We are now having a national conversation about what the federal government can do to lower the cost of credit cards. Sens. Bernie Sanders (I-Vt.) and Josh Hawley (R-Mo.), truly strange political bedfellows, have proposed a 10% cap. Now President Trump has too. But we risk spinning our wheels if we do not face facts about the underlying structure of this market.

We should dispense with the notion that the credit card business in the United States is a free market with robust competition. Instead, we have an oligopoly of dominant banks that issue them: JPMorgan Chase, Bank of America, American Express, Citigroup and Capital One, which together account for about 70% of all transactions. And we have a duopoly of networks: Visa and Mastercard, who process more than 80% of those transactions.

The results are higher prices for consumers who use the cards and businesses that accept them. Possibly the most telling statistic tracks the difference between borrowing benchmarks, such as the prime rate, and what you pay on your credit card. That markup has been rising steadily over the last 10 years and now stands at 16.4%. A Federal Reserve study found the problem in every card category, from your super-duper-triple-platinum card to subprime cardholders. Make no mistake, your bank is cranking up credit card rates faster than any overall increase.

If you are a small business owner, the situation is equally grim. Credit cards are a major source of credit for small businesses, at an increasingly dear cost. Also, businesses suffer from the fees Visa and Mastercard charge merchants on customer payments; those have climbed steadily as well because the two dominant processors use a variety of techniques to keep their grip on that market. Those fees nearly doubled in five years, to $111 billion in 2024. Largely passed on to consumers in the form of higher prices, these charges often rank as the second- or third-highest merchant cost, after real estate and labor.

There is nothing divinely ordained here. In other industrialized countries, the simple task of moving money — the basic function of Visa and Mastercard — is much, much less expensive. Consumer credit is likewise less expensive elsewhere in the world because of greater competition, tougher regulation and long-standing norms.

Now some American politicians want caps on card interest rates, a tool that absolutely has its place in consumer protection. A handful of states already have strict limits on interest rates, a proud legacy of an ethos of protecting the most vulnerable people against the biblical sin of usury. Texas imposes a 10% cap for lending to people in that state. Congress in 2006 chose to protect military service members via a 36% limit on interest they can be charged. In 2009, it banned an array of sneaky fees designed to extract more money from card users. Federal credit unions cannot charge more than 18% interest, including on credit cards. Brian Shearer from Vanderbilt University’s Policy Accelerator for Political Economy and Regulation has made a persuasive case for capping credit card rates for the rest of us too.

At the very least, there is every reason to ignore the stale serenade of the bank lobby that any regulation will only hurt the people we are trying to help. Credit still flows to soldiers and sailors. Credit unions still issue cards. States with usury caps still have functioning financial systems. And the 2009 law Congress passed convinced even skeptical economists that the result was a better market for consumers.

If consumers receive such commonsense protections, what’s at stake? Profit margins for banks and card networks, and there is no compelling public policy reason to protect those. Major banks have profit margins that exceed 30%, a level that is modest only compared with Visa and Mastercard, which average a margin of 45%. Meanwhile, consumers face $1. 3 trillion in debt. And retailers squeeze by with a margin around 3%; grocers make do with half that.

The market won’t fix what’s wrong with credit card fees, because the handful of businesses that control it are feasting at everyone else’s expense. We must liberate the market from the grip of the major banks and card processors and restore vibrant competition. Harnessing market forces to get better outcomes for consumers, in addition to smart regulation, is as American as apple pie.

Fortunately, Trump has endorsed — via social media — bipartisan legislation, the Credit Card Competition Act, that would crack open the Visa-Mastercard duopoly by allowing merchants to route transactions over competing networks. Here’s hoping he follows through by getting enough congressional Republicans on board.

That change would leave us with the megabanks still controlling the credit card market. One approach would be consumer-friendly regulation of other means of credit, such as buy-now-pay-later tools or innovative payment applications, by including protections that credit cards enjoy. Ideally, Congress would cap the size of banks, something it declined to do after the 2008 financial crisis, to the enduring frustration of reformers who sought structural change. Trump entered the presidency in 2017 calling for a new Glass-Steagall, the Depression-era law that broke up big banks, but he never pursued it.

Fast forward nine years, and we find rising negative sentiment among American voters, groaning under the weight of credit card debt and a cascade of junk fees from other industries. Populist ire at corporate power is rising. The race between the two major parties to ride that feeling to victory in the November midterm elections and beyond has begun. A movement to limit the power of big banks could be but a tweet away.

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Indeed, by the time some of you read this, we will be free. If all goes according to the White House’s plan, April 2 will go down in history as America’s “Liberation Day.”

Steve Bannon, a prominent unofficial Trump advisor, is so confident about its success, he’s already talking about making Liberation Day a federal holiday next year.

But we’re getting ahead of ourselves. From what will we be liberated on Liberation Day?

The Trump administration has been oddly parsimonious about providing one of its patented pithy catchphrases for what we’re being liberated from. You’d think they’d come up with something like “Globalist Tyranny,” “Neoliberal Serfdom,” “Surplus Production Sucker Status.”

But we can infer what they have in mind from context. On March 21, President Trump posted on social media, “April 2nd is Liberation Day in America!!! For DECADES we have been ripped off and abused by every nation in the World, both friend and foe. Now it is finally time for the Good Ol’ USA to get some of that MONEY, and RESPECT, BACK. GOD BLESS AMERICA!!!”

To this end, Trump intends to impose sweeping tariffs on foreign cars and reciprocal tariffs on every single American trading partner.

The exact numbers and other details are murky. “No one knows what the f— is going on,” Politico quoted a White House ally close to Trump’s inner circle as saying over the weekend. “What are they going to tariff? Who are they gonna tariff and at what rates? Like, the very basic questions haven’t been answered yet.”

White House trade advisor Peter Navarro expects these tariffs to raise $600 billion annually. Nearly every serious economist across the ideological spectrum understands that American consumers would pay the bulk of that. Thus, if “successful,” Trump would be imposing the largest, most regressive tax increase in history.

It would be regressive because the taxes would hit the poor and middle class much harder than the wealthy, because a larger share of their income goes toward basics like gas, food and clothes.

The challenge of writing about “Liberation Day” is that it is so incandescently stupid it amounts to a conceptual piñata: You can whack at it from any angle and get some reward for your effort.

For starters, many people understand that tariffs on, say, foreign steel make foreign steel more expensive. As a result, the things we make from foreign steel become more expensive, too. What gets overlooked, however, is that taxing foreign steel also makes domestic steel more expensive. When you make something more scarce — steel, eggs, Taylor Swift tickets — prices go up.

Politically, the idea of deliberately making things — like literally all the things — more expensive, when you were elected in large part due to popular exhaustion with inflation, is so irrational it’s like the economic policy equivalent of a Dali painting.

Geopolitically, blowing up our alliances and the global economy in the name of “self-sufficiency” is unfathomably idiotic. The more a country relies on tariffs to “protect” its economy, the poorer it is. The more friendly trading partners a country has, the stronger it is.

The wellspring of this geyser of asininity is the simple fact that Trump doesn’t understand how trade works.

The British economist Charles Goodhart coined “Goodhart’s Law”: “When a measure becomes a target, it ceases to be a good measure.” For Trump, the measure in question is balance of trade. He thinks trade deficits are proof that America is being “ripped off.” That’s not how trade works.

Every time you get a haircut, you have a trade deficit with the barber. Are you being ripped off?

Trump’s obsession with Canada illustrates his confusion. We have a trade deficit with Canada, under a trade agreement he crafted in his first term. Hence, Trump claims we “subsidize” Canada $200 billion a year (a made-up number, but that’s beside the point). The only reason we have a trade deficit with Canada is that they sell us oil at a price below global market rates. If we stopped buying their cheaper oil, we’d be worse off. Gas prices would go up and American jobs dedicated to refining that oil and exporting it would vanish. But the metric Trump cares about would improve.

Hold on here. Stuff we need would have become more scarce and expensive. Americans would be worse off. And that’s a win because … why?

During the years of our supposed economic captivity, the American economy became the “envy of the world.” That’s what Trump seems bent on liberating us from.

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