Trump’s biggest tell is the policy he doesn’t talk about
Globalism’s strongest soldier
Imagine the Trump administration was essentially a ruse, a clever plot to prove the folly of its stated ideology.
The White House tells us that free trade is bad, tariffs are good, and relatively unfettered global trade is a rotten deal for America. But let’s entertain the idea that a sleeper cell in this administration was out to prove the opposite of each point: that trade is good, that tariffs are bad, that the globalists are right, and that liberal economics works.
I think a clever way to accomplish this would involve the following four steps:
Raise tariffs on a bunch of stuff, including agriculture and manufacturing.
Show that these policies contributed to disasters in the farming and manufacturing industries.
Create huge carve-outs and exemptions for the artificial intelligence supply chain, so the tariffs didn’t apply to AI.
Show that AI is booming.
What would be so clever about this plan is that it would amount to a kind of controlled experiment. This Trump admin sleeper cell could show that within the same period of time, and under the same administration, growing industries benefited from liberal economics while shrinking industries were hurt by protectionism.
All right, dispensing the cheeky act, I’ll come right out with it: All four steps are already happening. The devious plot to undermine Trumponomics is the White House’s official economic policy. That’s weird. To wit:
The administration raised tariffs to their highest level since the 1930s. Import duties have been notably high on agricultural products (e.g., coffee and bananas)1 and manufacturing inputs (e.g., steel and some copper).
The industries most directly affected by Trump’s tariffs are doing poorly. Farmers are hurting, and some have been promised a bailout. The manufacturing industry is in a hiring recession, with employment falling steadily over the last six months.
But the administration has carved out huge tariff exemptions for AI. The largest of these exemptions covers $34 billion per month of imports for computers and parts that AI companies need to build data centers to train and run AI programs.
As the economics writer and The Argument contributor Joey Politano reported, computer imports surged in 2025, and the AI companies have saved billions of dollars on additional import taxes thanks to these exemptions. “The current AI boom would simply be impossible if tech companies had to pay the same tariffs that car manufacturers or homebuilders currently face,” Politano wrote.
The AI sector is by far the strongest industrial contributor to the U.S. economy. The growth in AI infrastructure spending contributed more to GDP than the growth of consumer spending earlier this year.
Trump is nominally pursuing a broadly protectionist agenda, but for the one industry the administration seems to really, really want to protect, it is not doing protectionism at all. At the very least, it raises the question of why, if globalism is so effective for AI, it’s apparently so bad for the rest of the economy.
The Trump administration’s neoliberal AI policy
If you want to see just how discordant Trump’s AI policy is with the rest of the agenda, read the White House AI Action Plan. It is the furthest thing from a mercantilist document. It seems like the sort of thing to which a zombie President Ronald Reagan would be proud to put his signature.
Under Joe Biden, the U.S. had been cautious about allowing Chinese AI into the U.S. or selling advanced chips to the Chinese. The Biden administration didn’t just bar U.S. companies from selling frontier AI products to China. Its so-called “diffusion rule” — called by one academic “a centrally planned global computing economy” — barred foreign chip factories (say, in Taiwan or South Korea) that used certain U.S. intellectual property or software from selling their best stuff to China.
It was a pretty broad-brush tool that blocked most countries from free access to American AI technology. The idea was to stop Chinese labs from getting access to our best technology, which might help them leapfrog us in the race toward powerful superintelligence.
But critics believed the diffusion rule actually kneecapped America’s ability to achieve economic dominance in AI.
The Trump administration loudly dismissed the rule. “TO WIN THE AI RACE, THE BIDEN AI DIFFUSION RULE MUST GO,” David Sacks, the White House’s AI and crypto czar, posted on Twitter in May (yes, in all caps).
In the last few months, the U.S. government has not only exempted billions of dollars of computer parts for the AI industry; it also permitted the sale of relatively advanced U.S. technology to China. In a series of moves that stunned some China watchers, the U.S. permitted the sale of powerful chips to China, including two chips — Nvidia’s H20 and AMD’s MI308 — that were banned under Biden.
One interpretation of this shift is that Nvidia CEO Jensen Huang has become a de facto policy adviser to the White House. Perhaps a more nuanced take, according to people I spoke to who are familiar with the administration’s policy, is that the U.S. is encouraging its companies to sell into China because it’s better for the U.S. in the long run.
If Chinese researchers rely on American infrastructure, it might prevent our geopolitical adversary from building an alternative tech stack that takes over the world and outcompetes American companies. This story seems to be playing out in hardware industries, such as the electric vehicle market.
Whatever you say about this policy, it is the opposite of the high-tariff, free trade-skeptical ethos that one associates with Trump’s economic agenda. It is even, dare I say, almost globalist.
One sign that America’s AI policy is the opposite of protectionism is that hard-line protectionists hate it. Oren Cass, a leading advocate for tariffs and the founder of the conservative think tank American Compass, has blasted administration policy as a “historic blunder.” As for Nvidia, the most important firm in the entire American AI stack, Cass wants it broken up.
The protectionist illusion
The deeper meaning of this whole schism is hiding in plain sight. The Trump administration’s protectionist strategy is really neither protectionist nor a strategy. What we see instead is a ramshackle operation, a White House without any unified theory of the American economy. Different barons control different fiefdoms, each improvising their own approach under the wandering eye of a dilettante-authoritarian president who sees politics not as a landscape for coherent policymaking but as a series of deals.
In an alternative world where Howard Lutnick happened to stumble into the job of AI czar, the United States might have pursued a totally different approach — one that was broadly protectionist, anti-China, and explicitly hostile to the idea of selling our best chips abroad. On that Earth-2, maybe we would have banned Chinese models outright and told Jensen Huang to eat rocks when he asked to sell frontier hardware to an adversary.
Instead, we got David Sacks, who in his bones is closer to a techno-libertarian neoliberal than anything resembling Trumpist economic nationalism. Sacks has been many things over the years — the original anti-woke crusader, a critic of what free trade did to the Rust Belt — but in practice, he is guiding the United States toward an AI policy that is more free trade-oriented than what Biden pursued.
For all the noise about tariffs and national rejuvenation, the one sector that is actually driving GDP right now is benefiting from a global trade policy that looks nothing like Trumpism. Instead, it looks like the liberal economic order the president and his protectionist clan claim to despise.
If you want to understand what the administration truly believes about economic policy, look at AI: In the one area where the stakes are highest, the administration chose globalism. It chose openness. It chose to rip apart the protectionist script.
AI is not just an exception to Trump’s worldview. It’s the reveal. In the one domain that now matters most to the future of American economic growth, the administration is not pursuing protectionism at all.
There’s a big question that I still have around why the administration has defaulted to the “free trade for AI; protectionism for everyone else” principle. The president’s own opposition to flooding the country with foreign goods seems to be perhaps his most sincerely held view — perhaps even more so than his opposition to allowing the entry of foreign people.
It’s possible that this is all just a compromise to keep the tech-right happy — a new entrant to the Republican coalition, the right is still figuring out how to make peace with a faction that’s built on disruption, immigration, and market liberal principles. It’s also possible that Trump is struggling to pull his party with him totally against trade.
While his staffers may begrudgingly go along with him as he messes up small parts of the American economy, the Republican deep state may be putting its foot down when it comes to the next frontier of economic growth.
But I might be overthinking things. The simplest explanation might just be the truest: Trump — despite all his faults — hates to watch the stock market freak out. Every escalation of tariffs has led to a serious negative market reaction, and every pause or reversal has led to jubilation. Trump knows that and he loves to watch the line go up.
The AI sector is the market’s crown jewel, the biggest contributor to S&P 500 gains, the anchor of tech valuations, and the engine of capital expenditures. Even if he is a believer in the long-term benefits of trade protectionism, Trump is incapable of waiting patiently for that promised utopia as the stock market bottoms out.
In that sense, the carve-outs may have less to do with a coherent model of global trade and more with a president instinctively protecting the one part of the economy the stock market cares about the most.
 | A guest post by
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What if Trump's tariffs never had anything to do with protecting American industry, at all? What if they were in fact a vehicle for a Trump extortion scheme, wherein he planned to extract concessions from foreign governments whose industries were under pressure, by enticing them with a removal of the very same tariffs he installed in the first place?
"Yes and", perhaps... I think the industrial workers are the ones who want protectionism, but the tech workers want globalization. So it is not just the bosses - the voters themselves might be getting the different policies they want...