[OPINION] Trump 2.0: The emperor’s new clothes

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When US President Donald Trump announced his sweeping “Liberation Day” hyper-tariffs, critics dismissed it as impulsive and irrational — but it may signal a deeper structural recalibration. The US is not just lashing out randomly but is attempting to consolidate its imperial position in a global order fraying at the edges.

This means disrupting the open architecture of global capitalism built over decades of neoliberal globalization. The US seeks to revive industry, manage rising debt, and assert hegemonic dominance in a multipolar world. Trump’s abrasive political style accelerates these transformations, but their underlying drivers — economic strain, rivalry with China, and decaying multilateralism — transcend any single administration.

At the heart of the shift is a bid to reindustrialize. 

American manufacturing is down from over 28% of gross domestic product (GDP) in the 1950s to less than 10% today. While finance and tech flourished, the industrial heartland decayed. China, in contrast, has built a formidable manufacturing base now reaching over a quarter (26.2%) of its GDP. Trump’s tariffs aim not only to curb China but to re-anchor America’s high-tech digital and service economy in a revitalized domestic base. 

Alongside deindustrialization is mounting fiscal stress. Federal debt soared from under $1 trillion at the start of neoliberal globalization in 1980 to US$35.5 trillion, over 120% of GDP, in 2024. The federal deficit hit US$1.8 trillion last year. Trump’s solution is blunt: cut social spending, and use tariffs for both industrial policy and raising revenue. Projected yields range from US$2.2 trillion to US$6 trillion over the next decade. But much depends on how allies and adversaries respond.

These economic goals sit within a geopolitical frame. The primary target is China, which is seen not just as an economic competitor but as a systemic rival. 

Machinery hegemony

The US still boasts formidable structural advantages. In 2023, it accounted for 26.1% of global GDP and an astonishing 31.4% of global household consumption, despite having only 4.2% of the world’s population. 

It is still the world’s biggest foreign investor with US$9.4 trillion invested abroad – over one-fifth (21.3%) and nearly twice that of China. It is also still the top destination for foreign direct investment (FDI), accounting for US$12.8 trillion or over a quarter (26.1%) of the global total. In comparison, China’s FDI stock, even including Hong Kong, was less than half that amount.

The US dollar retains its supremacy, accounting for three-fifths (58%) of international foreign exchange reserves, over half (50.2%) of SWIFT payments, and roughly half of global trade transactions. The US also has the deepest and most liquid capital markets in the world. Its equities comprise nearly half (48.6%) of global stock market capitalization, while its fixed income markets make up nearly 40% of all outstanding securities worldwide.

Then there is the hard power.

With military spending of US$916 billion in 2023 – more than the next ten countries combined – the US commands a global military footprint, including over 740 overseas bases in 82 countries. No other state has the same capacity to project force and conduct sustained operations anywhere. Trump’s muscular rhetoric about “[restoring] the US military’s mission of lethality,” an “American Iron Dome,” and nuclear weapons modernization is consistent with this strategic posture.

Methodical disruption

The current moment is distinguished by the degree of disruption that the US is undertaking as it retools its global position. 

The protectionist turn began well before Trump’s return and has been gathering pace across the Obama, Trump 1.0, and Biden administrations. Since the 2008 financial crisis, the US emerged as the world’s most aggressive user of new protectionist measures, implementing nearly 11,000 interventions. Obama effectively paralyzed the World Trade Organization’s (WTO) Appellate Body, rendering its dispute system inoperative and its agreements unenforceable. Biden’s Inflation Reduction Act (IRA) and CHIPS Act showered green and semiconductor firms with subsidies. Trump 2.0 has merely made the rupture with neoliberal globalization explosively explicit.

But it is the retreat from multilateralism that is particularly striking. Institutions like the United Nations (UN) and WTO are seen as enabling rivals like China while binding US actions. The irony is not lost: the US supported China’s accession to the WTO in 2001, only for Beijing to leverage open global markets and foreign investment into economic and geopolitical clout.

As it is, the first Trump term exited the Paris Agreement and slashed funding to the UN. The second term has quit the World Health Organization (WHO), the UN Human Rights Council, and UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA). Trump is already reviewing the US’s support to international bodies towards withdrawing from those that do not serve “America First” interests. It is antagonizing its traditional allies within the G7.

This reflects the US shift towards bilateral deals, where it can more directly leverage its power to extract better terms. Even the façade of multilateral cooperation is abandoned in favor of openly coercive demands for compliance.

This aggressive bilateralism also allows the US to use tariffs as negotiating levers – punishing adversaries, pressuring allies, and reshaping trade and relations. But this is risky. The sudden generalized disruption of global supply chains built up over decades will raise prices, slow growth, and push fragile economies into crisis.

Mounting contradictions

The strategic ambition is clear, but the risks are considerable. 

Trump’s industrial vision is muddled – combining hyper-tariffs while suspending parts of Biden’s IRA and CHIPS Act. This inconsistency reveals an ambivalence about the budgetary cost of reindustrialization. Yet it is hard to imagine any industrial revival without sustained state support.

Meanwhile, higher tariffs will inflate prices for consumers and producers alike. Working-class Americans will bear the brunt of this transition – facing higher living costs, weaker social services, and greater job insecurity – while corporate elites and billionaires benefit from tax cuts, deregulation and rent-seeking opportunities. Globally, the economic turmoil will hit the poorest countries hardest, particularly commodity-exporters heavily in debt. 

The social backlash is already brewing. Millions joined the “Hands Off” protests across all 50 US states earlier this year. The movement echoes the Occupy Wall Street moment in 2011. With deeper organizing and strategic clarity, these protests could be the embryo of a more serious class-based resistance. 

Imperial reinvention

Trump’s wager is audacious: that America can reverse deindustrialization, outmaneuver China, and reassert hegemony with hyper-tariffs and protectionism, backed by financial dominance and military power. This strategy discards the constraints of multilateralism in favor of transactional bilateralism.

Whether this gamble pays off remains to be seen. For now, the world must brace for greater instability, sharper geopolitical rivalries, and deepening contradictions. This is not just a shift in policy – it is a reconfiguration of imperial strategy in a new era of contested globalization. 

The Trump administration may be placing its bets on strength, but the global response and the American people will determine whether this new imperial strategy holds or collapses under its own contradictions. This gambit either marks the last gasp of empire, or its violent reinvention. – Rappler.com

This is a condensed version of a more detailed article available at https://www.ibon.org/trump-2-0-the-emperors-new-clothes/ . The author is executive director of IBON Foundation.