Donald Trump has turned the United States into an economic banana republic

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Richard Poplak is a Canadian journalist and filmmaker based in Johannesburg and Toronto. He writes the newsletter Ballast, in which a version of this essay was originally published.

Back in the bad old days, before the wall fell, doing business in what was then known as the Third World was an exercise in economic frustration.

The Berlin Wall extended far beyond its physical limitations, enclosing countries in little purdahs that served only the ruling regime. When the actual wall fell, the economic barriers remained and, as liberalization stalked the planet in search of more victims, many of these old-school, closed economies were resistant to change. That’s because the status quo worked, at least as far as the elites were concerned.

As for everyone else, they were busy sharpening their knives in anticipation of the next revolution.

This is perhaps why very few modern leaders have thought, “Man, I wish I could turn my country into, say, Chad.” The exception clearly being Donald J. Trump.

As unlikely as it may have seemed on the eve of his inauguration, this time Mr. Trump went all the way in on tariffs – and then some. To the surprise of many, his program has worked, at least on its own terms. The bond market has now adjusted to the bloodshed, which means that the administration’s economic butchery has entered a new phase: the United States has become perhaps the world’s first functioning Third World economy.

I don’t mean in size, and I don’t mean in stature. I mean in structure.

I can actually feel you pushing back on this. But let’s follow the not-so-golden thread where it takes us.

Following the announcement of his sweeping global tariff regime on April 2, 2025 – Liberation Day! – the U.S. bond market revolted against the revolt. Mr. Trump then blinked once, twice, a third time, and the TACO meme (“Trump Always Chickens Out”) was born.

The tariffs went up, then down, then were shot at by various branches of the judiciary. But they never went away. Last week, following a renewed bout of trade warring against Canada, a new tariff on more than 80 countries was established to combat the scourge of “forced labour” in the global manufacturing chain. The Trump administration does not care about forced labour. But what’s especially notable is that, during this latest tariff announcement, no one blinked at all. Especially not the bond market.

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And this is not only because traders have grown addicted to high-grade, uncut tariff crack. It’s also because Trump World has now grown coherent in its contours. Although he wouldn’t be caught dead articulating it this way, Mr. Trump’s vision is to turn the United States into a Third World economy. Very deliberately, the U.S. is starting to operate like the Congo or Chad or Malawi did at the height of the postliberation era.

The best way to think of the Third World economic model is to conceive of a box drawn by a child with a super-thick Sharpie. Outside of a few important exceptions, the borders of this box are impermeable. Goods cleared for entry are subject to massive duties, although tariffs can be circumvented by those willing and able to pay for the pleasure. Import and export markets are controlled by the elite, who are in turn supported, and thus controlled, by the ruling party. There is no immigration, which is to say, no flexible labour market. Income tax barely exists – revenue is collected solely from customs duties and consumption tax. The military is an adjunct of business – it roves outside the Sharpie box searching for commodities and opportunities. Treasury, not to be confused with the central bank (such as there is one), does not concern itself with inflation – or as Mr. Trump said, “I love the inflation!” – but purely on maintaining liquidity, AKA printing money. There are few functioning government agencies, and those that do exist provide sinecures for loyalists willing to use their positions to target the regime’s enemies.

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There are, of course, major – major – differences between the U.S. and the former Third World banana republics. For one thing, the U.S. doesn’t impose exchange controls; as long as the dollar remains the global reserve currency, it doesn’t need to. And at least nominally, the U.S. tolerates a free media, a relatively high quality of life, and competitive elections, which should curtail the worst of the administration’s excesses. (I know, I know.)

So while the analogy is not perfect, it’s far from outlandish: however much the actual adults in the Oval Office may disapprove, the U.S. has reshaped revenue collection around the simple, regressive models preferred by Third World dictators. And, like the backwaters that survived on a single commodity such as cacao, gold or oil, the U.S. has become a banana republic. American economic vitality in 2026 is derived from a lone native sector – tech – and growth is premised on going all in.

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You may think, “Nah, this gives way too much credit to Mr. Trump and his band of cretins.” Leaving aside Project 2025, which was little more than an injunction to eviscerate the “deep state,” there wasn’t some overarching plan, was there?

But there was. Mr. Trump is an authoritarian by instinct, and he’s always understood the value of the executive controlling a single source of government revenue. Think of it in psycho-political terms: paying income tax confers agency on the taxpayer, while a tariff regime renders everyone inside the Sharpie box a subject.

If you don’t like how the box is run, leave the box.

This is the corporate view of how a country should operate: a simple ledger devised in the penthouse suite of Trump Tower. It doesn’t hurt that corruption is fully and completely embedded in the system. The line between money and Mar-a-Lago is obvious and unambiguous, and by stripping down the federal government into a bare-bones bureaucracy stuffed with insiders, power is focused and centralized within the presidency.

Which is to say, the tariffs are going nowhere. The U.S. has been remade in the image of its President: Pay to play. The problem, as ever, is if the banana crop fails. Then, hoo boy – right then is where the real revolution begins.

But for now, the Third World has become the First, and America forges forward into the past. The bond market is quiescent, and most of the time that’s the only thing that counts.