## Summary: "Donald Trump, World-Order Wrecking Ball: ‘The Economic Consequences of Mr. Trump’" This review, published by **Policy Magazine** on **August 11, 2025**, and authored by **Colin Robertson**, delves into Philip Coggan's new book, *"The Economic Consequences of Mr. Trump: What the Trade War Means for the World."* The book offers a scathing assessment of the economic and geopolitical ramifications of Donald Trump's trade policies, particularly his use of tariffs. ### Key Findings and Conclusions: * **Destabilization of Global Cooperation:** Coggan argues that Trump's tariffs have not only caused economic turmoil for allies and uncertainty for markets but have fundamentally destabilized the entire architecture of global cooperation. * **End of the Post-WWII Order:** The book concludes that there will be no return to the post-Second World War, rules-based multilateral institutions. Instead, a major restructuring is needed to reflect a multipolar world with conflicting visions for the future global order. * **Tariffs as a "Clear, Simple, and Wrong" Answer:** Coggan, echoing H.L. Mencken, characterizes Trump's approach to complex economic problems as offering simple, but ultimately incorrect, solutions. * **"New Art of the Deal":** Trump's strategy is described as making excessive demands, forcing other parties to "show him the money in investment pledges or pay high tariffs." ### Critiques of Trump's Tariff Policy: Coggan identifies several significant flaws in Trump's tariff strategy: 1. **Tariffs Paid by Consumers:** Tariffs are paid by importers, not exporters. The **Cato Institute** concluded that tariffs imposed by Trump in **2018 and 2019** were almost entirely passed on to US consumers. This leads to: * Lower profits for businesses. * Lost jobs. * Slower wage growth. * Increased government debt servicing costs due to rising bond yields, exacerbating the already astronomical **$1.3 trillion budget deficit**. 2. **"Simplistic and Stupid" Formula:** The "Liberation Day" tariffs, calculated by dividing a country's exports to the US by its trade deficit, are labeled as "simplistic and stupid" by Coggan. 3. **Automation, Not Trade Deficits, Causes Job Loss:** Coggan asserts that job losses in US manufacturing are primarily due to automation, not trade deficits. 4. **Trade Deficits Not Due to "Cheating":** The book refutes the notion that foreign countries "cheat" to create US trade deficits. Instead, it highlights that foreign investment in US Treasury bonds, equities, and enterprises often increases the US capital account surplus, offsetting the current account deficit. 5. **Farcical Revenue Source:** The belief that tariffs can fund government, as they did in the age of McKinley, is deemed "farcical." This is contrasted with the present, where US defense spending represents a higher percentage of GDP (3.4% today) compared to **1899 (approximately 1.6% of US GDP)**, and the existence of social security, Medicare, and other welfare spending. ### Broader Implications and Concerns: * **Mercantilism:** Trump's approach is characterized as **mercantilism**, an economic theory debunked by Adam Smith in **1776**, which prioritizes exports and discourages imports. * **Alienation of Allies:** Trump's "shakedown" on defense spending and the "weaponization of tariffs" have alienated key allies, hindering efforts to address issues like China's trade practices. * **Use of Tariffs for Non-Trade Purposes:** The use of tariffs for punitive actions, such as sanctioning India on its purchase of Russian oil or forcing Colombia to accept deportees, represents a radical departure from established norms. * **Inflationary Impact:** Tariffs are taxes that will stimulate inflation, disproportionately affecting lower-income Americans and exacerbating inequality. * **Risk to Innovation:** Igniting culture wars with universities puts the development of ideas and innovation, crucial for winning the "artificial intelligence, the space race of our time," at risk. * **End of American-Led Globalization:** Coggan, quoting Prime Minister Mark Carney, states, **"The system of global trade anchored on the United States is over. The 80-year period when the United States embraced the mantle of global economic leadership is over. While this is a tragedy, it is also the new reality."** ### Recommendations: Coggan suggests that the effective way to confront China is to **work with allies**, rather than through unilateral tariff actions. ### Contextual Information: * **Book Title:** *The Economic Consequences of Mr. Trump: What the Trade War Means for the World* * **Author of Book:** Philip Coggan (economist and columnist for the Financial Times) * **Reviewer:** Colin Robertson (former career diplomat, fellow and host of the Global Exchange podcast with the Canadian Global Affairs Institute) * **Publication Date:** August 11, 2025 * **Inspiration for Title:** John Maynard Keynes' 1925 polemic on Winston Churchill's return to the gold standard. * **Historical References:** H.L. Mencken, Adam Smith, McKinley era, John Maynard Keynes, Winston Churchill.
Donald Trump, World-Order Wrecking Ball: ‘The Economic Consequences of Mr. Trump’ - Policy Magazine
Read original at Policy Magazine →The Economic Consequences of Mr. Trump: What the Trade War Means for the WorldBy Philip CogganProfile Books/July 2025Reviewed by Colin RobertsonAugust 11, 2025In his scathing new book The Economic Consequences of Mr. Trump: What the Trade War Means for the World, Philip Coggan concludes that the ultimate effect of the Trump tariffs is not just economic turmoil for allies, uncertainty for markets and financial institutions but destabilization for the entire architecture of global cooperation.
As the historian Timothy Garton Ash observes, the president “is now tearing down what remains of the edifice with unparalleled speed and recklessness.” There will be, argues Coggan, no return to what worked for 80 years in the aftermath of post Second World War rules-based multilateral institutions.
Instead, it will require a major restructuring reflective of a multipolar world of disparate and conflicting visions of any future global order.Coggan is an economist and columnist for the Financial Times, and the author of previous books including More: A History of the World Economy from the Iron Age to the Information Age and Economics: The Economist Guide.
He draws his latest title from John Maynard Keynes 1925′ take-down polemic on then Chancellor of the Exchequer Winston Churchill’s decision to return the United Kingdom to the gold standard. One of the great policy mistakes of the 20th century, it ushered in deflation and a general strike.In his assessment of the Trump tariffs, Coggan evokes satirist and journalist H.
L. Mencken’s observation that “For every complex problem there is an answer that is clear, simple and wrong.”The new Art of the Deal, writes Coggan, comes down to understanding that Donald Trump makes excessive demands forcing the other party to “show him the money in investment pledges or pay high tariffs.
”Coggan points out the many flaws in Trump’s tariff policy:First, tariffs are paid by the importer, not by the exporter. The Cato Institute concluded that tariffs imposed in 2018 and 2019 by Trump were almost entirely passed on to US consumers. This ultimately means lower profits, and therefore, lost jobs and slower wage growth.
And when bond yields rise, the US government must pay more to service its debt, worsening its already astronomical $1.3 trillion budget deficit.The April 2nd ‘Liberation Day’ tariffs were calculated by dividing the amount of goods a country exported to the US by its trade deficit: a formula Coggan calls ‘simplistic and stupid’.
In his assessment of the Trump tariffs, Coggan evokes satirist and journalist H.L. Mencken’s observation that ‘For every complex problem there is an answer that is clear, simple and wrong.’Second, the loss of jobs in US manufacturing is not because of trade deficits but, as anyone visiting a modern manufacturing plant will see, technology that has automated what was once done by workers.
Third, the US trade deficit is not the result of other countries ‘cheating’. He points out that foreign countries fund the buying of US Treasury bonds and equities or investment in US enterprise. And, as Paul Krugman has pointed out, an increase in foreign investment into the US usually increases the US capital account surplus, offsetting the current account deficit.
For Trump, his ‘beautiful tariffs’ are a means to raise the revenue he needs to pay for the tax cuts contained in his ‘big, beautiful bill’.Canada, China and Mexico were the obvious targets because they are America’s top three trading partners. The belief that tariffs can fund government like they did in the age of McKinley, one of Trump’s favourite ex-presidents, is farcical.
There was no social security, Medicare or other welfare spending and, in 1899, US defense spending represented approximately 1.6% of US GDP versus 3.4% today.But tariffs as a revenue source are likely to stick as future administrations and Congress both desperately look for revenue sources.Trump is right about China gaming the system, says Coggan, but the way to take on China is to work with the allies.
Instead, Trump has alienated them with his shakedown on defence spending and weaponization of tariffs. Their use for non-trade punitive purposes — think sanctioning India on its purchase of Russian oil, forcing Colombia to take deportees — is a radical departure from longstanding norms.Trump’s approach, says Coggan, is mercantilism — a belief that exports are good and imports are bad and that trade surpluses are optimal, which was demolished by Adam Smith in 1776.
Or, as George F. Will recently told Bill Maher, “I have a chronic, incurable trade deficit with my barber. Once a month I buy a haircut from her, she buys nothing from me.”In electing Trump for a second term, Americans now face the consequences. Curbing immigration and deporting migrants is cutting off the flow of those seeking a better life and prepared to take risks to achieve it.
Igniting the culture wars with universities puts at risk the development of ideas and innovation necessary to win the race on artificial intelligence, the space race of our time.Meanwhile, spin it as he wants, tariffs are taxes that will stimulate inflation, disproportionately afflicting lower-income Americans, further exacerbating growing inequality.
For the democracies, Trump’s tariff war signals the end of the American-designed and led rules-based order and a globalization based on a freer flow of goods, services and ideas.Prime Minister Mark Carney, writes Coggan, best sums up our current situation: “The system of global trade anchored on the United States is over.
The 80-year period when the United States embraced the mantle of global economic leadership is over. While this is a tragedy, it is also the new reality.”Contributing Writer Colin Robertson, a former career diplomat, is a fellow and host of the Global Exchange podcast with the Canadian Global Affairs Institute in Ottawa.
