Over the last few weeks, Americans have learned that Robert F. Kennedy Jr. canceled half a billion dollars in government investment in the development of mRNA vaccines, Las Vegas saw a 7% decline in visitors, residential electricity prices increased by an average of 6.5 percent, the number of housing permits issued reached its lowest level in half a decade, employers stopped hiring new employees, the manufacturing sector shrank, and inflation increased.
These depressing numbers show a slowing American economy and a deteriorating labor market. Although a recession is not a given, it is becoming more likely, and stagflation—which forecasters said was unavoidable when President Donald Trump started his international trade war—is getting closer. Americans will be spending more money and purchasing fewer goods both now and in the future. Trump’s second-term economic philosophy encompasses more than just cronyism, atavism, mercantilism, and protectionism. Degrowth is another aspect of it.
Trump, who came to office vowing to boost the American economy and cut costs on household goods, would never use that phrase. In Europe, degrowth—the idea that rich nations can and should cut back on their production and consumption—is linked to green parties, leftists, and environmental activists. Fundamentally, however, degrowth contends that people ought to not only accept but actively seek a smaller economy. Everyone will suffer as a result of that second-term Trumponomics.
The White House is pursuing a multifaceted strategy to increase prices, curb consumption, halt production, and reduce productivity in the US without acknowledging it. The most evident example, with the most immediate repercussions, is the trade war. Trump has increased, decreased, and increased tariffs on goods imported from U.S. allies worldwide since January. While warning that consumers and employers may have to go through a chaotic period of adjustment, the White House has promised that such barriers will eliminate the nation’s bilateral trade deficits and boost domestic manufacturing.
However, Trump has imposed tariffs on goods and components—like timber and engine parts—that factories use to produce goods in the United States. He has imposed tariffs on goods like gallium and bananas that are either not or cannot be produced here. Additionally, he has imposed tariffs on goods like sneakers and costume jewelry that, given the cost of American wages and the network of factories operating here, would be too costly for American consumers to buy if they were made here. According to the Yale Budget Lab, the nation’s effective tariff rate is currently at its highest level since 1934, at 18.3 percent. As importers pass the cost of Trump’s import taxes on to retailers and families, prices are starting to rise. Due to the industry’s uncertainty, industrial production is declining.
Trump has responded by disputing reality. “We’re just getting started and are only in the transition stage! ‘Price reductions have been anticipated by consumers for years,'” he wrote on Truth Social. He pointed to the cost of gas and eggs and added, “NO INFLATION.” However, the government monitors 80,000 prices every month to determine the overall inflation rate, and those are only two of them. As the bird flu pandemic has subsided, the price of eggs has decreased; this is because OPEC production has increased and global growth has slowed. The Federal Reserve has been fighting costs with high interest rates, but they have remained cripplingly high across the economy. Inflation would increase if the Fed reduced borrowing costs.
The cost of consumer goods is just one aspect of Trump’s campaign against reality. The president fired the head of the Bureau of Labor Statistics because he was dissatisfied with the rate of employment growth. On Truth Social, he wrote, “Important numbers like this must be fair and accurate.” “Political manipulation of them is impossible.” Touché. He has threatened to “put his own appointee, Jerome Powell, out to pasture” because he is unhappy with Fed policy.
Trump has lowered government subsidies for a variety of necessities while enforcing his bizarre unilateral war on imports. While promising not to cut Medicaid’s budget, he has taken $1 trillion away from the program. Low-income families will purchase fewer groceries as a result of his reduction in food stamp benefits. He has cut off funding for grants and loans that help underprivileged children pursue higher education. Additionally, he has cut funding for the production of renewable energy.
These policies will all result in lower supply and higher costs. For example, it is anticipated that Trump’s One Big Beautiful Bill Act will reduce electricity-generating capacity by 330 gigawatts by 2035 and eliminate 1.6 million green-energy jobs. (That is approximately equal to the nation’s present solar production capacity.) Because of Trump, Americans will use less electricity and pay more for it in ten years.
The United States is currently experiencing a shortage of visitors and immigrants, yes, a shortage. As tourists from Asia and Europe choose to spend their euros and yen elsewhere, tourist hotspots across the nation are in a panic. The shortage of workers is hurting farms and nursing homes. The dollar is depreciating and domestic borrowing costs are rising as a result of international investors choosing to park their money overseas.
Trump’s assault on universities and scientific research centers may prove to be the most detrimental of his degrowth initiatives in the long run. Despite its numerous flaws, the American higher education system is a driving force behind global modernization. The nation’s land-grant schools contribute to global food production. Its public universities help impoverished children climb the economic ladder. Its prestigious universities are hubs for cutting-edge science.
However, these institutions are being attacked for the crimes of hiring liberal thinkers, admitting foreign students, and helping Brown and Black children. Trump’s budget cuts may prevent mathematician Terence Tao, who some of his peers have compared to a modern-day Albert Einstein, from continuing his studies at UCLA. How could that be beneficial? The same benefit that will result from cutting funding for research on mRNA vaccines, which are intended to stop pandemics and prevent cancer. Jerome Adams, a doctor who was surgeon general in the first Trump administration, contended, “I’ve tried to be objective & non-alarmist in response to current HHS actions—but quite frankly this move is going to cost lives.”
The White House has reduced taxes and regulations as a countermeasure, at least for certain industries. In the Trump economy, the rich will be fine—I guess they’ll be content with a smaller pie if they get a larger share. However, Trump’s degrowth will eventually harm them as well. Wealthy people send their children to college and buy homes, sneakers, and bananas. Energy is used by the wealthy. Wealthy people staff their businesses and hire people to help them with their home health care. Additionally, wealthy people need cancer treatments and use vaccines.
Trump is practicing financial nihilism, in contrast to other degrowthers who prioritize long-term human flourishing and the preservation of the planet’s ecosystem. At least once, the president has acknowledged that his policies will result in Americans owning fewer things rather than more: “Perhaps the kids will have two dolls instead of thirty, you know? Additionally, the price of the two dolls may be a few dollars higher than usual. If only it wasn’t that bad.”
