Opinion | The Theories Behind the Trump Shock

There are two related theories of what Donald Trump’s dramatic revision of the global trade system is intended to accomplish.First, the goal is to revitalize American manufacturing, our capacity to build at home and export to the world.The global free trade system that took shape in the late 20th century served the American empire and American G.D.P.

but at the expense of America’s earlier role as a manufacturing powerhouse — and because manufacturing jobs were such an important source of blue-collar male employment, at the expense of the working-class social fabric.Meanwhile, over time, our manufacturing base didn’t just move overseas, it moved into the territory of our greatest rival, the People’s Republic of China.So rebuilding industry in America has two potential benefits even if it sacrifices some of the efficiencies offered by global trade.

Factory jobs fill a particular socioeconomic niche that’s been filled instead by drugs, decline, despair.And having a real manufacturing base is essential if we’re going to be locked into great power competition for decades to come.Under this theory, though, it would seem like tariffs would be most effectively deployed against China, countries in China’s immediate economic orbit, and developing countries that are natural zones for outsourcing.

But the Trump administration has deployed them generally, against peer economies and allies.The policy seems much more sweeping than the goal, the potential damage to both growth and basic international comity too large to justify the upside.Which is where the second argument comes in — that this policy is about fiscal deficits, not just trade deficits and manufacturing.

The same global system that made America a net importer also enabled us to borrow immense sums, but we are reaching the point where that borrowing cannot be sustained, where interest rates on the debt will crush our policymaking capacities even if there isn’t an overall flight from the dollar....