President Trump has radically altered federal policy for promoting economic growth. As articulated by Treasury Secretary Bessent, this policy has three pillars.
First, dismantle U.S. trade policies and international arrangements that prioritize globalization and weaken the industrial base and middle class. The strategy is to redevelop American manufacturing with high tariffs providing a pricing umbrella to attract domestic and foreign investment. The average tariff on imports is now about 19%, compared with 2.3% in 2024.
Although the final contours of the new international trade order and scope of foreign market access for U.S. businesses are not in place (new trade agreements take years to negotiate), it's doubtful that future administrations will restore the old order by returning tariffs to pre-Trump 2.0 levels.
Mr. Trump will appoint a successor to Federal Reserve Chair Jerome Powell who will be less focused on inflation and will lower short-term interest rates. However, large federal deficits will frustrate progress, as the critical 10-year Treasury rate, which provides a benchmark for business borrowing, will likely remain elevated.
Second, Mr. Trump has aggressively moved to ease federal regulations, mostly through executive orders. We can see that in the abundant supply of crude oil and gasoline prices.
Finally, the One Big Beautiful Bill Act reinstated or made permanent several business-friendly tax benefits related to the expensing of investments in new facilities, equipment, and research and development.
Mr. Trump's preferred approaches to monetary policy and tariffs have prominent critics, but the die has been cast and we'd best consider what else is needed for his program and those of future presidents to work most effectively.
Critical will be the availability and skills of workers for factories and emerging high-tech industries.
American students' competence in math and science lags that of their peers abroad, and grade school performance in fundamentals such as reading is eroding. Overall, adult American workers don't stack up to foreign workers as well as they once did in general reasoning and problem-solving skills.
We depend on immigration to fill about one-fifth of STEM positions and more than two-fifths of doctoral-level science and engineering roles.
In high schools, we need more accountability and emphasis on vocational education to staff new factories and the growing range of technician roles created by artificial intelligence and elsewhere in the tech sector.
The Department of Labor Apprenticeship USA connects recent high school graduates, the unemployed and others seeking to upgrade their career trajectories with paid apprenticeship programs. Recent graduates earn an average of $84,000 annually.
By better advertising these programs and through smarter immigration policies, the federal government could boost the availability of highly skilled workers.
In 2023 and 2024, gross domestic product grew 2.8% annually and the economy added 192,000 jobs a month. At full employment, indigenous population growth and legal immigration should have been able to support less than half that figure. The balance was met mostly by illegal immigrants taking jobs.
This year, growth has been disrupted by deportations and uncertainty about tariffs. Both will pass, but if we are to accomplish something better than 2% growth, we need more immigrants to fill STEM occupations and less-skilled positions in agriculture and food processing, construction, elder and child care, and other services.
The laws enabling legal immigration are overly biased toward family reunification, which can be abused through chain immigration, and a diversity lottery, which is at odds with the movement toward making workforce decisions based on need and merit.
Instead, the U.S. should set immigration quotas to ensure 1 million to 1.5 million additional workers annually.
Federal authorities could be empowered to screen applicants, as Canada does, for their potential contribution to the economy and prioritize those who fill needed occupations. However, the criteria applied could easily be corrupted by a future administration's political or cultural agenda.
Instead, let the market decide who can contribute most by setting annual quotas permitting enough new workers to sustain unemployment at about 4% annually. Let employers sponsor workers but pay fees set by auction, and use the proceeds to assist local governments with resettlement costs.
Employers should be required to guarantee work for a minimum of a year or two to prevent churning and quota farming.
Raising the cost to employers of immigrant workers through auctioned licenses would greatly reduce employer incentives to hire immigrants to avoid paying higher wages to native-born Americans and established legal immigrant workers. It would enhance the overall quality of workers entering the U.S. workforce abroad.
Stronger immigration-enabled growth would boost tax receipts and help Americans better secure retirements directly by adding to the Social Security trust funds and indirectly by reducing federal deficits. The latter would help lower interest rates and boost business profitability and stock market valuations, further enhancing the value of retirement savings accounts.