Trump Tariffs: The Madman Theory Applied to Economics (and what we should do about it)

Paul Jay: Hi, I’m Paul Jay and welcome to theAnalysis.news. This is an essay we have titled, Trump Tariffs: The Madman Theory Applied to Economics (and what we should do about it). 

During the Vietnam War, President Nixon believed that if he appeared insane, his nuclear threats would be taken seriously — a tactic known as the madman theory. 

Richard Nixon: That’s what I would call the mad man theory. I think that overstates it.

Paul Jay: Donald Trump is now applying this logic to the global economy. It looks like chaos, but there is method to the madness.

Despite all the rhetoric about bringing jobs back to America, Trump’s tariffs are not about protecting American workers. Trump’s tariff war is not a random outburst of protectionism, nor is it simply about weakening China. Beneath the nationalist bluster, the emerging strategy reveals a multi-layered project: to fund a new wave of militarization — especially the so-called Golden Dome — without taxing the rich; to crush labor power both globally and domestically; to destabilize economic rivals; to dismantle regulatory institutions; and to restructure the U.S. economy around a new elite rooted in militarized AI and energy dominance.

Trump himself is not the architect of this plan. He governs mostly by instinct — revenge, self-interest, and gut feeling. But surrounding him is a network of serious actors — Robert Lighthizer, Peter Navarro, Elon Musk, Peter Thiel, Russell Vought, Stephen Miller, J.D. Vance, Steve Bannon, and the architects of Project 2025 — who have given Trump’s instincts a more coherent, if dangerous, strategic form.

This marriage of spectacle and structural capture, and let’s not forget Trump learnt  his politics in the world wrestling federation, this is essential to Trumpism’s broader project. Without it, the economic nationalism of tariffs would collapse under its own contradictions. We’re already seeing warning signs: empty container ships, unstable schedules, rising shipping costs, a tumbling stock market, and open conflict with the Fed. Just recently, Trump already had to lower his tariffs against China because of the amount of pressure coming from Wall Street and the American corporate sector. But with control over federal agencies and media narratives, Trump’s allies believe they can manage the fallout — at least long enough to consolidate power, crush organized labor, and lock in a new corporate-nationalist order.
It doesn’t have to be sustainable. It just has to last long enough to become irreversible.


Climate Collapse: Denial and an Iron Fist

It’s critical to address the climate crisis in this context. It’s not a side issue — it’s structurally tied to the entire strategy of tariffs, militarization, and authoritarian state-building.

Fossil fuels are the material base of U.S. power. Energy dominance has long been a strategic goal, and Trump’s allies see climate mitigation efforts as direct threats to American hegemony. So it is not just climate science denial for no reason. Here is a quote from Trump: “American energy dominance will be declared a strategic economic and foreign policy goal of the United States. It’s about time,” that is Trump speaking to a crowd at the final event of the Williston Basin Petroleum Conference in 2016. His executive orders are now making that vision a reality.

Climate change produces inevitable political instability — food shortages, mass migration, regional collapse. So how do you deal with that? Do you start to phase out fossil fuels? No. Trump’s cabal plans to manage the crisis through repression, militarized borders, and internal surveillance — not through transformation of the economy.

Trumpists are willing to allow global warming to reach levels that are unsustainable for human civilization. Rather than confront this reality, they prefer denial and magical thinking: pretending that some technological miracle will solve the crisis some day. They minimize or ridicule overwhelming scientific consensus, and dismiss climate disasters already unfolding as exaggerations or conspiracies or fake news.

Trump’s “drill baby drill” is a clarion call: science be damned, American power will triumph.

In short, this is about defending the entire material and political structure of American corporate-nationalist dominance — even if it means denying humanity’s survival.


Tariffs Are Hidden and Regressive Taxes to Fund Militarization

At the simplest level, Trump’s tariffs function as hidden taxes. Rather than overtly raising income taxes on corporations or billionaires, or even working people,  tariffs generate revenue quietly by taxing imports — a cost mostly borne by American consumers, not by foreign exporters, as Trump falsely claims.

Tariffs also function as a regressive tax. Even Gary Cohn, former chief economic advisor to President Trump and current Vice Chairman of IBM, gets it. During his appearance on Face the Nation on April 27, 2025, he said:
Gary Cohn: “Tariffs are highly regressive. Meaning that poorer people end up paying a disproportionate percentage of the tariffs. Because they spend 100% of their paychecks on goods.”

Paul Jay: This revenue stream is critical because Trump’s broader agenda demands massive new federal spending. The Golden Dome missile defense system — a trillion-dollar boondoggle enriching firms like Musk’s SpaceX and Thiel-aligned defense contractors — will require enormous funding. Expanding AI militarization, surveillance systems, and space-based weapons will require billions more. 

At the same time, Trump remains committed to cutting taxes for corporations and the wealthy even further. Tariffs bridge the gap — funding militarization while shifting the burden onto working people, all without politically explosive tax increases on the rich.

There is a legitimate case for targeted tariffs to protect American workers and rebuild domestic industry, especially in sectors hollowed out by decades of offshoring and corporate-driven trade deals. But that’s not what Trump’s tariffs are doing.  It’s protection for a new oligarchy rooted in surveillance, fossil fuels, and permanent war.


The Golden Con

One of the most expensive — and absurd — pieces of this agenda is the so-called “Golden Dome” missile defense system. From here on, let’s call it what it is: The Golden Con. It’s not about the dome — it’s about the gold.
Promoted as a high-tech shield against nuclear threats, it’s more boondoggle than defense strategy — a trillion-dollar fantasy with no proven ability to stop an actual missile barrage.

As Daniel Ellsberg warned, and let’s remember Ellsberg not only leaked the Pentagon Papers, before that he worked at RAND corporation as a nuclear war planner. Well Ellsberg said these systems are less about protection than they are about profit: “snake oil” sold to the public to enrich aerospace contractors and tech billionaires.

Firms aligned with Elon Musk and Peter Thiel are among the biggest winners, positioning themselves as indispensable to a future of endless threat and endless funding.

The only thing worse than this ABM sytem being a trillion-dollar boondoggle that doesn’t work… is if it might work.
Even the remote chance that a new ballistic missile defense system could be partially effective sends a message to other nuclear powers: develop new weapons to evade it — or build a Golden Con of your own.
As former Governor of California, Jerry Brown, said,  and he is also the Chair of the Bulletin of the Atomic Scientists:

Jerry Brown: “Keeping on that path ensures a massive, continuous, almost an eternal arms race, which sooner or later has to fail — by blendor or mistake, or miscalculation.”
And that failure, inevitably, leads to the end of human civilization. Ellsberg called it “institutional madness.”

Bottom line: tariffs are not only a hidden tax — they’re a regressive one that forces the working class to fund the insane AI weaponization of space.

But of course, it will create sooo many jobs.

This is the end of part one. Part two is about how the tariffs are part of a greater strategy to suppress unions and worker’s struggles at home and around the world, all in the name of defending the American worker. The final part of this series will be about how people who are organizing to resist and how we can take advantage of this chaos.