For much of the twentieth century, the American Dream promised a straightforward bargain: work hard, save wisely, and secure a comfortable life. Today, that promise is fading. Surveys show only 31 percent of Americans believe the American Dream is still attainable. For my generation, Gen Z, lofty expectations of prosperity clash with economic realities, leaving many disillusioned.
The culprit is not just inflation or abnormally high interest rates, but also a petty populism that enchants leaders across the political spectrum. From Donald Trump’s tariffs to Joe Biden’s subsidies, both sides embrace protectionist policies that undermine the very Americans they claim to champion. These measures, cloaked in slogans like “Make America Great Again” or “Bidenomics,” are eroding the path to the American Dream.
Protectionist policies — tariffs on Chinese furniture, subsidies for domestic chipmakers, “Buy American” mandates — are building a “fortress economy” that traps sluggish growth and higher prices inside. According to the Tax Foundation, Trump’s tariffs would reduce US GDP by 0.8 percent over the next decade, translating to an average tax increase of $1,300 per US household in 2025. These estimates are understated, as they don’t account for the shrinking choices consumers face and the higher prices for substitute goods.
Trump’s latest round of tariffs on furniture alone will raise prices for millions of households, as his previous import restrictions have already done. In fact, US furniture companies, the supposed beneficiaries of these tariffs, opposed Trump’s plan, arguing that these “tariffs cannot reopen factories that no longer exist, bring back thousands of workers who retired or moved on to other industries, nor reverse the interests and inclinations of today’s younger workers, who are attracted to higher-paying trades.”
Biden’s policies, despite their “green” rhetoric, mirrored this approach, raising input costs and slowing productivity growth without reviving manufacturing or clean energy. In his new book, Crushing Capitalism, Norbert Michel argues that populist agendas are depressing the brakes on decades of unprecedented US economic growth. He explains that the narrative of too much “liberalism” hollowing out the middle class is not only wrong, but dangerous.
These policies hit lower-income households hardest, functioning as a regressive tax, as Scott Lincicome of the Cato Institute notes. Steel and lumber tariffs, for instance, drive up housing costs, while subsidies divert capital from more productive uses, dampening economic growth. Deficit spending, fueled by protectionist schemes, further erodes real wages through inflation. The result is an economic storm that all Americans, especially the working class, must weather.
Nowhere is the retreat of the American Dream more evident than in housing.
An Economist analysis found that in most US cities, a single person can’t afford to live alone without spending more than 30 percent of their income on rent. In other words, Americans are becoming house poor, or more accurately, apartment poor.
Young buyers, once an energetic customer base for housing, are increasingly priced out, their down payments swallowed by creeping inflation and stubborn student debt. Tariffs on Canadian lumber add thousands to the cost of a new home, while local zoning laws, like minimum-lot-size requirements, choke supply. Starter homes are increasingly unattainable, replaced by a rental treadmill that traps younger Americans outside the realm of homeownership.
This housing crisis is forcing many millennials and Gen Zers to turn to the stock market to chase wealth, a risky substitute for the stability of homeownership. Without reforms such as deregulating housing markets and scrapping protectionist tariffs, affordable homes will remain out of reach.
At its core, protectionism reflects a distrust of ordinary Americans, Don Boudreaux writes. It assumes citizens are too foolish to spend wisely, needing government to “correct” their choices. Trade is not a zero-sum game, butt a positive-sum exchange that has, over decades, raised living standards and the very prospect of the American Dream itself. There is no American Dream without free trade.
Protectionism reverses these gains, raising prices and limiting consumer choice.
The long-term costs are equally dire. Biden’s green subsidies and Trump’s trade wars have pushed the economy toward stagnation and inflation. Federal debt is at historic highs, productivity is sputtering, and uncertainty over taxes, trade, and regulations stifles growth. This environment punishes aspiration, making the Dream feel like a taunt rather than a promise.
Reviving the American Dream requires dismantling the fortress economy. Scrap tariffs that inflate consumer prices. Reform zoning laws to boost housing supply. Restrain federal spending to curb inflation. Above all, trust Americans to make their own choices in the marketplace.
The so-called “abundance movement,” sparked by Ezra Klein and Derek Thompson’s recent book on the subject, is a promising development among progressives. But their overreliance on government actors to solve economic challenges threatens the very supply-side abundance they hope to achieve.
The American Dream was never about government guarantees — it was about opportunity, the chance to rise through the sweat of your brow. Populism’s suspicion of markets and its faith in bureaucratic management undermine the ethos of opportunity. Americans don’t need government meddling. They need affordable goods, stable prices, and economic breathing room.
To remain a land of opportunity, America must embrace openness, competition, and economic freedom. Only then can the American Dream be fully unlocked for a new generation.
