By Brian Schwartz and Greg Ip

As investors and consumers fretted in recent weeks about the fallout if President Trump unleashed a massive trade war, Trump himself kept looking to the past.

The rest of the world has been ripping off the U.S. for 40 years, he told advisers who asked him to articulate his economic vision. It was, he and his advisers would note, an argument he has been making on television since the 1980s. Before his second term ends, he said, he feels he has to right those wrongs.

If people complained about the tariffs he was about to impose, Trump told his inner circle to remind the public of his view of how the U.S. once was and could be again: a place with thriving Main Streets and hometowns, where American workers made American products sold to the American public.

Trump leaned into that vision with his market-shaking tariff announcement Wednesday. "Empty, dead sites, factories that are falling down...will be knocked down, and they're going to have brand new factories built in their place," he said, to an audience that included members of the United Auto Workers union. "We're going to be an entirely different country."

The tariffs Trump announced would lift the average duty above the previous peak of 1930. It is by far the most disruptive component of an agenda that may be one of the most disruptive of any new president since the 1930s, one that includes slashing immigration, government spending, taxes and regulations.

Perhaps the most striking aspect of Trump's dramatic move to reposition the American economy is the timing. The economy he inherited was the envy of the world with growth of 2.8% last year, faster than almost every other major developed economy, an unemployment rate of just 4.1% and inflation of 2.8%. Stocks were at record highs.

Wall Street assumed Trump would prioritize growth-friendly tax cuts and deregulation while delaying and diluting tariffs, as he did in his first term.

Instead, Trump decided to administer shock treatment immediately. The economy, he argued, is a sick patient that needs therapy now, regardless of the pain. "THE PATIENT LIVED, AND IS HEALING. THE PROGNOSIS IS THAT THE PATIENT WILL BE FAR STRONGER, BIGGER, BETTER, AND MORE RESILIENT THAN EVER BEFORE," he wrote on social media Thursday.

Trump's aides see the tariff rollout as part of a comprehensive program, along with tighter borders, lower taxes and less regulation, that will result in a more self-sufficient economy, where Americans produce more and import less of what they consume, fewer jobs are filled by immigrants who came illegally, the private sector is freer and the government less burdensome.

In that economy, "We're making a lot more stuff in America, high-tech manufacturing, security goods, autos, a lot more stuff across the industrial spectrum," said Stephen Miran, chairman of Trump's Council of Economic Advisers. Less regulation and taxes will "make it faster and more flexible to make stuff in America."

Families and communities left behind by deindustrialization should benefit, Miran added. "If you create good jobs for people, they have an easier time forming a family, getting married, having kids, finding housing, affording the costs of raising children."

Independent economists and even many Republicans think Trump's theory of the economy is wrong and that his trade policies will leave the U.S. poorer and international relations damaged. Some economists warn they could cause a recession.

U.S. markets slid Thursday in their steepest decline since March 2020, as investors worried the new tariff plan will hurt economic growth. Global markets also sank.

White House spokesman Kush Desai said Trump has made it clear that the U.S.'s decline isn't inevitable, but a choice rooted in bad policies that put the country last. "Other peer countries like Germany and Japan have put their citizens first and maintained their manufacturing base and workforce," he said.

Dismissing naysayers

On Wednesday, which Trump called "Liberation Day," the president dismissed naysayers, saying: "Every prediction our opponents made about trade for the last 30 years has been proven totally wrong."

Still, he has acknowledged privately and publicly that, in the short run, implementation of his plan is going to be disruptive -- higher inflation, at least temporarily, and an elevated risk of recession. "Will there be some pain? Yes, maybe (and maybe not!). But we will make America great again, and it will all be worth the price that must be paid," he said on social media in early February.

At a Republican National Committee fundraising dinner at the Four Seasons in New York on March 31, donors asked Vice President JD Vance how tariffs could impact Republicans in the 2026 congressional midterm elections.

Vance pivoted to Trump's vision for a realignment of global trade to one that better benefits the U.S., said attendees.

He told the crowd that he had met with Ford Motor Executive Chairman Bill Ford, whose family still controls the company, just the previous week, as Trump announced a 25% tariff on imported cars. Ford could suffer from Trump's auto tariffs since the company has interconnected supply chains that move through both Canada and Mexico.

Trump is making policy decisions with his gut after meeting with his advisers, Vance told the roughly 20 donors.

A spokesman for Vance didn't respond to a request for comment. A Ford spokeswoman confirmed the meeting.

Learned in real estate

Trump's obsession with trade and tariffs is heavily influenced by his background in real estate. "From the very first time I met him, on trade, it was as if he was talking about developing properties in New York City, " recalled Sam Nunberg, who worked for Trump from 2011 to 2015. "He was extremely well versed, he followed the nuances and he knew the history of it."

Marc Short, chief of staff to Trump's first vice president, Mike Pence, and now a critic of the tariffs, said, "The way [Trump] would describe it is to say...the American marketplace is the greatest marketplace, and people should be charged to have access to it, like a real-estate fee. And we're suckers not to be charging people not to have access to it."

Trump developed this viewpoint early on as a real-estate developer dealing with deep-pocketed Japanese investors. "Forget about our enemies -- the enemies you can't talk to so easily. I'd make our allies pay their fair share," Trump told talk show host Oprah Winfrey in 1988. "We let Japan come in and dump everything into our markets. It's not free trade. If you ever go to Japan right now and try to sell something, forget about it...We make it possible for [Kuwait] to sell their oil. Why aren't they paying us 25% of what they're making?"

The targets of his ire have changed, from Japan, Kuwait and Saudi Arabia to China, Vietnam and Mexico, but his prescription has stayed the same: Make them pay for the privilege of selling to or being defended by the U.S.

His views were honed by listening to protectionist television personalities, including the late Lou Dobbs on CNN and Fox Business, Laura Ingraham on Fox and the late Ed Schultz on MSNBC, according to Nunberg.

Nunberg said Trump would remark on how much cheaper televisions were in the U.S. compared with other countries, a differential he blamed on bad trade deals. He said American workers were being victimized not just by offshoring but by illegal immigrants, citing conversations with union construction workers, Nunberg said.

The central message of his presidential campaigns reflected these ideas -- that American workers and families were being unfairly hurt by prior presidents who had allowed imports and immigrants to flood the American economy.

Tapping nostalgia

Trump's rhetoric often evokes past eras when American manufacturing was at its zenith.

"As I was driving over, I see these empty old, beautiful steel mills and factories that are empty and falling down," he told an interviewer in Chicago last year. "We're going to bring the companies back."

Princeton historian Julian Zelizer said Trump's vision of the economy is fundamentally a nostalgic one. "It's an older, manufacturing-based, 1950s-'60s auto-producing economy that I think he still envisions is possible, fueled by oil, not fueled by electricity."

Former Republican Speaker of the House of Representatives Newt Gingrich, a supporter of Trump, disagreed. Trump, he said, admires Elon Musk and is enthralled by space travel. But he said Trump has returned the U.S. to its roots when it comes to tariffs and trade.

Trump, he said, is an admirer of President William McKinley, who raised tariffs sharply in the 1890s. "McKinley is simply the archetype of a pattern which began with [Alexander] Hamilton, who understood that if you didn't have tariffs, British industry would drown you," he said. Only since Franklin Roosevelt has free trade been "enshrined in modern economic thought," he said.

In his first term, Trump raised tariffs considerably, especially on China. Japan, South Korea, Canada and Mexico all made concessions to secure new trade deals with the U.S.

Yet Trump ended his term with a sense of unfinished business. He has recently told allies at his Mar-a-Lago club in Florida that he felt blocked from larger scale tariffs by people such as National Economic Council director Gary Cohn and Secretary of State Rex Tillerson.

Trump's advisers have often tried to dissuade him of what they said were his misconceptions about trade, such as who pays the cost of the tariff. "That was always a circular conversation," recalled Short. "It would be explained, it's the American importers, and he'd come back...and he'd say those countries need to pay."

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April 03, 2025 21:00 ET (01:00 GMT)

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