit as far back as 2016, although even then, he warned the former would likely be worse.)
This matters, of course, because economic evidence has largely confirmed that the U.K. economy was permanently deformed by Brexit, making it smaller, less trade‑intensive, and less investment‑rich than it would otherwise have been. Data consistently show moderate but persistent negative effects on GDP, trade, investment, and labor supply. Recent research using “what if” comparisons suggests U.K. GDP per person is about 6% to 8% lower than it would have been without Brexit by around 2024–25.
Why Trump’s economy is more radical than conservative
While Trump has delivered on his pledges to slash regulations and cut taxes for corporations and wealthy Americans, Wolfers noted that other policies are less consistent with the economies of recent Republican presidents. The Trump administration has approached some companies by leveraging the government’s regulatory power, by weighing in at times on antitrust cases, or casting doubt on mergers that require federal approval, as regulators have done to discourage firms from enacting DEI policies.
The Trump administration has also taken on a more active role in the private sector by buying equity or ownership stakes in several companies. Last year, the government committed more than $10 billion in taxpayer funds to such deals, with the bulk directed at securing a 9.9% stake in chipmaking giant Intel. The administration has also taken an interest in mining, nuclear energy generation, and steelmaking. Reports also emerged over the weekend of the administration’s plans to inject $1.6 billion into USA Rare Earth, a large mineral supplier.
Most concerning to many economists, Trump has repeatedly subverted the independence of federal institutions, notably by firing the Bureau of Labor Statistics’ chief after an unfavorable employment report (with admittedly quite large revisions that cast previous months’ view of a strong economy in doubt) and repeatedly harassing and threatening to remove Federal Reserve Chair Jerome Powell. Trump has tried to fire Federal Reserve Governor Lisa Cook, a case now before the Supreme Court, and his Department of Justice has launched an investigation into alleged mortgage fraud by Cook, which she strenuously disputes.
Unease in U.S. markets is just one indication of the chaos that Trump following through on undermining central bank independence could cause. Top CEOs including Jamie Dimon have warned about the dangers for countries that pursue such actions, with Turkey a notable example of what can go wrong when the executive fires bankers who tell him things he doesn’t want to hear.
Wolfers said this behavior is inconsistent with the U.S.’s role as one of the world’s wealthiest nations. As confidence in the economy falls and economic data becomes less reliable, he added, the consequences could reverberate far into the future, risking a premature erasure of years of potential growth.
“Don’t think about next quarter. Don’t think about next year and even look through a recession. Ask the much deeper question: What are the foundations of prosperity?” Wolfers said. “In a decade’s time, there’ll be some companies that were never founded.”
Beyond the threats to market stability, other economists and scientists have warned that some of Trump’s policies, including tariffs, cuts to federal funding for research, and stricter immigration requirements, are creating long-term risk that might undermine U.S. innovation. One analysis by UC Davis economists found that tariffs imposed during the late 19th and early 20th century—a period Trump has lauded as a golden age for the economy—reduced domestic productivity 25% to 35% for every 10% increase in tariffs.
Kent Jones, professor emeritus at Babson College, has noted that tariffs were used to fund the federal government until 1913. That was the year that Congress introduced the law that the modern income tax derives from, starting the end of an era of staggering wealth inequality, a key moment in what historians call the Progressive Era. The era that Wolfers accuses Trump of reviving, of course, is the Gilded Age that came directly before that time.
“Whatever the next generation’s Google or OpenAI is, it may not end up being invented or it may not happen on our soil,” Wolfers said. “We will never see that absence, but our kids will feel it. Our kids will feel it in a set of lost opportunities.”
