The effect on history of the last one — the Trump populist revolution — remains to be seen. What is certain, however, is that the Trump phenomenon, its support base and the logic of reform it represents, will not simply vanish.
U.S. President Donald Trump announced his “Liberation Day” tariffs at the White House Rose Garden on April 2, warning of strict trade measures and fuelling fears of a global trade war.
One-hundred days into his second term, President Donald Trump has spearheaded changes on domestic and foreign policy in tandem, with an intensity, scope and impact far exceeding that of his first term. His maverick authoritarian approach has led some U.S. political pundits to lament a throwback to empire. The abrupt fracturing of the transatlantic partnership has put the international community on edge, in fear that the liberal world order is on the brink of collapse.
A new international landscape and new dynamics in major power relationships are taking shape. Over the long course of the American development model’s evolution, every president has enacted reforms bearing their own hallmarks. However, only a few have made a lasting mark in American history and on the global stage. The New Deal of Roosevelt, Reagan’s reforms and the so-called common sense revolution of Trump stand out as distinct and profound transformations shaping the American model.
How New Deal stage was set
Since the founding of the United States, the principle of free-market competition has dominated Western economic theory. The concept, rooted in Adam Smith’s seminal work “The Wealth of Nations,” posits that the market is an “invisible hand” capable of self-regulating and optimizing resource allocation, with the government’s role confined to “night watchman.” For decades, the U.S. has embraced an economic model marked by a big market and small government, where the government has largely refrained from interfering in market competition. This approach has significantly unleashed productive forces and accelerated capitalist modernization, although it has also fostered the illusion that a big market was a panacea.
The Great Depression of 1929-33 originated in the U.S. and spread globally, shattering this illusion. It revealed that the big market was not omnipotent and that relying solely on the market could put the nation’s fate at the mercy of an unpredictable and potentially destructive force.
In 1933, to shake off the Depression, President Franklin D. Roosevelt introduced a series of policies known as the New Deal to deliver “relief, recovery, and reform.” The government significantly enhanced its oversight and controls over the economy and the financial sector. And it established a social security system. Under the influence of Keynesian economics, the New Deal abandoned the laissez-faire market model. Instead, it embraced sweeping state intervention in economic and social affairs, prioritizing the role of government. This shift made big government intervention in market activities a defining feature of the New Deal by mitigating both economic and social crises, pulling the country out of the Depression and ushering in a period of state intervention in the economy. This marked the dawn of state monopoly capitalism in the U.S. economy.
Keynes fails, Reagan rises
While the New Deal powered the growth of the U.S. economy and capitalist economies as a whole, free-market proponents, after scrutinizing its substance, quickly tore at it. They contended that the New Deal “led to big government and big deficits” and dismissed government as a driver of a half-baked revolution, not a solution to economic woes.
The 1973 oil crisis ignited the worst global economic crunch since World War II, severely impacting the U.S. economy over a three-year span. This crisis exposed the failures of the big government model and marked the end of Keynesianism’s dominance in U.S. economic policy after World War II. Meanwhile, neoliberalism, championed by Friedrich Hayek, gained traction. Neoliberals viewed the big government of Keynes as the primary cause of economic stagnation. They decried state intervention as a “road to serfdom” and advocated a “spontaneous order,” with free competition being the key to economic prosperity.
Influenced by neoliberalism and supply-side economics, Ronald Reagan, who took office in 1981, and UK Prime Minister Margaret Thatcher spearheaded a neoliberal revolution across the Atlantic. This gave rise to Reaganomics, which was characterized by significant tax cuts, deficit reduction, free competition and reduced government intervention. The principles of privatization, marketization, liberalization and curbing trade unions became globally prevalent as part of the so-called Washington Consensus. The Reagan Revolution helped America emerge from postwar stagflation and ultimately win the Cold War, marking a revolutionary shift in U.S. economic history after the New Deal. Driven by neoliberalism, the U.S. entered the era of the New American Model.
Trump’s populist revolution
Once a proponent, leader and beneficiary of globalization, the U.S. government, bolstered by the academics, embraced the notion that globalization buoyed American economic prosperity and hegemony. It even equated globalization with Americanization. However, since the turn of the century, the emergence of powers such as China and India has coincided with a surge in conservative and populist sentiment in the United States. Populists argue that in the latest wave of globalization, the U.S. has become the biggest victim while emerging powers have reaped the benefits. Conservatives blame the establishment’s promotion of a global liberal world order for what a sizable slice Americans see as the country’s decline. In this view, globalization is the root cause of the loss of manufacturing jobs, the decline of the Rust Belt, trade imbalances and the influx of illegal immigrants.
Trump returned to the White House on his “Make America Great Again” platform, which prioritized “America first” to spur domestic and foreign reforms, reshape federal governance institutions, drain the “deep state,” indiscriminately impose tariffs, attempt territorial expansion, shun international responsibility by withdrawing from multilateral agreements and turn against transatlantic partnerships.
Political and academic pundits around the world seek to make sense of Trump’s policies by referencing history, labeling his changes as neo-Jacksonian, neo-McKinley, or neo-Reagan. However, these labels seem insufficient to capture the multifaceted nature and essence of Trump’s policies. In reality, his policies represent a more extreme version of his earlier approach, sparking a Trump revolution underpinned by political conservatism, mercantilist trade and industrial policies, a transactional foreign policy and neo-imperialism. As a result, the American model has entered an era of assertive government under Trump.
As American historian Arthur Schlesinger Jr. observed, U.S. mainstream politics tend to swing between liberalism and conservatism every 30 years. Trump’s first hundred days are mired in controversy, with his “reciprocal tariffs” having become a lightning rod of criticism.
The lasting impact of the Trump revolution on American history remains to be seen. What is sure, however, is that despite the uncertainties of the midterm elections and Trump’s time-bound presidency of four years, the Trump phenomenon, its popular support and the logic of reform it represents will not just vanish. They will continue to drive profound transformations in the American model during this era of flux.
