TRUMP’S AMERICA: WHAT’S HAPPENING? – ADAM CREIGHTON

Adam Creighton is an Australian journalist who returned to Australia in 2025 after a stint as the Washington correspondent for The Australian. Creighton was previously the economics editor. He has also written for The Wall Street Journal and The Economist. Adam Creighton’s recent time in the United States and Washington DC gave him a significant background in making an assessment of the new Trump Administration and what it means economically. In an address to The Sydney Institute on Monday 14 April 2025, Adam Creighton assessed the Trump administration’s first few mmonths in office.

TRUMP’S AMERICA: WHAT’S HAPPENING?

ADAM CREIGHTON

Gerard, thank you very much for that warm introduction. It’s always a pleasure to speak here. It is indeed my fourth time, although one of them was a zoom call, I believe, while I was in the US. I did notice a picture of me that was used to advertise this event, and it reminded me of my answer when people ask me, “What impression did the US leave on you?” I say 8 kg of weight. Still the same brain, I hope.

The topic “Trump’s America; What’s happening?” really could not be more timely. That said, I don’t think members of Trump’s cabinet fully know what is happening. So, I can’t give you the definitive answer, given the volatility of the announcements and so forth.

I want to offer an alternative theory about what might be explaining Trump’s trade and foreign policies. I’ll talk about that first and then I’ll talk about the economic and social trends that are driving Trump’s MAGA movement and make a few observations about the outlook for the Trump presidency. But first, it’s worth dwelling on the magnitude of Trump’s victory. Trump’s second victory. It really is quite extraordinary. I don’t think it is given enough attention, which is not a surprise, given most of the mainstream media loathe Trump. In January last year, I wrote for The Australian that even if Trump ultimately loses, his renaissance would have been staggering in light of his four indictments. This included 91 criminal charges by state and federal courts for election interference and separate civil cases in New York related to alleged sexual harassment decades ago and business fraud.

Richard Nixon won more than 60 per cent of the popular vote in 1972 – which was, as is often forgotten, the biggest or near biggest win in US history. But he resigned less than two years later in the wake of the Watergate scandal. He wasn’t formally charged with anything. There were no indictments, but he could never have dreamt of a comeback. Yet Donald Trump, with all that baggage, made an extraordinary comeback.

In all that, Trump’s style is almost inimical to political success, I would say. On top of his legal woes, his campaign rhetoric appears almost designed to infuriate and scare sections of the electorate. His political enemies are “vermin” and migrants are”‘poisoning the blood of the nation” and the constitution should occasionally be ‘terminated’, which he said as well. This is seemingly not helpful. Yet, my point is, despite all that, he won, and he won in an electoral college landslide. Including winning all seven swing states. People on the left protest about the popular vote, but the fact is, the electoral college governs who becomes president and if the rules had been different then political campaigns would have been run very differently. It was a landslide in the electoral college, which is all that matters.

The only group Trump did worse with, than Harris, was amongst higher income households. Basically, with everyone else Trump did better, pretty much. He destroyed the traditional Democrat coalition, which involved pandering to racial and sexual groups. That failed comprehensively for Democrats – maybe permanently. They have to go back to the drawing board with this. And he enjoyed huge swings towards him amongst non-university educated Americans, which are still the largest voting block. We forget that the media is full of university educated people talking to university educated people. You can easily forget that the great unwashed, so to speak, did not go to university. And they vote.

In recent weeks, there’s been so much understandable focus on trade, obviously. But a lot else is happening. The sheer depth and breadth of what Trump 2.0 is trying to achieve is quite remarkable. Compared to the first administration, it’s extremely disciplined, it’s confident, it’s very well organised and it’s, so far at least, not mired in scandals. The Russiagate scandal, which was built on a pack of lies and political chicanery, upended a lot of the first term of the Trump agenda.

This Trump administration has been very busy. So, I’ll to spend some time explaining some of the things apart from trade that are going on. By this time in the first Trump administration there had been 24 executive orders. Now there’s been 123 at the same point which really is quite striking. It’s more than any other US administration in history. It’s also worth stressing that this second Trump term can afford to be a lot more aggressive politically. This is a point that’s not made enough. Trump can’t run again; he’s constitutionally barred. You are getting the real Trump this time around. To all the donors that gave him so much he can say, “I don’t really need to live up to the promises. I’ll just do whatever I want. The money’s in.” That’s a key point.

I picked 10 of the 123 executive orders just to briefly remind you of what else is going on. I’ll quickly run through them. There’s ending birthright citizenship. This is reinterpreting the 14th amendment to exclude children of undocumented or temporary immigrants from automatic citizenship. That is a very big deal in the US. It is being blocked temporarily by a federal judge but there will be appeals. Trump has declared a national emergency at the southern border – you would have read about the extraordinary levels of illegal immigration into the United States. He’s withdrawn the US from the World Health Organisation which is a fairly big deal. He’s withdrawn from the Paris Climate Agreement – another big deal. As an aside, Australia is going to be left looking very silly with its climate policies in the next few years given that China, India and the United States – overwhelmingly the largest economies, whether it’s by population or GDP – are no longer paying any attention to these targets. And yet, here in Australia with our one per cent contribution to global emissions, we are massively increasing our costs to reduce that one per cent by 20 per cent or whatever.

Trump also established the Department of Government Efficiency – DOGE – in conjunction with Elon Musk. This aims to make various cost savings. So far DOGE says it’s saved $150 billion, which sounds a lot. It is a laudable aim but it’s not enough to fix the US fiscal crisis. The first round of tariffs, as early as February, imposed 25 per cent duties on foreign minerals and there’s been more recent tariffs as we all know. As well, there were two proclamations, one saying that there’s only two genders and the other, more substantive one, is banning so called gender affirming care or at least refusing to give states any money if they allow the procedure.

It’s worth pausing here too to remember another big part of this Trump renaissance. That is the enormous push back against DEI or Diversity, Equity and Inclusion. It’s been pretty extraordinary, and it started even before the second victory. Numerous large American corporations, such as Ford, Amazon and Boeing, have all cancelled their DEI programs. Some of it happened before the election, some after. It appears to be a global phenomenon that we may have hit peak DEI.

Another Trump executive order promoted deregulation. The reason I mention this one is because there was a very interesting Supreme Court case last year, the Chevron case, which didn’t get much attention because it happened in a week where there was a lot of other news. Basically, the doctrine required courts to defer to federal agencies, reasonable interpretation of laws; it has been thrown out so courts must independently assess the intent of statutes. So there’s been a big shift of power from federal agencies, who are typically left wing, to courts which are not necessarily so.

Then there was the executive order to restore “America first” foreign policy. A big part of that is the closure of US Aid. That’s been a big political success for the MAGA movement and the Trump administration. They found a huge number of hilarious expenses. Expenses such as drag queen performances in Ecuador, teaching gender studies in Afghanistan, Sesame Street in Iraq, climate change poetry workshops in South Africa and yoga for bureaucrats in India. In financial terms, these are not huge but they are politically extremely damaging for the left. A real win there.

The final order I shall mention was to encourage school choice nation wide. A most interesting aspect of having been in the US for four years is to notice there is this a school choice movement, which we don’t have here at all. The public system here is completely controlled by the unions. There are no charter schools. There are really no truly independent schools and if there are independent schools they’re funded to some extent by the government. They’re quasi government schools.

In the US, there is this push nation wide for vouchers and more than 10 states now give vouchers to parents. Those parents just get a cheque from the government, and they can spend that money on whatever school they want. It’s really quite innovative. In Arizona they can even get the money if they’re homeschooling. Which would be considered wild by Australian standards. But I’m not saying it’s a bad thing. I’m just saying it’s really out there by our standards.

Anyway, so they’re a small sample of the executive orders and a lot is happening. We’re living through the Australian election campaign at the moment and it’s incredibly boring and incredibly lame. The contrast is – each of those executive orders would be considered a major announcement by Australian standards and we haven’t really had one, frankly.

Now on to the second part of my talk. I wanted to make the case that a big chunk of the Trump agenda from tariffs to foreign policy can be explained by underlying fiscal trends. Donald Trump’s plan to upend the global trading system by imposing heavy tariffs has obviously shocked and infuriated mainstream opinion, but the administration desperately needs revenue. The American fiscal position is diabolically bad, and this is not appreciated enough.

The US now has World War II levels of debt, without having remotely fought a world war. The federal government’s public debt, as a share of GDP, is already 100 per cent. This is about where it was, after World War II and it’s on track to reach 118 per cent within ten years. That’s according to the Congressional Budget Office. Spending on interest, already exceeds spending on the military, which is quite extraordinary. The biggest line item in the federal government is interest. US budget deficits, going forward, are two trillion dollars a year. That’s deficits of 6 per cent of GDP as far as the eye can see.

As the minter of the world’s reserve currency, the US can get away with a lot fiscally, but this cannot last forever. At some point, mathematically, there’s going to be a problem. Something has to change, and tariffs can raise a lot of money. The Afghanistan quagmire cost the US more than a trillion dollars over 20 years, analysis at Brown University showed. This is the background to the reluctance of the Trump administration to get involved in Ukraine. It’s just completely unaffordable. It has already spent $300 billion or so on that conflict and that’s before any involvement of the US military, which would cost far more.

In terms of tariffs, the Washington based tax foundation estimated that a 20 per cent universal tariff, which is roughly what we’re going to end up with, would raise $3 trillion over the decade to 2035, so about $300 billion a year. That’s a very significant dent in the $2 trillion of annual deficits. It’s $300 billion out of $2 trillion. These tariffs also have the political advantage that Trump and Republicans can say that they’re all about bringing jobs home. It’s not really about raising money it’s about bringing jobs home, great politics.

Think of the tariffs as a consumption tax that would never be passed by a Republican controlled Senate. And the great thing about these taxes is, to some extent, they are paid by foreigners, which would be unlike a normal consumption tax.

Those that criticise the tariff roll out need to come up with another way to fix the US budget. To digress a little here, people have been so terrified by the word “tariff”, when a tariff is just another tax. All taxes are bad – especially in the opinion of the IPA where I work. They stifle economic growth. But who’s to say tariffs are worse than income tax. Is it better to increase income tax or to increase tariffs? That’s an open question. It’s certainly far worse to have extraordinarily high stamp duties, say on property transfer as we have here, than to have a small tariff.

Because of the word “tariff”, the media has gone crazy. Even though it’s worth pointing out the US government was funded by tariffs almost the entirety of its history. The country grew and became very powerful, so tariffs don’t automatically lead to decline. I’m not supporting them; I’m just saying they’re another tax, that’s all. Here’s a thought experiment – just imagine if the Trump administration had announced a 20 per cent consumption tax. Most economists would have wet themselves with excitement. What a wonderful idea, a 20 per cent consumption tax, it’s efficient, it’s wonderful. Yet, the same thing, basically but called a different name, is just horrific. You have to look at that contrast; it’s quite revealing.

A strong case can be made that economic reality, especially the parlous state of the US budget, are dictating Trump’s most controversial policies. I have also noted some amusing ironies of the recent Trump debate. Trump is often accused of being too close to money interests, too close to Wall Street. He has for years been accused of this. Yet, this past fortnight, he’s just been smashing those interests, completely. That’s an extraordinary contrast. He’s clearly not in their pocket if they’re hating what’s going on. The other interesting thing is that the left – which is supposed to rail against the machine, to hate the establishment – has been terrified that the economic order might be changing. That’s also very funny. The third thing is that politicians around the world are always accused of not doing things. Trump is doing something, and is certainly not a small target – interesting and quite the reverse.

So, what is powering the Trump movement? The Democrats were once the party of the workers but no longer that is the case. It’s very clear in the US that the parties have flipped. Trump supporters, especially those in those critical seven swing states, are overwhelmingly poorer than their Democratic counterparts and they now vote Republican. Scott Bessent, who increasingly has become the reasonable or the nice face of the administration, pointed out in a recent interview that the top 10 per cent of Americans own 88 per cent of shares, and the next 40 per cent own 12 per cent, and the bottom 50 per cent don’t own anything – they have debt. That is pretty shocking. The bottom 50 just have credit card bills. They rent their homes. They have auto loans, and they’re very angry. The Australian press has been furious about changes in the share market but most US citizens couldn’t care less about the share market. Might I add that the share market is less and less an indicator of how the real economy is faring anyway. You often find that when unemployment rate goes down, so does the share market because there’s less chance of a rate cut. It’s not following the real economy.

The fact that the non-housing wealth of the richest Americans was briefly down 10 per cent on paper from the start of the year is of little importance to the vast bulk of Americans who voted for Trump. So here are some more sobering statistics – and the contrast with Australia here is apt. Australians have enjoyed strong real wages growth for decades, until recently. This has not been true in the US, which explains the Trump populist movement. There’s been rising GDP per capita, but this has obscured a very lopsided distribution of the wealth growth in the US. This fact is extraordinary to me. Between 1999 and 2014, some 15 years, real median household income in the US fell from $70,200 to $67,000, which is quite amazing. This explains some of the anger. At the same time, you’ve had the richest people in the US or the top 10 per cent do swimmingly well. Whether Trump’s tariffs are the answer to this, I don’t know. Frankly, my personal view is, probably not. But you can understand why there’s rage and a desire to do something about this.

Another statistic. For young men, it’s been far worse. American men aged 25 to 29 had lower real earnings in 2022 of about $40,000 US, than in 1972. After 50 years – earning less. That’s according to the right-wing American Enterprise Institute. That’s not some lefty outfit. Consider that. If you’re hardcore right-wing you might say, “Well they’re not that much worse off.” But those people those young men are on social media – Instagram and Facebook – and they are seeing how the wealthy are living now. Every day. They can see that some parts of American society are doing extremely well indeed over the last 50 years. It’s also interesting to point out the impact of social media now. Thirty years ago they wouldn’t be able to see that difference but now they can, constantly, all day. It shouldn’t be a surprise that many of these young men turn to drugs, crime and welfare and choose to revolt against the economic system. Especially when they can see on social media that everyone else has had quite a good 50 years indeed.

Then there’s this other trend in the US, which we don’t thankfully have in Australia. Every single year, 70,000, mainly young Americans – well over the number of Americans that died in Vietnam – die of fentanyl poisoning. That’s a very large number of people and it only affects the poorer parts of the United States. You very rarely see stories about people dying of fentanyl poisoning in the wealthy counties. It’s no wonder the biggest swing to Trump in 2024 was amongst young men under 30 and it was enormous. In 2020, Joe Biden won amongst young men – as the Democrats typically did – by 15 percentage points. Yet in 2024, just four years later, Trump won by 14 percentage points. A 29 per cent swing – that’s an earthquake for any psephologist. Trump was giving these people a voice.

The war of words between established institutions and Donald Trump has also helped the president for many Americans. There must be something to like about the person that those established institutions loathe. If you look at the statistics, the percentage of Americans who say they trust the government to do the right thing fell from 77 per cent, during Lyndon Johnson’s administration, to 44 per cent when Ronald Reagan was president. But now, the figure is 16 per cent, as of 2024.

Remember this is trust in the bureaucracy. Americans’ confidence in the mainstream media is equally abysmal. It’s dropped from 55 per cent in 2000 to 32 per cent in 2024. Amongst Republicans it’s only 11 per cent. Trump endured eight years of relentless and vicious attacks by the media, it clearly did not work. In fact, he did much better in 2024 than he did in 2016. Turning to universities. Pollster Gallup found last year that only 36 per cent of Americans held their universities in esteem. Down from 57 per cent, just a few years before in 2015. Amongst Republicans, that had gone from 56 per cent to 19 per cent over the same period.

A few comments on the MAHA movement – you may or may not have heard of. But this is a big part of what’s going on in the United States right now. This is Make America Healthy Again. It is spearheaded by Robert Kennedy Jr, who’s become quite a powerful figure in the Trump movement. Many of his supporters think that he gave the election to Trump when he told his relatively small band of supporters to vote Trump. And they’ve also respected each other for many years. Kennedy’s appointment as health secretary reflects a growing suspicion of elite advice. This was supercharged during the Covid pandemic, where many official views were quickly proved to be wrong and many alternative voices – which later proved to be correct – were silenced and derided. Confidence in the pronouncements of public health experts has collapsed in the US across many dimensions. Pew surveys show that trust in science has fallen. There’s been a worrying increase in vaccine hesitancy amongst the established vaccines that work. Gallop polling shows a huge fall in trust in the CDC, which is one of the major US health agencies. The fact that Anthony Fauci was given a pardon going back ten years basically for anything, does not help either, given he was the top health expert for so long.

Certainly, I think that this renewed cynicism is warranted. Some of the health statistics for the US are really quite shocking. The rate of early onset cancers in adults under 50 has surged 79 per cent since 1990. The rates of autism among children have soared from 1 in 150 in the 1950s to 1 in 36 and there’s been no change in the clinical definition. Over the same time, the share of Americans who are obese has jumped from 12 to 40 per cent, including a fifth of children. That’s contributed to half of adults now having Type 2 diabetes or pre-diabetes up from three per cent in the 1970s, according to the American Heart Association. The prevalence of autoimmune diseases is now rising between 3 and 4 per cent and now affects 50 million Americans. More than 41 per cent of Americans will contract cancer in their lifetimes according to the National Cancer Institute. And rates of dementia among young people aged 30 to 44 have soared during the 2010s, according to the Blue Cross Shield Association. These trends are not common in other Western countries so there is something wrong with the United States health system. There’s something wrong with food ingredients. I’m no expert at all, but it does make me think there is something wrong causing this that we don’t know about.

It needs to be understood that the Trump movement is a very broad church. There’s a lot of disagreement within it. There’s not one view on all issues. There’s significant tension over certain issues. It’s a populist movement, so it doesn’t fit neatly into the traditional left/right dichotomy a framework that in any case, is increasingly meaningless. To give a few examples of this tension – you’ve seen the Steve Bannon and Elon Musk dispute over immigration, there’s a lot of tension over whether to have more or less immigration. Traditionally, Republicans have liked a lot of immigration as it delivers more workers. Steve Bannon supporters now argue that the extra immigrants undercut American workers’ incomes. Meanwhile, Musk says that the tech industry needs them.

On foreign policy, there’s huge tension. The traditional Republican base quite likes an assertive interventionist policy. They advocate for a tough line on Iran and strong support for Israel and Ukraine. Talking from personal experience at various rallies – amongst the MAGA rank and file, the poorer members of the MAGA movement, there’s significant opposition to support for foreign involvement. Not just for Ukraine but also for Israel, which might shock some people. It shocked me. A Pew survey conducted a few weeks ago found, amongst young Republicans under 50, those who have an unfavourable view of Israel has jumped from 35 per cent three years ago to 50 per cent now. That’s quite significant and obviously worrying.

On fiscal matters too, there are big disagreements. Trump has promised tax cuts, but I can tell you from a private meeting with Steve Bannon that I had he told me how upset he was with Trump’s first tax cuts. He wanted tax to go up on the very wealthy, not down. Steve Bannon is a huge influence in the MAGA world, and he did not like the fact that Trump wanted to cut the top marginal tax rate. He wanted it to go up. That’s an extraordinary difference of opinion in this movement.

Improving the US fiscal situation is going to be very hard. The DOGE movement is admirable. In practice, it’s always very hard for governments to cut spending because the people who lose the money squeal very loudly, and they dominate the press. The beneficiaries of that cut are very diffuse and spread out and they have no voice. Take the Defence budget, which is huge in the US at about $900 billion. In early February, Trump said that he would cut the defence budget by 8 per cent every year – ie $50 billion a year for five years. Then, just a few weeks ago, he reversed course and now there’s going to be a record-breaking trillion-dollar Pentagon budget for 2026. This is a 12 per cent increase from the previous year. That’s obviously the complete opposite of his original statement. The only major piece of legislation passed so far by Congress in Trump’s term is the Budget bill and this basically ignored all of the DOGE recommendations. DOGE is kind of a recommending agency, it doesn’t actually have power, it just recommends things. It brings things to the public’s attention. Ultimately, the Congress is in charge of the purse strings, and it just balked at the idea of cuts. So, there were almost no cuts.

There’s a question mark over how enduring Trump’s revolution will be. The executive orders could be undone by the next administration because they can just simply be reversed by the stroke of a pen. There’s been very little Congressional action so far, there’s just been that Budget bill which frankly wasn’t very impressive. We also have the midterm elections next year and Republicans have only very slim majorities in the Congress. Just a handful in both houses. Statistically, Democrats are very likely to win control of the House of Representatives in November next year. Democrats need to only gain three seats which is extraordinarily close in a 435-member house. Historically, the opposition party wins 20 seats. Even though the Democrats aren’t doing well, they’ll probably win three seats at least. That’s not looking good and will make it much harder for any Trump legislation to pass the Congress. There’ll be a lot of heat and light, but not actual much legislative change.

The socioeconomic trends will help Trump and Trump type movements around the world, that’s going to stay with us. It’s worth pointing out that many of the studies that show growing inequality were actually undertaken before the Covid response and the Covid response was an absolute disaster for lower income people and for lower socioeconomic people. It supercharged the value of assets, value of houses, the value of used cars.

In the US, used cars are still 40 per cent more expensive than they were four years ago. For lower income Americans, used cars is what they buy and they’re 40 per cent more expensive. Meanwhile, the house that they would like to buy is also 40 per cent more expensive. All because of the Covid response. All that money that went into the system went straight into asset prices. It’s great for asset owners who were all insulated from inflation, but anyone who didn’t own assets was completely stuffed. The inequality that’s generating this movement in the United States is not going to go away. In fact, it’s probably stronger now than it was before. It’s also true in Australia and Europe and other countries as well. I believe there’ll be more Trump type movements over the next coming decade. Even if they don’t use Trump type rhetoric, which is obviously quite toxic now in other countries.

Let’s talk about Trump’s impact on Australia. If you look at Canada, Trump has been a disaster for conservatives in that country, an absolute disaster. Their opposition leader was set to win in a landslide and then Trump started talking about tariffs and now new PM Mark Carney is going to win in a landslide. It’s kind of extraordinary really, how bad Trump has been. On a smaller scale in Australia, if Labor’s returned in May, it’ll be in no small part to the association of Dutton with Trump. However unfair that is, and it is unfair, but that’s what Labor will do, and it will work to some extent. He’s a very toxic figure.