A Journal of Analysis and News
By Paul Tolmachev
The United States of America, once the undisputed locomotive of world industry and global economic hegemon, is experiencing dramatic times. For decades, under the sweet-sounding assurances of globalization apologists and “free trade,” America lulled itself into the illusion of a post-industrial paradise, where prosperity was built on the service sector, brain-economy, and financial flows, while heavy and “dirty” production was handed over to countries with cheaper labor.
However, as some economists bitterly joke, one cannot build a 21st-century economy without the solid foundation of a 19th-century economy. This fundamental truth today crashes with full force on the heads of those who chose to ignore the realities of the physical world and geopolitical competition.
We are witnessing not just a change in economic cycles but a tectonic shift in paradigms, demanding from America decisive and uncompromising economic self-defense.
Traditional “mainstream” economic theory, at best representing a neoclassical synthesis, and at worst, left-Keynesian doctrines, has long tried to present the enormous and constantly growing U.S. trade deficit as something positive or at least harmless.
We were told it was a sign of the attractiveness of the American economy to foreign investments, evidence that the world wanted to invest its savings in reliable American assets. Economists like Jay Bryson, Chief Economist at Wells Fargo, argue that trade deficits “are not a sign of national weakness” but rather the result of “we don’t save enough.” Others, quite “right-wing,” like Arthur Laffer, claim the trade deficit “is a capital surplus and never think of a capital surplus as something bad for our country.” Conservative economist Stephen Moore echoes this, stating that “the trade deficit always grows when the economy is strong.”
However, reality is far less comforting. The U.S. trade deficit, at its core, is a direct consequence of deep internal imbalances: chronically low levels of domestic savings paired with high overall investment levels in the economy. This means investments are financed not through thrift and accumulation but through debt. As David Korten put it, “money flows into the U.S., inflates American assets, and allows the U.S. to have a monstrous trade deficit. This means we consume more than we produce.”
The intertemporal trade model (Intertemporal Trade Model), developed by Nobel laureate Robert Halberstam, explains the trade deficit as the result of society’s intertemporal choices: if a country consumes more than it produces, it effectively borrows from future generations. This directly confirms that the deficit is not a temporary effect but a systemic risk.
Research by Larry Cooperman (AEI, 2024) showed that countries with current account deficits exceeding 4% of GDP face a 60% higher probability of a financial crisis than balanced countries. This indicates that the trade deficit is a significant risk to national security and a factor of economic turbulence.
The current account deficit mirrors the capital account surplus. This means that to cover its consumption exceeding production, America is forced to continuously attract foreign investments and loans. The main channel for this financing is the purchase of U.S. Treasury obligations (Treasury securities) by foreigners. The reinvestment of export revenues from producing countries back into the American economy is nothing other than foreign investments, vital for sustaining the enormous American demand for their products.
A closer examination allows a deeper understanding of the paradoxical essence of this mechanism.
When foreign companies and governments receive billions of dollars for goods sold in the U.S., they do not rush to spend them on purchasing American exports. These dollars either sit as cash or are invested in American assets. Every dollar not used to buy American exports effectively increases the U.S. trade deficit. As Martin Feldstein explained, “To finance this trade deficit, the U.S. has to borrow from the rest of the world or sell American assets, such as stocks, businesses, and real estate, to the rest of the world.” He also noted, “The only way to reduce our financial dependence on inflows from the rest of the world is to reduce our trade deficit.” This applies primarily to resource and production donor countries, most of which are increasingly authoritarian regimes led by China.
Moreover, even holding dollars as cash is a form of credit since every dollar is backed by production that can be purchased in the future. If the dollar is not presented for redemption today (i.e., not used to buy American goods or services), it means the obligation is postponed to tomorrow or later, equating to credit extended by the holder. Milton Friedman, though a free-trade advocate, acknowledged this aspect, saying: “Can you imagine a better deal than us getting beautiful textiles, gleaming cars, and sophisticated TVs for a pile of green printed paper? Or for some entries in bank books?” Clearly, such a “deal” leads to a dangerous level of dependence and degradation of the production base.
The most painful part of this scheme is that the U.S. government uses these colossal inflows—this credit from supplier countries—to support and stimulate consumption, not to develop its own production potential. In other words, these investments do not create a productive multiplier for the U.S. economy, which stands at 1:3 (Time to Build and Aggregate Fluctuations, Kydland, F. E., & Prescott, E., 1982). Instead, America, in essence, fuels and expands the production capacities of other countries.
A country with a large trade deficit, buying much and selling little, effectively lives on borrowed money. The creditor is the seller, who lends under the condition that the buyer will purchase even more of their goods. In this vicious spiral, the seller grows richer, while the buyer country sinks deeper into debt. The trade deficit directly corresponds to the growth of capital inflows—the money the seller lends for the consumption of their own products.
This fundamental imbalance between savings and investments, financed through external debt, is the root of many economic problems in America. For example, Jud Wennerster (Heritage Foundation), studying this issue, relies on Edmund Phelps’ “National Wealth” model, which states that sustainable growth requires a balance between savings and investments. She writes: “When investments are financed not through domestic savings but through foreign debt, it destroys the nation’s future. Today, the U.S. lives off the capital of other countries, contradicting the basic principles of economic sustainability” (2023).
This is a vicious leverage, a consumption economy taken to absurdity, instead of a healthy supply economy.
The introduction of high tariffs by the Trump administration triggered a storm of criticism from free-trade dogmatists. We were told this was a non-market, protectionist tool that would stifle growth, distort competition, expand corruption, and inevitably lead to inflation.
We live not in an era of creation, but in conditions of actual global geopolitical, economic, and cultural conflict. In such a situation, one must act with “military methods” that may be painful but necessary.
The core purpose of tariff leveling is to reduce the U.S. trade deficit by shrinking surpluses among trading partners. Tariffs are tools to correct imbalances caused by hyper-consumption and credit leverage in America and the massive production overhang in exporting countries.
Tariff objectives are multifaceted:
It is critical to understand that imposing tariffs in today’s environment of global conflict and fragmentation is a forced, albeit painful, measure—akin to increasing military spending during wartime.
In the ideal free-trade world described by Hayek and Mises, tariffs would indeed be evil. But we do not live in Fukuyama’s “end of history” utopia, nor in a theoretical model or experimental space. We live in a harsh reality amid intensifying global competition and clashing values.
Trump’s tariffs are not an end goal but a negotiation tool aimed at achieving fairer and balanced trade relations. The ultimate objective, paradoxically, may be to maximize the reduction of global trade barriers—but on terms favorable to America. As economist Arthur Laffer stated, “This is a win-win strategy” because Trump is “phenomenal at negotiation” and can force other countries to “truly lower their tariffs on our products.”
This represents a shift from an economy based on debt-driven consumption stimulation to one focused on stimulating domestic production and supply. Shifting the tax burden from producers to consumers through tariffs is a logical step to incentivize domestic entrepreneurship.
Of course, there is a risk of retaliatory measures from other countries. However, the U.S., as the world’s largest consumer market, holds significant leverage. Many countries, especially China, depend on access to American consumers, limiting their capacity for full-scale trade war.
As practice shows, many nations would rather negotiate and concede than lose access to the U.S. market. America can play divide-and-conquer by negotiating individually with each country rather than all at once—a political tactic adopted by Trump and his administration.
As Arthur Laffer said, “Everyone loses in trade wars, but not all lose equally. Americans will lose far less than foreigners.
More than 200 economists, including Nobel laureates Vernon Smith and James Heckman, warned that Trump’s new tariffs would harm American consumers, triggering price hikes and recession risks. Yet their predictions, built on idealized models for a “laboratory glass,” ignore the complex economic mechanisms in a critically shifting geopolitical landscape. Experience from Trump’s first term, economic models, and empirical data show: inflationary risks are exaggerated, and the policy could even revive manufacturing without harming consumers.
Between 2018–2019, contrary to forecasts, the imposition of sweeping tariffs—especially in trade with China—did not spark inflation. Import prices in the U.S. did not rise and even fell in some periods. Why? The core reason was that tariffs, acting as a tax on imports, forced importers to pay more. However, to retain access to America’s colossal market, foreign exporters faced pressure to lower their own prices. Ultimately, most of the tariff burden was absorbed by foreign producers through reduced export revenues and profits. Foreign seller companies, unwilling to anger their largest buyer—the American consumer—could not simply shift all costs onto them.
As demonstrated by Brander and Spencer’s Strategic Trade Policy Model (1985), under imperfect competition, tariffs allow redistribution of profits from foreign firms to domestic ones. In effect, the burden of tariffs fell on exporters, not consumers.
Empirical data confirm this: during the 2018–2019 trade war, U.S. import prices did not rise significantly despite expectations, even falling in some periods. For example, according to U.S. Department of Commerce data, prices for Chinese goods in 2019 increased by only 1.2%, despite an average tariff of 19%. This indicates foreign exporters absorbed up to 75% of tariff costs by cutting their margins. As Scott Bessent, Treasury Secretary, noted, in Trump’s ideal world, the U.S. would “pocket” tariff profits while Chinese exporters bore the losses.
Modern economic realities form a barrier against inflationary risks, driven by declining consumer demand, rising household debt burdens, and forced price restraint by businesses. According to the Federal Reserve Bank of Philadelphia (2024), the share of credit card debtors making minimum payments reached 10.75%, signaling growing credit stress. Consumer confidence is falling, and with it, demand. Under the classic IS-LM model of John Hicks, reduced consumption eases price pressures, even under tight monetary policy. Firms facing falling sales are forced to restrain prices rather than pass costs to buyers.
Inflationary processes depend on three factors: demand shocks, supply shocks, and inflationary expectations (Rational Expectations Theory, Robert Lucas). In 2020, the price surge was driven by monetary stimulus: direct payments to households increased the money supply (M2) by 25%, creating a “pig in a python” effect—excess liquidity sparking record price growth.
Today’s situation is reversed: household savings are depleted, shrinking from $2.3 trillion in 2020 to $0.9 trillion in 2024, while debt burdens rise. As Milton Friedman emphasized, inflation is always a monetary phenomenon. Without a new M2 spike (which is contracting in 2024), inflation will be contained even with expanded tariffs.
We know corporations respond to rising costs (wages, benefits, components, utilities, etc.) that must be factored into final product prices to maintain margins by adjusting prices. However, as shown by the correlation between economic growth rates and corporate profits, companies can shift costs to consumers only if demand remains above supply.
In 2020–2021, corporations passed 60–70% of inflationary costs to consumers, who were flush with government direct payments. Today, retail sales have fallen 1.5% (from 2021 peaks), and profit margins at major companies dropped to 11.2% from 14.5% in 2021. This confirms companies are forced to restrain prices to retain customers and demand. As noted in a National Bureau of Economic Research (NBER) study, under weak demand, corporations absorb 60–70% of costs rather than pass them to consumers.
Thus, the percentage of cost increases that corporations must absorb grows, reducing profitability but manifesting in the economy as slowed inflation.
The Trump administration prioritizes national interests: tariffs aim to restructure global supply chains, deregulate, and stimulate onshore production. This aligns with economic nationalism principles, where the priority is incentivizing domestic competitiveness over unlimited consumer credit. Direct investments in domestic enterprises create jobs, boost supply, and reduce import dependence—a mechanism described in Albert Harchevnikov’s Structural Growth Theory.
In short, forecasts of accelerated inflation due to tariffs should be treated critically: they ignore current demand declines, household credit crises, and structural features of international trade.
Tariffs are not a “bug” but a strategy that could reboot U.S. manufacturing without intensifying inflationary pressure, provided the money supply remains controlled. As Milton Friedman stressed, stable monetary policy and a flexible labor market are keys to recovery. Trump’s policy, aimed at weakening the dollar and protecting national interests, combines classical free-market principles with adaptation to 21st-century realities.
The history of America’s deindustrialization is a story of missed opportunities and deliberate destruction of its own industrial potential. Over recent decades, tens of thousands of factories have left the U.S., and millions of manufacturing jobs have been lost. America has become a nation that consumes everything it sees but produces very little. A staggering fact: one of the largest U.S. exports today is scrap paper.
The numbers speak for themselves—and if they don’t freeze the blood in your veins, they at least provoke deep concern.
Since 2000, the U.S. has lost nearly 70,000 factories. Over 5 million manufacturing jobs have vanished since 2000. A National Bureau of Economic Research (NBER) study cited by the United Steelworkers shows that U.S. manufacturing employment was nearly 30% lower than it would have been had China not joined the WTO.
Research by the Economic Policy Institute (EPI) reveals that since 2001, the growing trade deficit with China has cost the U.S. over 2.7 million jobs, including 2.1 million in manufacturing. In July 1979, 19.5 million Americans were employed in manufacturing; by March 2025, that number had fallen to just 12,764,000—even as the country’s population grew significantly.
The share of manufacturing in U.S. GDP has plummeted from 28% in 1959 to 10.3% today. David Henderson’s “Deindustrialization Loss Model” (Hoover Institution, 2023) quantifies the costs of this decline: the loss of every million manufacturing jobs reduces GDP by 1.2% in the long term due to the erosion of knowledge and value-added supply chains.
The U.S. trade deficit with China reached $295 billion in 2024. China produces roughly four times as many cars annually as the U.S. The U.S. spends about $3 on Chinese goods for every $1 that Chinese consumers spend on U.S. products. American stores are flooded with Chinese goods, while the primary U.S. export to China is soybeans.
The share of semiconductors produced in the U.S. has collapsed from 100% at the industry’s dawn to a mere 8% today. Of over a billion mobile phones sold annually, only a few thousand are manufactured in the U.S.
Even in critically strategic sectors like artillery shell production, Russia produces three times more than the U.S. and Europe combined.
The consequences of this deindustrialization are catastrophic—not just for the economy but for society. Over 36 million Americans live in poverty (U.S. Census Bureau, Income and Poverty in the United States , 2022). Homelessness has reached record highs, with demand for food banks across the country breaking all-time records. The 2023 U.S. Department of Housing and Urban Development (HUD) report notes that the homeless population hit 653,100 people—12% higher than in 2022 (HUD, Annual Homeless Assessment Report , 2023). This is the largest single-year increase in decades. Feeding America, which serves 40 million people annually, reported that food bank demand rose 19% in 2023 compared to pre-pandemic levels (2019). In regions like Texas and Illinois, increases reached 30% (Feeding America, State of Hunger Report, 2024 ).
Once-prosperous industrial cities like Gary, Indiana, and Youngstown, Ohio, have become “rotting, decaying hellholes,” as one commentator put it. Poverty rates in Gary, Indiana, and Youngstown, Ohio, exceed 30% and 15%, respectively—far above the federal average of 11.5% (U.S. Census Bureau). In Gary, over 30% of residential homes are abandoned or in disrepair, and in Youngstown, the figure exceeds 15% (Gary Housing Study, 2021; Zillow, 2024). Crime rates are astronomical: violent crime in Gary is four times the national average (FBI UCR, 2023), and Neighborhood Scout ranks it among the most dangerous cities in the U.S. Recall that in the 1970s, US Steel’s Gary plant was the city’s largest employer, providing 30,000 jobs. By 2020, only one active plant remained, offering just 2,000 jobs (Gary Steelworks History, Indiana University). The same fate befell Youngstown: the 1977 closure of the Youngstown Sheet and Tube steel mill erased 5,000 jobs in a single day. This day became known as “Black Friday” and marked the region’s decline (Youngstown Historical Center of Industry & Labor). Naturally, no “high-tech” or “service-sector” alternatives replaced these industries.
One commentator wryly observed: left-liberal ideology “killed manufacturing, workers, and cities with fake kindness and unfulfilled promises.”
Political journalist Nancy MacIntyre rightly argues: “The left offers charity instead of jobs, creating the illusion of care but failing to solve systemic crises” (National Review , 2020). Authors of the study The Failure of Welfare Expansion to Revive Deindustrialized Regions (AEI, 2023) also stress that “benefits do not replace industrial revival—they merely mask its decline.”
Globalization apologists claimed that job losses in manufacturing would be offset by growth in services and high technology. However, as we see, this became reality only partially.
Great economic empires in history thrived through manufacturing. How can America continue to consider itself “great” if its industrial base is being destroyed at such an alarming rate?
The U.S. has created the most expensive debt bubble in history, attempting to sustain a high standard of living through consumption borrowing. Every month, America sinks deeper into debt and becomes poorer.
Tony Piccardi (AEI) references Robert Mundell’s “Critical Mass of Production” theory (2021), which argues that a minimum manufacturing share of GDP (15%) is necessary to maintain technological sovereignty. The drop to 10.3% in the U.S. creates vulnerabilities, especially in defense industries.
A study by Robert Elliott (University of Nottingham, 2024) shows that countries with manufacturing shares above 20% exhibit 30% greater resilience to geopolitical shocks.
Deindustrialization is a national crisis that should be the foremost concern of every American. Unfortunately, most Americans still fail to grasp the scale of what is happening.
U.S. deindustrialization is a massive systemic risk that fully manifested during the COVID-19 pandemic. The loss of manufacturing capacity, reliance on globalized supply chains, and neglect of national sovereignty created a fragile economic structure. The pandemic acted as a “stress test,” exposing vulnerabilities caused by decades of shifting focus toward services and imports.
The manufacturing sector was the first casualty of the pandemic. According to the Bureau of Labor Statistics (BLS), unemployment in this sector reached 16.1% in April 2020—nearly double the national average (8.4%). In Midwestern states like Indiana and Ohio, where industry traditionally anchored the middle class, manufacturing unemployment exceeded 18.5% and 17.3%, respectively. These regions lost over 300,000 jobs in 2020, causing GDP to contract by 5.2% compared to regions retaining production capacity (Brookings Institution, 2021).
Globalization intensified U.S. dependency on external suppliers. In 2019, 47% of medical goods and 80% of active pharmaceutical ingredients were imported from China and India (U.S. International Trade Commission). In March 2020, shortages of N95 masks and COVID-19 tests revealed U.S. reliance on China, which controlled 50% of global medical equipment exports (New York Times, 2020). This is not just an economic issue but a national security threat: supply chain disruptions during crises can endanger lives.
Deindustrialization worsened regional inequality. Detroit and other cities saw housing prices fall 15–25% over two years. Research by the Economic Policy Institute (2021) showed that laid-off factory workers partially shifted to lower-paying service jobs with high layoff risks during crises. This created a “double blow”: loss of income and social benefits, collapsing the middle-class standard of living.
Structural unemployment became a key problem. According to David Autor et al. (2020), retraining industrial workers proved ineffective due to skill gaps. By 2023, consumer confidence had fallen to a 40-year low (Conference Board), and credit stress reached a record 10.75% of credit card debtors (Federal Reserve Philadelphia, 2024), signaling long-term crisis effects.
The pandemic exposed vulnerabilities even in high-tech sectors. The 2021 microchip shortage, caused by Asian factory shutdowns, reduced car production by 30% and raised prices by 18% (Alliance for Automotive Innovation, AAA). According to Executive Order 14017 (2021), the U.S. produces only 12% of global semiconductors, while Asia accounts for 75% (Department of Commerce, 2021). This jeopardizes U.S. technological leadership: in 2022, chip shortages cost the auto industry $210 billion (McKinsey).
The U.S. government allocated $5 trillion to stimulus payments and support programs (Congressional Budget Office, 2021), primarily boosting consumption. Investments in domestic production revival remained limited. The CHIPS Act (2022) allocated $52 billion for semiconductor manufacturing, but this is insufficient to close the gap with Asia. The Semiconductor Industry Association estimates the U.S. must invest $150 billion over five years to achieve 15% global chip production share.
The pandemic became a “catalytic crisis,” revealing the consequences of U.S. deindustrialization. History shows: without a robust industrial base, economic resilience is impossible.
The status of the dollar as the world’s reserve currency, long seen as an unquestionable blessing, paradoxically accelerated America’s deindustrialization. A strong dollar made U.S. exports expensive and imports cheap, undermining domestic industry’s competitiveness. At the same time, low-cost imported goods kept consumer price inflation low, fueling consumption-driven GDP growth.
The strong-dollar policy crushed U.S. manufacturing but “maintained social stability through low consumer inflation, high consumption levels, and GDP growth fueled by consumption—a house built on sand.” An overvalued dollar became the key mechanism sustaining trade imbalances, keeping imports cheap despite a growing trade deficit.
For decades, America maintained its international financial balance by exporting its obligations—Treasury bonds—to foreign trade partners. Supplier nations preferred to reinvest their dollar earnings into the U.S., buying American securities to sustain their primary export market and boost its purchasing power. Total accumulated global investments in the U.S. over the past 70 years reached a staggering $40 trillion. In 2024 alone, foreigners purchased $700 billion in U.S. Treasuries and $300 billion in other assets.
Despite a massive goods trade deficit ($1.2 trillion last year), America maintains a large surplus in trade in services ($295 billion), which, however, only slightly offsets the overall deficit. The U.S. is a dominant exporter of software, cloud computing, financial instruments, and consulting.
As explained by Stephen Miran, Chair of the President’s Economic Advisory Council, the U.S. runs a current account deficit not because it imports too much but because it must export bonds and other obligations to provide reserve assets and support global growth—what is known as the “Triffin Equilibrium.”
However, as America’s economic dominance over the rest of the world shrinks, the costs of this equilibrium grow, increasingly affecting domestic economics and policy.
The “Triffin-Greenspan Model” (an updated version of the classic Triffin framework) explains that the reserve currency status requires a persistent current account deficit, which undermines the industrial base. Eric Rosenberg (Cato Institute, 2023) writes: “Dollar privilege has become a trap: we print money but lose factories” (Working Paper No. 89).
James Crown (Hoover Institution) developed the “Overvaluation-Debt Model,” showing that a strong dollar reduces export competitiveness by 20–25%, reinforcing the paradox of reserve currency status.
Specifically, Michael Burden’s study (Goldman Sachs, 2023) proved that a 1% dollar appreciation against the yen reduces U.S. exports to Japan by 0.8%.
Global demand for dollar-denominated reserve assets leads to significant dollar overvaluation, weakening American purchasing power.
Modern international politics has become an arena where traditional rules yield to strategic chaos. Trump, whose administration aggressively uses tariffs as a pressure tool, symbolizes this transformation. His political style is often criticized for unpredictability, but beneath this lies a rational dynamic strategy rooted in international relations theories, game theory, historical precedents, and political technologies.
Trump’s tariff policy is not chaotic but part of a strategic plan to reshape America’s relationship with the world. Its goal is to force other countries to play by rules favorable to the U.S., even if this requires dismantling the status quo. For example, threatening 50% tariffs on Colombian goods over its refusal to accept American planes carrying migrants forced the country’s president to capitulate within hours. Actual losses for the U.S.? Zero dollars. This is a classic example of the Chicken Game , where the winner is the one who convinces the opponent to back down.
Trump’s tactics align with the ultimatum game model (Anatol Rapoport): extreme demands create psychological pressure. The U.S.-China trade war (2018–2020) began with sudden tariffs on $250 billion in goods, embodying Thomas Schelling’s concept of “uncertain retaliation.” Here, chaos becomes a tool to raise the cost of refusing compromise, ultimately leading to the Phase One agreement.
From the perspective of realist political theory (Hans Morgenthau, Henry Kissinger), states operate in an anarchic system where power and flexibility determine success—especially during cycles of geopolitical turbulence. Trump radicalized this idea, using tariffs as leverage to renegotiate trade agreements.
For instance, renegotiating NAFTA into USMCA became possible through exit threats—a tactic matching the strategic chaos model (Robert Jervis, Thomas Schelling).
Another example is pressure on Canada and Mexico. Critics called tariffs on allies absurd, but from the divide-and-conquer perspective (Halford Mackinder), this advanced the creation of a U.S.-oriented trade bloc. As Alexander Hamilton wrote in 1791: “Not only wealth but independence of a nation is linked to the prosperity of manufacturing.”
Trump effectively exploits the informational noise generated by tariff threats. Scandals and tweets distract from complex decisions, such as the 2017 tax reform. This aligns with the agenda-setting theory (Max McCombs) and Bernard Cohen’s principle: “The press doesn’t tell people what to think, but what to think about.”
Simultaneously, populist narratives (Cas Mudde) strengthen voter loyalty. For Trump supporters, tariffs symbolize fighting foreign “cheating.” As Peter Navarro wrote, trade deficits are the “sum of all frauds,” and tariffs compensate for them.
Trump’s goal is not just deficit reduction but restructuring global supply chains to exclude China. Steven Mnuchin, Treasury Secretary, proposed that countries respond to tariffs with investments in the U.S., increased defense spending, or direct payments—a concept resembling alliance theory (Glenn Snyder), where the central power uses economic levers to control partners.
Critics, including Joseph Stiglitz, argue Trump’s approach turns globalization into a “negative-sum game” where everyone loses. However, supporters see it as a zero-sum game , where the U.S. emerges victorious by restoring balanced relations with the outside world, while the collective “losing side” accepts these terms.
Trump’s unpredictability and manipulativeness are not bugs but a rational strategy exploiting informational chaos to dominate agendas, press opponents through uncertainty (hypergame theory ), and boost domestic support via populist narratives.
This style intersects with neoclassical political realism , alliance theory , and historical protectionism , adapting them to the 21st century. In a world where traditional institutions (NATO, WTO, UN) lose effectiveness, and key players (China, Russia) employ uncertainty tactics, chaos becomes a powerful tool for achieving goals.
Trump’s tactics are not a departure from political theory but its evolution, reflecting new rules of the global game.
The central mission of the Trump administration is to revive America’s industrial base and stimulate domestic production. This requires breaking free from global dependency and embracing greater self-sufficiency. This process will create winners (domestic manufacturers, resource companies, certain financial firms) and losers (transnational corporations, importers, foreign exporters).
Reindustrialization involves not only repatriating and establishing new manufacturing capacity in the U.S. (reshoring) but also relocating production to nearby countries (nearshoring) to reduce transportation costs and strengthen supply chain reliability. Despite higher labor costs in the U.S., cost savings, tax reductions, regulatory relief, reduced trade deficits, and redirected investment flows—from consumption to production—can offset these expenses.
Examples of successful reshoring already exist. In 2022, over 350,000 jobs returned to the U.S., the highest annual figure on record, according to the Reshoring Initiative. Intel is investing $20 billion to build semiconductor plants in Ohio to reduce reliance on Asian suppliers. Apple has committed $430 billion in domestic operations by 2026, expanding its reliance on U.S. component suppliers. GE Appliances improved product quality by shifting refrigerator production from China to Kentucky. Many European industrial firms are opening or expanding U.S. operations due to lighter regulations and lower taxes compared to Europe.
Reshoring is most active in sectors like medical equipment, pharmaceuticals, semiconductors, automotive components, and critical defense/aerospace manufacturing.
From a hard-nosed realist perspective, reindustrialization and onshoring are not just strategic advantages or global power plays—they are matters of national security. Peter Navarro’s “Onshoring 2.0” model (2022) integrates Harold Brown’s “Security Economy” concept, evaluating reindustrialization not only through GDP growth but through reduced geopolitical risk.
Tony Piccardi (AEI), emphasizing the importance of building production capacity, cites Edward Prescott’s “Production Multiplier Model,” which shows that investments in domestic manufacturing generate a 1:3 multiplier effect through tax revenues, employment, and reduced import spending.
The era of unchecked globalization, built on American hyper-consumption and debt financing, is over. The world is no longer a utopian sandbox where nations freely share resources and harmonize interests—a “end of history” fantasy (as Fukuyama envisioned) that has collapsed into anti-utopian reality. China and Russia are not becoming liberal democracies; the Arab world is not transforming into Dubai. As Emmanuel Macron rightly observed, this world never existed.
America can no longer afford to live on borrowed money while dismantling its industrial base and accumulating a colossal debt burden.
Transitioning to a “supply-side economy,” anchored in robust domestic production, is an existential necessity for long-term stability, prosperity, and national security. As Marine Le Pen stated, “Wild globalization has benefited a few but become a catastrophe for the majority.” Critics like Anna Lindh and Gordon Brown describe it as “uncontrolled” and “vulnerabilizing” societies. Danish Prime Minister Mette Frederiksen noted, “The price of unregulated globalization, mass migration, and free labor mobility is paid by the lower classes.”
Tariffs, in the hands of a pragmatic leader, are not tools to destroy free markets or empower the state. Rather, they are surgical instruments to correct decades of imbalances distorting free markets and capitalism, and to reset global rules. They serve as leverage in negotiations, spur reindustrialization, and force other nations to recognize that access to the U.S. market is not an unconditional right. As Peter Navarro emphasized, “The mission of these negotiations is to sharply reduce our trade deficit, level the playing field, eliminate all tariff disparities, and remove all non-tariff barriers.”
Despite criticism and apocalyptic predictions, evidence shows tariffs do not trigger runaway inflation in the U.S. Their burden is absorbed by foreign exporters and offset by reduced consumer spending and declining importer profits reliant on imported components.
The true drivers of inflation remain government spending, bureaucracy, regulation, and credit expansion. The 2020 inflation surge stemmed from temporary money supply increases via direct household payments—not debt or Federal Reserve actions.
The path to reviving American industry will be arduous, requiring decisive action. It demands abandoning outdated free-trade dogmas that no longer align with the fundamental shifts in global order, restructuring global supply chains, strengthening the defense-industrial base, and enacting domestic policies favoring producers as creators of national wealth. Even critics concede, “The core of Mr. Navarro’s accusations against China is not so controversial,” referencing unfair trade practices and subsidies.
An optimistic vision of America’s future is not a post-industrial utopia but a sovereign economic power with a strong industrial foundation—capable of producing what it consumes, defending its interests, and dictating terms on the global stage. This is not isolationism but a pragmatic approach to globalization rooted in reciprocity and national interest. America must stop being a naive “Uncle Sam” and reclaim its role as a leader that values its own production and secures prosperity for its citizens.
Of course, official economic data should always be viewed with skepticism. Governments tend to sugarcoat reality, especially during economic hardship. Yet the facts about deindustrialization and structural imbalances in the U.S. economy are undeniable.
Rebooting the American economy is not merely an economic task—it is a return to the foundational principles that made America great. It is a rejection of globalization’s illusions and a return to a reality where production matters, sovereignty reigns, and the interests of one’s own citizens come first.
The road will be difficult, but it is the only correct path.
Paul Tolmachev is an Investment Manager, Economist and Political Analyst. He is Certified Professional in Philosophy, Politics and Economics (PPE Program), Duke University. For over 25 years, Paul has managed assets in global financial markets for some of the world’s largest investment holdings. He also is a visiting scholar at The Stanford Institute for Economic Policy Research (Stanford University), where he researches political economy and social behavior, specializing in the analysis of macroeconomics, politics, and social processes. Paul is a columnist and contributor to a number of international think tanks and publications, including, Mises Institute, Eurasia Review, WallStreet Window, Investing.com, L’Indro, etc.
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