From champion of deregulation to price controller: Under Donald Trump, a metamorphosis is taking place in the U.S. that is upending the Republicans’ economic framework. The buzzword “affordability” conceals far more than a tactical campaign ploy for the midterms. It is an attempt to replace capitalism with a system of presidential interventionist populism. As Trump forces the tech giants to subsidize infrastructure and seeks to dictate interest rates by executive order, a systemic question arises: Is there anything left of the market economy other than a backdrop for the “people’s tribune’s” next big deal?
Trump, the socialist?
It was Bill Clinton who defined the gravity of politics with the laconic phrase, “It’s the economy, stupid.” But Donald Trump has taken this formula to extremes. He no longer waits for the markets to take their course; he forces them. Whereas the economic rationality of the old guard in his party still relied on tax cuts and investment incentives, today’s occupant of the White House intervenes directly in price formation.
As his poll numbers have faltered, he has (now) discovered a particular affinity for the “little people.” “Affordability” is the keyword. The midterms are approaching, and gifts to the electorate are always welcome. It’s, so to speak, half the battle won for good election results. Trump, the socialist? Prosperity for all? Is the focus on high-tech feudalism a thing of the past?
The modern form of tribute
In late February, Trump declared that the affordability crisis was over. He emphasized that prices would now “plummet.” His broad toolkit allows for a variety of approaches.
The latest “Ratepayer Protection Pledge,” signed by the titans of Silicon Valley, marks a turning point. The fact that corporations like Amazon or Microsoft are financing the modernization of the power grid without passing on the costs is not a market-based compromise – it is a modern form of tribute. Here, Trump is acting not as the president of an economic nation, but as the receiver of a system he has declared a failure. He is replacing competition with deals and legal certainty with personal arrangements.
The nationalization of the dream home
The shift away from core Republican beliefs is particularly evident in the U.S. housing market. In January, the U.S. president resorted to a tool one would have expected to find in the toolbox following the Lehman shock: he directed the government-controlled mortgage finance companies Fannie Mae and Freddie Mac to purchase mortgage-backed securities worth up to $200 billion. At the same time, he took steps to discourage large institutional investors from buying single-family homes and explored the possibility of allowing access to 401(k) savings for down payments. In early March, mortgage rates in the U.S. fell. The 30-year fixed-rate mortgage fell below the 6 percent threshold for the first time since the fall of 2022.
Lower interest rates and more affordable medications
Trump also called for a one-year cap on credit card interest rates at 10 percent.
Last fall, he set a goal of lowering drug prices. To that end, he announced agreements with the pharmaceutical companies Eli Lilly and Company and Novo Nordisk.
He loves them all – at least those whose votes will tip the scales in November. But the “tribune of the people” label doesn’t quite capture it. What we’re witnessing is the birth of American paternalism. Trump offers protection from the ravages of the market: he reins in the pharmaceutical giants on drug prices, he tames Big Tech on infrastructure costs, and he restrains the banks on interest rates.
A flirtation with the planned economy
In the logic of the MAGA movement, this is the ultimate proof of the state’s ability to act. From a regulatory perspective, however, it is a dangerous flirtation with a planned economy. Under Trump, the U.S. is transforming from a competition-oriented republic into a “deal democracy,” in which prosperity is no longer generated but rather “arranged” by the president. In the end, the price for this new “state capitalism light” is unlikely to be paid by corporations, but rather by the stability of the dollar and the long-term innovative strength of a country that was once proud of the fact that the government does not set prices.
Note: This text was translated using AI and may contain translation errors. The German version of the text is authoritative.