“The Economic Consequences of Mr Trump: What the Trade War Means for the World” by Philip Coggan
Economic policy set at the whim of one man.
Tariffs up one day and down the next.
Businesses bewildered, consumers alarmed.
As Donald Trump wages his trade war, what will become of a global economy dependent on close trading links?
Leading financial journalist Philip Coggan lifts the lid on Trump’s economic gamble, why it’s a universal threat and how we can make sense of this new ‘age of chaos’. This is his clear-sighted and powerful rallying cry in defence of global trade — and why it matters for the world.
On 2 April 2025, President Donald Trump unveiled a package of tariffs on products from almost every nation in the world. The scale of these tariffs (which are taxes on imports) surprised observers around the globe and quickly sent financial markets into a tailspin. While Mr Trump said the announcement represented ‘Liberation Day’, the Economist quickly dubbed it ‘Ruination Day’.
Exactly 100 years previously, in 1925, Winston Churchill, as chancellor of the exchequer, took Britain back onto the gold standard. John Maynard Keynes, the great economist, advised again the decision and published a book lambasting the move called The Economic Consequences of Mr Churchill. This book is a homage to Keyne’s polemic and argues that Mt Trump’s package, and the confusing announcements that followed it, was one of the great economic mistakes in history.
The tariffs, or Trump tax, are a mistake in many different ways. But the most important error is a fundamental misunderstanding of the global trading system. The US does not make wholly American goods, nor the UK wholly British goods. Products are constructed from materials and components brought in from all over the world. Around half of all US cars are made from imported parts, for example. When you impose tariffs on imported components, you increase the cost of domestic producers.
The decisions of Winston Churchill and President Trump have some striking parallels. Keynes lamented that the consequences of a return to the gold standard would be a decline in the standard of living in the form of lower wages. Economists today worry that US workers will face a reduced standard of living in the form of higher prices.
Nostalgia also links the two proposals. Churchill was trying to recreate the conditions that existed before the First World War when Britain was the centrepiece of the global financial system, sterling was the pre-eminent currency and British industries were matched only by those of Germany and the US. Mr Trump is trying to recreate the conditions of the 1950s and 1960s, when US industry dominated the world and the men (and they were mostly men) employed in manufacturing could afford a house, a gas-guzzling car and all the latest gadgets.
If there are similarities between the mistakes of Trump and Churchill, there are also big differences. With the exception of Keynes, most experts in 1925 urged Churchill to rejoin the gold standard. Most modern economists would advise Mr Trump against hist trade policies – but he relies on his own instincts and the support of a narrow coterie of acolytes. Worst of all, Churchill’s policy mainly did damage to his own economy, but Trump’s approach is causing turmoil both in the US and in the rest of the world.
Read an extract from the book on Moneycontrol. It has been published by Profile Books/ Hachette India.
Philip Coggan is a former Economist and Financial Times journalist. In 2009, he was voted Senior Financial Journalist of the Year in the Wincott awards and best communicator in the Business Journalist of the Year Awards. Among his books are The Money Machine; The Economist Guide to Hedge Funds; the highly acclaimed More: The 10,000-Year Rise of the World Economy and Surviving the Daily Grind.
17 August 2025
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