What Is Trumponomics? Part 1: How Donald Trump Is Breaking American Capitalism

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Sep 3, 2025

Greg Ip, Chief Economics Commentator at The Wall Street Journal, dives into the unorthodox realm of Trumponomics. He discusses how Trump's economic policies fuse traditional Republican ideologies with unexpected interventionist approaches, reshaping capitalism as we know it. Topics include Trump's significant tariffs, his controversial influence on the Federal Reserve, and the implications of state capitalism reminiscent of China's model. Ip raises critical questions about the evolving roles of government and capitalism in contemporary America.

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INSIGHT

State Capitalism As Trumponomics

Greg Ip labels Trump's economic style "state capitalism," a hybrid of government direction and private ownership.
The state directs key industries while leaving most firms autonomous, targeting high-profile sectors.

INSIGHT

Interventions Without An Exit Plan

Historical U.S. interventions (WWII, TARP) were crisis-driven and temporary, then the state exited.
Trump's interventions lack statutory basis and clear end dates, making them open-ended.

INSIGHT

Some Deals Fix Market Failures, Others Extract Value

Market-failure rationales justify some interventions like MP Materials' Pentagon-backed rare-earths deal.
Other moves (e.g., export levies on AMD/NVIDIA) look like extraction rather than fixing failures.

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Today is the first of two interviews this week trying to answer this question: What is Trumponomics?

From the 1980s to the 2010s, it was generally assumed that Republicans and Democrats had settled differences in economic policy. Republicans wanted lower taxes and less spending on welfare. Democrats wanted higher taxes and more social spending.

Reality didn’t always conform to those differences. George H.W. Bush famously raised some taxes, and Bill Clinton famously reduced some welfare spending. But generally speaking, the socialists voted for Democrats and the corporate libertarians and free-market folks found their home in the GOP.

What’s interesting about Trump's theory of power and economics is that he doesn’t just scramble this divide. He obliterates it.

Some of Trump’s measures are so classically Republican, you could imagine the ghost of Ronald Reagan signing off on them. After all, his signature legislative accomplishment in both terms are two huge corporate income tax cuts. But when Trump announced that the government was taking a stake in Intel, Bernie Sanders cheered the news and Gavin Newsom called him a socialist.

Trump has single-handedly instituted the biggest tariffs in 100 years—tariffs that are so unusual and extralegal that a federal court just ruled that most of them are, in fact, against the law. He’s waging war on the Federal Reserve, grabbing at an institution that has historically enjoyed independence when it comes to setting interest rates and managing monetary policy.

Trumponomics is capitalist and socialist; it’s obsessed with defeating China and also obsessive about copying China; it’s sometimes focused on keeping America from getting ripped off and sometimes focused on issues so personal they have nothing to do with the national interest at all.

Today’s guest is Greg Ip, the chief economics commentator at The Wall Street Journal. According to Greg, the best way to see clearly what Trump is up to is to see his economic policy as what he calls “state capitalism.”

If you have questions, observations, or ideas for future episodes, email us at PlainEnglish@Spotify.com.

Host: Derek Thompson

Guest: Greg Ip

Producer: Devon Baroldi

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