Matthew Continetti compares President Donald Trump’s current policies to those of a controversial predecessor.
Donald Trump isn’t the first president to blow up the global economy.
Half a century ago, Richard Nixon scuttled the international trading system and proclaimed a “New Economic Policy” for America. He broke the dollar’s connection to gold, levied a 10 percent tax on imports, and froze wages and prices for 90 days.
His plan worked—for a while. But within a few years it flopped, as controls created shortages and untrammeled federal spending fueled inflation.
What became known as the “Nixon shock” had global implications. Coming one month after Nixon stunned the world with his announcement that he had accepted Premier Zhou Enlai’s invitation to visit the Communist People’s Republic of China, Nixon’s economic speech placed additional burdens on U.S. allies. Foreign stock markets nosedived. Leaders bristled. Uncertainty reigned. America was charting an independent, unilateral course. No one knew the consequences.
Sound familiar?
The story of Nixon’s New Economic Policy is a cautionary tale for the Trump administration—if it’s inclined to learn from history. President Trump, like Nixon, has bet his legacy on an economic policy the experts deride. By playing to the working-class constituencies that brought him to office, Trump, like Nixon, has divided the GOP old guard and conservative movement. He’s repulsed U.S. allies at the same time he tries, like Nixon, to drive a wedge between Russia and China.
Trump’s challenge: Demonstrate the benefits of Nixon-style economic nationalism—if there are any—while avoiding Nixon’s fate. It won’t be easy. …
… The parallels with Trump’s “Liberation Day” are uncanny. In reshaping the economy, both Nixon and Trump pressed their authority to the limits. Both men used the heavy hand of government to protect U.S. manufacturing. Both men implied they were open to negotiation. Both men saw international competition as a zero-sum game that America was losing—until they arrived on the scene.
