Trump's tariffs hurt the US much more than China - Economist Michael Hudson explains

Donald Trump's tariffs benefit rich elites at the expense of the majority, argues economist Michael Hudson. He explains how the trade war on China is isolating the US, while encouraging alternatives.

Donald Trump's tariffs are benefiting rich elites at the expense of the majority of the population, argues economist Michael Hudson. He explains how the US trade war on China is isolating the United States and encouraging countries to seek alternatives. Ben Norton hosts the interview.

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(Intro)

BEN NORTON: Why has US President Donald Trump imposed tariffs on countries all around the world? And in particular, why is Trump waging a trade war on China? What are his real goals?

Well, to try to answer these questions, I spoke with the economist Michael Hudson, who is the author of many books, and who just published the new report "Return of the robber barons: Trump's distorted view of US tariff history".

Michael Hudson outlined the history of the use of tariffs in the United States and in other countries, and he explained how Trump is using tariffs as a weapon of class war, to benefit the rich at the expense of the vast majority of the population, and also how Trump is trying to reshape the global financial system, in order to benefit the United States at the expense of everyone else.

But as Michael Hudson warns, this is already backfiring on the US economy, and it's accelerating the transition to a more multipolar world.

So here are a few clips from our discussion, and then we'll go straight to the interview.

MICHAEL HUDSON: The United States is the only country in the world that has weaponized its foreign trade; weaponized its foreign currency, the dollar; weaponized the international financial system; and treated every economic relationship in an adversarial way, to weaponize it.

And other countries say, how can we have a different approach, and treat trade as how can we mutually gain? How can we treat investment as something where the investor gains, but we also gain?

So what's happening is that, as other countries are putting in place their mutual production facilities, transportation facilities, investment facilities, Trump is isolating the United States from trade and investment relations.

It has tried to isolate China, but what it's doing is isolating itself from everyone, except its satellites.

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(Interview)

BEN NORTON: Michael, thanks for joining me; it's always a pleasure. Let's start by talking about this report that you published.

You outlined the history of US use of tariffs and industrial policy, and your argument is that Trump is using tariffs essentially as a form of class warfare, to move the burden off of the rich and corporations, and to increase the burden of taxation on the working class through the use of tariffs.

So can you talk about what your argument is in this report and why you decided to write it?

MICHAEL HUDSON: Well, it's much more than simply class warfare. Trump has for years been complaining about the fact that the richest people are taxed progressively, at a higher tax rate than other people. He wants to get rid of the tax rate altogether for the finance, insurance, and real estate sector, the FIRE sector.

I think he must have had a discussion with some economist or historian and said, "Isn't there some way that we can get by without an income tax?" And the person must have told him, "Well, you know, the United States didn't have an income tax before 1913".

And Trump said, "No income tax?" No, the Supreme Court ruled that an income tax was unconstitutional. That's what supreme courts do; they try to prevent any kind of progressive social legislation.

Well, finally, in 1913, the Senate passed the 14th Amendment, and enabled an income tax to be levied.

So Trump said, "Well, how how did the United States finance itself before that?" And the answer was, well, almost all the US fiscal revenues came from the tariff, from customs receipts, in addition to land sales for land that they grabbed from the Indians.

So Trump said, "Well, they did it through tariffs!" The advantage of tariffs, for Trump, is that the cost falls on consumers. He doesn't see that they also fall on companies that import goods from their foreign affiliates.

But, ultimately Trump said, "Oh, this is on consumers; this is wonderful! Why couldn't we go back to the way things used to be, today? Why can't we get rid of the income tax altogether -- at least on my constituency, the campaign donors -- and why can't we simply raise tariffs?"

Well, his associates must have said, "How ever are you going to convince people to go along with this?" And so Trump said, "Well, let's see, under tariff protection, in the late 19th century, that's how the United States rose to be a great industrial power. So somehow, tariffs must have nurtured industry. And I want to bring industrialization back to the United States, to make America great again. And I can say tariffs are going to bring back industry".

And what he means is, un-taxing the wealthy people, especially the finance and real estate sector, and shifting the tax on the consumers is going to make the country great again.

Well, what he's leaving out is the fact that it wasn't tariffs as such that made America into an industrial power. What there was a whole large program that was necessary to industrialize America.

All of this was spelled out in the 1820s by Henry Clay, and it was called the American System. And the American System was protective tariffs, with "internal improvements" -- that means public investment in infrastructure -- and a national banking system to finance industry.

Well, Trump said nothing about these, so it's worth saying something about them.

By the late 19th century, the United States, said, "How are we going to lower the cost that industry has to pay for its wages, without leading to a huge round of strikes?"

The solution was we can have the public sector pick up many of the costs that labor would otherwise have to pay out of its own paychecks.

For education, we can have free education -- not the $50,000 a year that workers have to pay today in order to get a job. We can have social programs, health programs, and others, to help them.

We can have natural monopolies in the public domain, such as transportation, starting with the Erie Canal, and going all the way through roads and other transportation. Communications too.

All of these natural monopolies, if they were not held in the public domain, would be owned by private people who would get monopoly rents. And the United States said the way that we can compete with other countries is pretty much the way that the classical economists said you compete: you lower the cost of production by having the government bear as many of these costs as possible through public enterprises, through public infrastructure; you essentially socialize or nationalize the land.

"Socialism" was not a bad word in the late 19th century. Almost everyone across the political spectrum was describing their policies as socialist. There were Christian socialists, and libertarian socialists, and Marxian socialists, and social democracy. Everybody was one kind of socialist for another.

That meant a rising role of government in providing more and more services, or regulating the economy, such as the anti-trust law of 1890, to prevent monopoly pricing, and Teddy Roosevelt's, trust-busting.

The whole idea was to minimize the cost of production with an act of a government. And they said that, well, if we can have a mixed economy, a public and private economy together, with the government sponsoring industrial credit -- not the kind of British credit that was just for trade, or exploitative, or loans to the farmers -- but actually to finance capital investment in industry, then we can take off.

It was this context for protective tariffs that enabled the United States to get rich.

Well, what Trump wants to do is the exact opposite of this context. He wants to deregulate the economy, not regulate it. He wants to privatize any public domain that's left, any public enterprises.

The post office, for instance, can be privatized. It's going to cut back services to rural areas. It's going to increase prices. It's going to make most of the US economy look like Thames Water in London, for instance.

They're going to Thatcher-ize the American economy, to do to the American economy what Margaret Thatcher and Tony Blair did for England; or what Reaganomics began to do for the United States.

So we're talking about an anti-government policy, not a mixed policy. And under Elon Musk, he wants to just carve up the government agencies altogether, privatize everything.

What they're going to do is dismantle the country's social programs, dismantle its subsidies, dismantle subsidized social programs that have enabled companies like Amazon, or other low wage companies, to pay very low wages, and having the American social system pay for employees that are paid below the poverty line, because they haven't been increasing the minimum wage in the United States.

So, this is what is really in store for the US: cut, essentially privatize, the government; especially get rid of Social Security, and other social programs, Medicare.

They call it streamlining the economy or making a "free market", a market without government that interferes by protecting consumers, protecting the population against predatory monopolies and predatory finance.

BEN NORTON: Michael, you raised so many important points there.

I want to hit on this idea of the Gilded Age, that Trump sees the Gilded Age in the 19th century as essentially his model for what the US should return to.

The Gilded Age is notorious for the robber barons, these big billionaires like Cornelius Vanderbilt and J.P. Morgan.

Today there are, of course, similar oligarchs. Many of them are in the Trump administration, including Elon Musk, who's the richest billionaire oligarch on Earth. You have the Treasury secretary, another billionaire hedge fund manager, Scott Bessent. Then you have the billionaire who is the commerce secretary, Howard Lutnick; he's also from Wall Street.

And at his inauguration in January, Trump invited the world's most powerful billionaires, like Mark Zuckerberg, Jeff Bezos, Tim Cook, and others.

So one of the points that you emphasize is that Trump is really trying to overturn not only the progressive gains of the New Deal, but even the gains of the Progressive Era in the late 19th and early 20th centuries.

When Trump looks back at people like McKinley, the US president, he sees essentially the 19th century and the Gilded Age as something positive. Of course, the vast majority of the population was exploited, and lived in horrible conditions, but for a small handful of oligarchs, the situation was quite rosy for them.

So why do you think Trump sees it this way?

MICHAEL HUDSON: What Trump doesn't realize is that the Gilded Age was a failure of US protectionism.

In the process of protecting industrial investment, you had the financial sector making a lot of money off this. And finance has always been the mother of trusts.

Finance began to lead to a fight over who is going to control the railroads. The crisis of 1873 came when [robber baron] Jay Cooke's railroad defaulted. There were rivals trying to buy control of railroads from each other.

The Gilded Age emerged sort of accidentally, as a byproduct of making industry rich, you also made a lot of opponents of industry rich, like monopolists.

That's why in the year of the McKinley tariff, when he was a congressman in 1890, you had the Sherman anti-trust law. They said, OK, we're going to make sure that the protection of industry does not become protection of monopolies; it will not become a protection of unearned wealth, economic rent-seeking.

So Trump gets it all backward: what was an oversight that the Americans cured in 1890 -- or at least started to put in place a public mechanism for avoiding the Gilded Age -- as if that was actually a great success.

If only it had succeeded, Trump would say, then, America would have polarized and done what gilded ages do.

BEN NORTON: Yeah, and one of the points that you emphasize, Michael, is how China's model is completely different.

China is following the kind of state-led industry of policy that every industrialized economy has used to industrialize, to develop a manufacturing sector.

China has state ownership of telecommunications, infrastructure, education, energy, land, and finance -- most importantly, the financial system in China is state-owned.

China has five-year plans, in which they target certain industries that they want to develop.

China creates plans for sectors like electric vehicles, and they say that the government is going to direct resources into these industries through the use of subsidies, and infrastructure investment, and job training, and education, and cheap loans from state-owned banks. And they're going to develop semiconductors; they're going to develop local civilian airliners.

So can you can you contrast China's industrial policy with the Trump administration's lack of an industrial policy?

MICHAEL HUDSON: Well, you could say, could I compare China's development to the policies of the United States and also Germany when it was developing?

China has sort of reinvented the wheel. One of the first books of mine that they translated as a textbook into Chinese was my book on trade, development, and foreign debt, when I described the contrast between free trade and protectionism, and how the United States developed a protectionist argument to counter the free-trade arguments of England, in order to protect industry.

So, China has essentially done the same logical thing that any government would have to do. You have to subsidize your own industry and protect it, insulate it, from lower-cost imports underselling you.

You have to enable industry, if not really to make a profit, to at least make enough money to somehow be able to pay its labor force, and to pay for the raw materials and the machinery that it takes to create industrial production.

The one thing that China has done that other countries did not do -- although Germany began to do it in the 19th century -- was to keep money and credit as a public utility.

China did this because it really didn't have much of a choice, after Mao's revolution. How is the government going to finance capital investment in industry in what was a very poor country of peasants, basically, as the US secretary of commerce keeps calling China, a country of peasants.

BEN NORTON: US Vice President JD Vance referred to the Chinese as a bunch of peasants. And this has really angered people in China.

JD VANCE clip: We borrow money from Chinese peasants to buy the things those Chinese peasants manufacture. That is not a recipe for economic prosperity.

BEN NORTON: And this has really united people in China against the US.

MICHAEL HUDSON: Of course. Well, at any rate, since Mao's revolution had got rid of the wealthy financial classes, there was no way that the government could do what the Western countries did and borrow from the wealthy classes to pay for the government deficit in financing industry. So China created its own money.

Well, that's exactly what the American colonies did in the 17th and 18th centuries. When Britain was dominating the colonies, and forcing the colonies to export crops and other materials, by borrowing hard money from British merchants, the colonies began to create their own paper money.

That's how they basically developed.

When America fought the Revolutionary War, the government issued Continentals -- fiat currency called Continental currency.

In the Civil War, in America, the costs of the war were so large that it couldn't possibly borrow from domestic creditors, the government printed Greenbacks. But in peacetime, the financial sector fought back and insisted on "sound money", meaning money that you pay interest on to private financiers.

Well, since China didn't have private financiers, it did the same thing that America had done: it printed the money itself.

And it kept banking in the public domain. And what that means is that banking in China does not make loans for the same kind of things that American banks make loans.

We know that they went overboard in making fairly reckless real-estate loans, but they don't make loans for corporate takeovers, of private investors to borrow the money to take over another industrial corporation and just sort of empty it out and do what American corporate raiders and kleptocrats do.

So China has been able to create money to spend into the economy for purposes intended to serve the public interest, to build housing, to finance high-speed railways, to finance all of the public infrastructure that China has kept in the public domain, to offer at low, subsidized prices to the population at large.

So if you have a private enterprise in China, creating a factory to produce goods for exports to the United States or other countries, they don't have to pay the workers enough to have to pay for privatized transportation; they have wonderful public transportation, in the subways and railroads.

They they don't have to take out student loans to get an education; they can get the education from the public sector in China. They can get health care.

They don't have to pay for all of the things that the United States' employees and employers have to pay for. That's what enables China to have low-cost labor.

It's not that it's impoverished labor; it's not that it's pauper labor; because the labor in China is better and better remunerated; but its remuneration is not only in the form of its paychecks that it gets in salary; it's in the form of all of the public services that it gets, that Americans have to pay out of their salary.

So when you realize that the standard of living of workers is not only the paycheck, but the public services they get, or the subsidized prices they have to pay for basic needs, then you find that, if basic needs are treated as basic needs, then everybody should be able to get them, as a precondition for being citizens.

That's basically what happens in China. And that's what has enabled China to undersell Western economies that have privatized, and Thatcher-ized, and Reagan-ized their economies.

And, of course, that's how the United States, and Germany, and other countries that industrialized in the late 19th century built up their competitive power internationally.

BEN NORTON: Those are very important points, Michael.

Trump has been expanding his tariffs not only against other countries -- he now has blanket 10% tariffs on all countries around the world -- but he has specifically targeted China with now tariffs of 245% -- which, after a certain point, there's not really any meaning to further increasing these tariffs; it's largely symbolic.

Why do you think Trump has been so aggressive targeting China specifically?

Do you think it has to do with what you were just explaining, the significant differences between China's system and the US system? That might explain why the US has deindustrialized, and simply can't compete with China's very sophisticated system of manufacturing.

MICHAEL HUDSON: Well, you're right that America can't compete. It realizes that it can't compete. It's treating China as an enemy.

But, regarding the the tariff question, the way in which Trump has arranged his three-month interim, before the very high punitive, disruptive tariffs are imposed, is specifically aimed against China.

Let me explain what the connection is, because it's not clear on the surface.

The tariffs that he has announced are so disruptive of trade for other countries that they're going to suffer -- as will the US economy, and US consumers and businesses are going to suffer.

Trump says that these maximum demands are open to negotiation. And he's asking other countries, well, if we don't disrupt your trade by imposing these 40% or even higher tariffs on you, what are you going to give us in return? What's your give-back to us for us not making these demands on you?

At first, I thought, well, he's going to demand that maybe they'll have to sell off some public infrastructure to Americans. Maybe they're going to have to give trade favoritism to Americans. There are all sorts of things.

But Trump has made it clear: what Trump wants is diplomatic givebacks. Every country is going to be subject to one-on-one, distinct pressures. 75 countries, he says, have called him and want to negotiate.

DONALD TRUMP clip: I'm telling you, these countries are calling us up, kissing my ass. They are dying to make a deal. Please, please, sir, make a deal. I'll do anything. I'll do anything, sir!

MICHAEL HUDSON: With each country, he's going to treat individually, that they give America something. But the common denominator in all of his demands is that they impose trade sanctions against commerce with China, and against mutual investment with China, and especially any plans they may have to join its Belt and Road Initiative in favor of US plans to interrupt the whole connection system of Belt and Road that China wants to put in place.

So Chinese officials can see where all this is leading. They've announced their refusal to negotiate with the United States, when a gun is pointed to their head.

China recognizes that Trump really doesn't have many cards in his hands. What does he really offer other countries except to refrain from disrupting their economy?

He's what back in Mao's time was called a paper tiger, militarily. Well, America has become a paper tiger financially today. It doesn't really have anything to offer except the threat of tariffs, the threat of suddenly disrupting all of the trade patterns that have been put in place over the last few decades.

So the most important consideration for China in all of this, in what is it going to do, is that it doesn't need the US market to anywhere near the degree that the United States is dependent on China for key metals, and key materials, and key industrial products.

Most in the news are the rare earths, ores that are refined to make magnets and other alloys that are used in almost every high-tech manufacture today, from electric cars to military, and space things; but also steel and aluminum are faced with enormous tariffs, as well as key products that American industry needs; and of course all of the consumer goods that Walmart imports into the United States and that Apple imports for use in its iPhones.

So, what is really the threat of these tariffs against China? It has already said, well, we don't need to buy soybeans from America; we can buy soybeans from Brazil, instead of US farmers. And most US farmers of soybeans live in Republican districts, because the Republican Party appeals to the western, midwestern, rural population much more than the educated urban population.

I'm told that one of the key US products that the United States has sort of cut China off from is soy sauce. And, all these years, my Chinese friends tell me, they've been buying soy sauce from a Singapore company with a Chinese name that they thought was Chinese. Probably just organized out of Singapore, but it turns out that it's an American company, and now they can't get it.

So, what's going to happen? Well, it's not that hard to make soy beans into soy sauce. And you can imagine that what is going to happen is that China is going to respond to the US sanctions in the way that any country responds to sanctions: once they can't import something that they've been importing from another country, that they need, they produce it themselves.

That's exactly what Russia did, when the United States told Europe, stop exporting food to Russia; let's starve them out. Russia stopped its dairy and farm imports from the Baltics and other countries, and developed its own agricultural, production. That's called import [substitution].

So the reaction to sanctions is to force other countries to replace US imports with domestic production. And that's exactly what China has done.

Well, why do the United States strategists have this blind spot? And the reason is, I think, the whole mentality of US diplomats is punitive. That's the only thing they have today. They have little to offer the other country.

They can't do what President Xi does and say, here's a win-win situation; we'll develop our trade with each other, and we'll both gain from this, from our mutual interdependency that'll create an efficient, regional trading system.

But the United States doesn't have that. All it can do is disrupt the trading system. And they can disrupt it for a few months; maybe it'll take a year. It takes time to replace new means of production, to replace trade, imports and exports, with the United States.

But you can imagine that European countries, Asian, African countries, Latin American countries, are all spending these next three months thinking, how are we going to create a world after August, that is going to enable us to keep on producing what we're producing and importing what we're importing, but not from the United States.

They're all trying to think of realignment. And the United States says, well, this is going to disrupt your economy for a year or so; and the other countries will make a calculation and they'll say, yes, it's going to disrupt our economy for a year or so, but then for the next decade or century, we won't have to deal with US threats anymore.

The United States is the only country in the world that has weaponized its foreign trade; weaponized its foreign currency, the dollar; weaponized the international financial system; and treated every economic relationship in an adversarial way, to weaponize it.

Other countries say, how can we have a different approach, and treat trade as how can we mutually gain? How can we treat investment as something where the investor gains, but we also gain?

If China is going to build up ports and infrastructure for us, and we will pay China in the form of raw materials, or agricultural production, or whatever we're producing; then we get the capital investment that China is providing, and we're providing them with the trade that they've helped develop by putting in place ports, and roads, and railroads, and other means of transportation.

So you have two different views of what an alternative world trade system would look like. And of course, this alternative is what everybody expected to be created after World War One.

That was the promise of mutual gain that mutual trade was going to integrate countries, and provide gains from trade, for peaceful, friendly international relations.

It hasn't turned out that way. But now other countries are saying, well, we can achieve that kind of trade under rules very similar to those that the United Nations created in 1945. But we can't do it under the rules that the United States imposes for its own one-sided, unipolar world order that it's insisting on.

So what's happening is that other countries are putting in place their mutual production facilities, transportation facilities, investment facilities. Trump is isolating the United States from trade and investment relations.

It has tried to isolate China, but what it's doing is isolating itself from everyone, except its satellites, in Western Europe -- Germany, England, and the other European countries.

The question is, how long can its Asian satellites -- South Korea, Japan, and the Philippines, even Taiwan -- how long can they decide, well, are we going to look at our long-term future as trade with China, which is growing and expanding its market, or with United States, whose market is shrinking?

And it goes even further than that. Trump also has said he's going to punish other countries that try to find an alternative to the dollar. And yet today's Wall Street Journal [on April 18] had a whole editorial: Trump is now trying to prevent other countries from keeping their international reserves in dollars.

He's forcing other countries to sell off their dollars by imposing a tax on other countries' holding of Treasury securities.

If you're a foreign central bank and you've done what you've done since 1971, when Nixon went off gold, and you kept your foreign exchange reserves in the form of US dollars, in the form of US Treasury securities, or government agency securities, or other US holdings, then all of a sudden you're going to have to pay a tax on them, and this tax is going to mean that you're losing money.

Well, the dollar has been going down steadily, day after day after day, for the last few weeks. And it looks like it's going down because other countries are looking at what Trump is threatening, and they think, this guy may really mean it!

The whole essence of American imperialism -- as my book Super Imperialism explained way back in 1972 -- the whole essence is that America gets a free lunch; it can print its dollars, flood the economy with dollars, mainly through its foreign military spending -- which is, in most years, the leading element in the balance of payments deficit -- flood this and other countries haven't had an alternative to the dollar to hold.

They've been discouraged from buying gold. Well, as you can imagine, China has been buying gold. Now other countries are buying gold. Germany has asked for the gold that it had been keeping in the Federal Reserve for safekeeping after World War Two, that this is returned. None of my German financial reporters have been able to find out whether it's actually got any of this gold. The politicians are quite mum on that.

So, other countries are essentially being driven out of the dollar, at the same time that Trump says, don't join together and create a non-dollar area.

Well, if they can't hold US dollars, or they're told, if you recycle your savings and your surplus dollars into US treasury bills, you're going to have to lose money year after year.

Well, as they sell the Treasury securities, the dollar is going down. And as the dollar goes down, that means that, even if other countries get a higher return in stocks or US bonds, the value in euros, and Chinese currency, and Japanese currency, the value in their own currency is going down as a result of Trump's policies.

Well, Trump believes that if you lower the exchange rate of the dollar, that will make American exports more competitive. And of course, it would, if America had something to export.

But how can you make industrial exports more competitive, at a lower price -- which lowers the cost of labor, lowers the cost of America -- if you don't have factories to produce these exports? That's the crazy thing about all this!

How can you increase export competitiveness of industry, if you don't have an industry?

The United States, ever since, really, Clinton in the 1990s, has offshored American industry -- to Asia, to China and other countries -- how on Earth can it be competitive?

Basically neoliberalism has undercut the ability of the United States to be competitive in the way that, it and European countries, and now China, had become competitive as a mixed economy.

The essence of neoliberalism is to carve up and privatize governments, basically on credit, borrowing the money to buy things.

So you're having an inherent instability. And this is what other countries are discussing.

Now, the question is, will other countries agree to give up the Chinese market in order to gain the American market?

Well, how long is the American market going to last? And how much trade and diplomacy with China are they going to give up? Will it be a total set of sanctions and isolation? Will it be partial? All of this is a product of bilateral negotiation.

I think other countries should take a look at what's happening domestically, in the way that Trump bargains.

You've seen two big fights, domestically, of Trump in the American economy, have occurred in the last few months: the fight against law firms and the fight against universities.

Trump declared war on law firms that had worked for the Democratic Party in the last few decades, especially law firms that supplied lawyers who prosecuted him for all of the Democratic lawfare that the Biden administration began.

And he said, well, you have to do a give-back. And the first give-backs that he asked from these firms is, you have to provide $50 million of pro bono -- meaning work without payment – for Republican-backed organizations.

Well, almost all the law firms capitulated. They surrendered and they agreed to give him, you know, $50 million, or however much free legal advice he wanted, at their expense.

Well, now, in the last few days, he has asked for what the New York Times and Wall Street Journal say is $1 billion from the law firms, saying you're going to have to not only support the Republican administration, but you're now going to have to support me, and support Republican policies, as we bring lawsuits against the government, to try to carve it up, and shrink it, for the kind of things that Elon Musk is doing.

So, he keeps raising the price. He'll make an agreement. They think, ok, we gave him $50 million. That's enough. Trump had said, if you don't do this, I'm going to cancel your security clearance for all of your lawyers, and I'm going to ban your lawyers from federal buildings, because you're a "security risk". And I can declare a national emergency, and a national emergency is anything I find a national emergency in. Any threat to me is a national emergency, because I'm the state. Sounds like King Louis of France.

He asks for more and more and more. It's a never-ending rise in demand. So, again, here's the problem that they face.

Once you begin to give in to Trump, a bully thinks, oh, I've been able to do this; now I can do even more. If you begin giving into him, it's a never ending path of decline. That's the whole problem.

China describes the choice as between the post-war, the whole world's post-1945 commitment to free trade and the same rules for all countries; or henceforth, are they going to be subjected to America's neo-mercantilist protectionism, as the new context for international trade?

BEN NORTON: Michael, as always, you made so many great points there. It's hard to know where exactly to respond.

But let's pick at this idea, which I think is very important, which is that China has said that the US is essentially trying to recreate the global system that the US ironically helped to create in the first place, after World War Two.

You described that system very well in your book Super Imperialism, published in 1972. The US designed the international financial system, giving itself the exorbitant privilege of printing the global reserve currency.

The US also helped to design the international legal institutions and political institutions through the United Nations. And still at the UN Security Council, the permanent seats are held, yes, by China and Russia, but also by the US, France, and the UK. And the US has used its veto power to essentially neuter the UN, to prevent the UN from taking any action the US doesn't approve of.

So the US has really benefited from the system. But it seems like Trump is now just throwing a bomb and blowing everything up. What do you think is happening?

MICHAEL HUDSON: The world has changed a lot since 1945, when the US not only led the creation of the United Nations, but also the International Monetary Fund and the world Bank.

It created a system of free trade because, under free trade, the dominant economic and industrial power wins over countries that haven't industrialized.

That's why countries that haven't industrialized need protective tariffs, to develop their industry, and especially their agriculture -- which is how the United States subsidized all of its agricultural productivity in the 1930s.

So, the United States, in 1945, could say, all countries have to follow the same rules, because it knew that the rules that they were to follow -- with free trade, and no imperial preference for the British pound sterling, no colonialism, you decolonize -- the US knew that it would gain.

But, since 1945, we've now gone eight decades since then, and since the United States has deindustrialized, it no longer benefits from the rules and the whole philosophy that it supported back in 1945.

Under the United Nations, at that time, it said all countries should be treated politically as equals. That has been the whole rule of international law since 1648, when the 30 Years War was ended: no country should interfere with other countries.

Well, the United States no longer treats that. It is able to interfere with other countries, but essentially claims that any other country that gets a benefit from the United States is somehow interfering with its trade, or posing a national security threat.

So the United States has ended the kind of idealistic rhetoric, and the underlying world order that it put in place in 1945.

So, China, Russia, the speeches of Foreign Minister Lavrov and President Putin, they're all saying the same thing: the ideals of the United Nations as they were set out; the ideals of trade, not to weaponize trade, but to have mutual gain; the ideal of the role of government to provide basic needs for the population; all of this was a good idea.

But the spread of neoliberalism by the United States and by Europe, essentially, is now opposing everything that was promised in 1945. We're in a completely different world.

We cannot achieve and restore this world as long as we leave the United States with veto power in the United Nations, to stop it; and with a military power and willingness to intervene in foreign elections; to support regime change, to make sure that its own politicians are elected, over and above whatever the population may want.

Such as Europe -- most of Europe's population wants an end to the war in Ukraine. The politicians want to escalate NATO's war against Russia.

You can go right down the line, that what the politicians that are supported by the United States in many countries advocate is the opposite of what voters want.

Just like in the United States. Trump won the election saying he's going to bring peace in NATO's war against Russia; he's going to be a peace candidate, not the war candidate that Biden and Harris were. Now all of that is just sort of, well, that's campaign promises; that's just rhetoric; that's the narrative that we've created.

So, you're having, in a way, two different narratives to shape how people think of the split in the world, between the 15% of the population -- the US and Europe, plus America's satellites in Asia -- and the 85% -- the Global Majority, in the Global South -- that are trying to have mutual trade and benefit.

In order to have this mutual trade and benefit, you have to have a political system and a tax system, that essentially prevents the emergence of a domestic financial oligarchy, and monopoly oligarchy, and real estate oligarchy, from stifling economic growth in their countries.

And the United States wants to create such an oligarchy as long as it's controlled by US investors themselves.

So how do you explain why politicians follow this pro-US submission that they're doing?

Well, I think there are a number of answers for why you're having a different approach to how the world is being restructured.

Politicians live in the short run, and many are so used to being bullied that they've succumbed to the Stockholm Syndrome and identify with the bully. They think, well, the Americans are so powerful; there's really nothing that we can do; we have to join them because the bully strong enough to fight any other policy that we may do.

Well, democracy is supposed to prevent the kind of oligarchy from developing that you have in the United States.

They're supposed to prevent a Gilded Age. They're supposed to prevent the economic polarization between the 1% of the economy -- the creditor class, the billionaire class of creditors, monopolists, real estate owners -- and the rest of the economy -- of debtors, of renters, of wage earners that have less and less control over their working conditions.

That's not being prevented; that's being encouraged by neoliberalism -- just the opposite of what was promised.

It's as if we're having a new kind of colonialism; but it's not overtly a military colonialism, except in countries that refuse to follow US laws. It's sort of what free-trade imperialism, or what the [US] Treasury bill standard was.

It's what the West calls "democracies", which is foreign control by the neoliberal class, the kind of people who go to the World Economic Forum in Switzerland and think that they're planning the kind of world that they would like to see.

We're dealing with two kinds of economic theory.

The reality-based economic theory recognizes that debts tend to grow exponentially, and polarize society, and create a crisis, if they're not canceled.

The orthodox economic theory, that's taught in all the universities throughout the West, says if you just get rid of government, leave government alone, don't regulate anything, the economy will automatically self stabilize, and produce equality among people, and among nations; free trade will make nations more equal, instead of polarized.

You have a whole different body of economic theory to justify a whole means of social and economic organization that occurs.

In other countries, the fight by Asia and the Global Majority today -- and by Putin against the legacy of kleptocrats that the neoliberals subsidized in Russia -- was how do you keep this wealthy class -- you can let it accumulate wealth, but it has to use its wealth in the public interest, to develop the overall economy and benefit the economy, not to subject the economy to lower wages, to use its wealth to take over government and disable the government from the ability to regulate it.

Well, this disabling of government to regulate is the political program of Donald Trump. He says he wants to deregulate any kind of government regulations, and tax. He wants to get rid of progressive taxation.

He wants to stop any environmental regulation. He has pulled out of all of the global warming agreements that America has had.

Trump and Vance have gone to Europe and backed the right-wing parties that are following this there.

The US is backing this kind of economic and social philosophy. For any country that is trying to do regulation, it's being attacked politically.

This has gone on for 2500 years. The lead for democracy in Greece occurred already in the 6th, 7th, and 8th centuries BC, when the local mafia-like oligarchies were overthrown by populist leaders who were called "tyrants".

The Roman oligarchy accused reformers of seeking kingship. The Greek oligarchy called any reformers wanting democracy as being tyrants. And the Americans call any reformers as being socialists -- as if socialist today is the same term as seeking kingship to control ambition, being tyrants.

The narrative of history has been turned inside out. And they treat all of these as bad words, not as the ideal that it was during the whole reform movement, in the 19th century.

BEN NORTON: Well, I don't know if I can add much there. You again raised so many interesting points. And you did a great job of drawing these parallels over thousands of years of history, in the fight against oligarchy.

We see this so clearly today. Of course, every US president represents the financial oligarchs on Wall Street. But Trump has taken the mask off, lifted the veil, and made it as clear as day.

He's regularly inviting these billionaires to the white House. He gave Elon Musk, the world's richest billionaire, an office at the white House. He invited all these oligarchs to his inauguration.

So I think your argument is -- you've been saying this for a long time, and you've been proven so correct. Trump is really the epitome of everything you've been saying for so long.

So on that note, I think that's actually a really good place to conclude. Is there anything else you want to add?

MICHAEL HUDSON: Listening to what you just summarized, what kind of country would elect a leader who made this money by cheating other people? By cheating his suppliers and not paying them, offering only half the money that they had promised; cheating his suppliers; going bankrupt and defaulting on his bank loans; and being not only a congenital liar, but treating that as a social virtue!

You wonder, when somebody like that is elected, or someone like Obama, or Biden, when you look at the people who have been elected in the United States, or even in Britain, how could this have ever happened, under what was expected 80 years ago?

The world is being turned inside out. And how is the rest of the world going to try to undo the damage?

And they can't really undo the damage. All they can do is isolate, is go along with Trump -- accept the isolation. Isolating themselves is the only way that they can create an alternative to surrender to the US neoliberal, polarized economy and society.

BEN NORTON: Once again, well said. I was speaking with the economist Michael Hudson, and I will link to his most recent report on Donald Trump's tariffs, and the robber barons, and the Gilded Age.

Thanks so much for joining me, Michael. It's always a real pleasure speaking with you.

MICHAEL HUDSON: Thanks for having me again, Ben.