The Bulwark Podcast: S2 Ep1041 – Justin Wolfers on Trump's Centrally Planned Economy

Release Date: May 13, 2025

In this engaging episode of The Bulwark Podcast, host Tim Miller welcomes renowned economist Justin Wolfers to dissect the intricate tapestry of President Donald Trump's economic policies, particularly focusing on his approach to tariffs and the broader implications for both the U.S. and global economies.

Australian Election and Trumpism

The conversation kicks off with a lighthearted discussion about Justin Wolfers' recent experiences in Australia. Wolfers reflects on the Australian election victory of the Labor Party, juxtaposing it with the influence of Trump-like politics overseas.

Justin Wolfers [01:34]:
"Trump has determined two major international elections, Canada and Australia. And so even as he moves the US to the right, he's moving the rest of the world to the left."

Wolfers explains how the Australian Conservative Party, led by Peter Dutton, adopted a Trump-esque agenda—termed "Timu Trump"—which ultimately backfired, leading to a significant swing back to the Labor Party.

Trump’s Tariff Policies and Global Trade

Shifting focus to Trump's tariff strategies, Wolfers provides a critical analysis of the administration's inconsistent and often illogical tariff impositions.

Justin Wolfers [07:55]:
"Trump comes to power. First thing he does, having run on tariffs, having not mentioned the word Canada through the entire campaign, the first thing he does is puts tariffs on Canada and Mexico."

Wolfers deconstructs the rationale behind these tariffs, highlighting their origin as tools to curb illegal immigration and fentanyl trafficking. However, he points out the administration's pivoting justifications—from revenue generation to onshoring manufacturing and national security—often leading to economically detrimental outcomes.

Justin Wolfers [08:57]:
"They put tariffs on absolutely everything, including non-manufactured goods... They decided on a 10% across-the-board tariff, plus an absurd formula that yields what the administration calls reciprocal tariffs."

He criticizes the lack of coherent strategy, emphasizing the arbitrary nature of the tariff rates, which often targeted countries without reciprocal tariffs, leading to economic chaos and increased prices for consumers.

Impact on the Stock Market and Recession Risks

Delving into the economic repercussions, Wolfers discusses the stock market's response to Trump's tariff policies and the ensuing recession fears.

Justin Wolfers [23:02]:
"It's absolutely clear that the market as a whole thinks Trump's tariff policy is terrible."

He elaborates on how every tariff announcement correlates with a market downturn, indicating widespread investor skepticism about the long-term viability of Trump's economic strategies. Wolfers also touches on the heightened uncertainty affecting businesses, leading to reduced investments and potential rises in unemployment.

Addressing recession predictions, Wolfers references platforms like Kalshi and insights from financial institutions like Goldman Sachs, noting a decline in recession odds following negotiations to reduce tariffs.

Justin Wolfers [32:19]:
"The chances of recession have retreated because Trump has retreated from Trumpism."

However, he remains cautious, acknowledging the unpredictable nature of policy reversals and their delayed effects on the economy.

Federal Budget, Tax Cuts, and Deficit Concerns

The discussion transitions to the Republican-controlled House's budget proposal, characterized by extensive tax cuts and increased deficits.

Justin Wolfers [44:58]:
"Budget deficit's currently 6.4% of GDP. To say that in English, large."

Wolfers critiques the proposal for exacerbating the national debt without addressing revenue shortfalls, emphasizing the disproportionate benefits to the wealthy and corporations at the expense of the working and middle classes.

Justin Wolfers [46:52]:
"These debates come down to two things. Should we be spending more money than we're taking in right now? And do we want to take from the poor and give to the rich? That's it."

He warns of the long-term economic dangers, including rising interest rates and reduced investor confidence, which could further strain the U.S. economy.

Housing Market and Supply Constraints

Addressing domestic economic issues, Wolfers examines the soaring housing prices and the supply-side constraints impeding affordable housing.

Justin Wolfers [51:09]:
"If you don't allow people to build apartment buildings, you're just saying it's beautiful. And I’m not sharing."

He advocates for increasing housing supply as a fundamental solution, criticizing policies that hinder construction and favor demand-side interventions like subsidies, which only inflate prices further.

Global Economic Cooperation and State-Managed Economies

Wolfers also touches upon the shifting dynamics in global trade, particularly the deteriorating relationship with China under Trump's policies and the broader trend towards state-managed economies.

Justin Wolfers [42:35]:
"I think that the healthiest president is one who doesn't know the name of any CEOs. We've seen the opposite. This is very, very centrally planned economy right now."

He laments the move away from market-oriented policies, emphasizing the importance of competition and cooperation in fostering global economic growth.

Concluding Insights

As the podcast wraps up, Wolfers underscores the interconnectedness of global economies and the detrimental effects of protectionist policies.

Justin Wolfers [17:47]:
"Whenever we get rid of tariffs, we create more cooperation in the world. Who wins? Both sides."

He calls for a return to economically sound policies that prioritize market forces and international cooperation to enhance living standards and economic stability.

Final Thoughts

This episode provides a comprehensive critique of Trump's economic policies, highlighting the chaos wrought by arbitrary tariff impositions and irresponsible fiscal strategies. Justin Wolfers offers valuable insights into the broader implications for both the U.S. and global economies, advocating for coherent, market-driven approaches to trade and fiscal management.

Listeners gain a nuanced understanding of the complex interplay between political maneuvers and economic outcomes, reinforced by Wolfers' expertise and candid analysis.

Produced by Katie Cooper with audio engineering and editing by Jason Brown.