LAST April 2, 2025, Trump imposed reciprocal tariffs against all US trading partners. This tanked the financial and bond markets, prompting Trump to suspend these tariffs for 90 days. His reason was to give the 100-plus countries the opportunity to "kiss his ass," to negotiate tariff reductions. There are no serious negotiations going on now. Trump's propensity to change his mind on a whim, calling out and negating tariff figures is causing volatile market fluctuations. Wall Street cognoscenti suspect Trump's cronies, alerted to these developments, are making a killing in the markets.

But the Financial Times awarded Trump a new moniker — TACO (Trump Always Chickens Out) — a pejorative that describes this pattern of behavior. By early July, the suspension period will expire roiling the markets again, continuing the deadly phase of the trade wars. But by the looks of it, these tariffs in their present context will not be imposed. This is an insanely developed trade strategy that could cause global recession. With Donald the TACO, this is just another bluff.

Bringing manufacturing back

Trump imposed these tariffs ostensibly to liberate America from decades of being ripped off by trading partners, singling out China as the biggest culprit. He declared that these tariffs would incentivize American companies now operating abroad to repatriate manufacturing jobs to America.

Borrowing heavily from Benjamin Norton, editor-in-chief of Geopolitical Economy Report and Professor Richard Wolff of the University of Massachusetts, Amherst, their contention is that Trump's attempt to reindustrialize to bring back jobs, by using massive tariffs — his reckless strategy — will not work.

America's dominance in the 1950s, 1960s

America, the lone hegemon, has grown very rich since the end of World War II, claiming the 1950s-1960s as the golden era of the US economy, when one quarter of America's GDP (gross domestic product) came from manufacturing. Today, it has declined to 10 percent — a condition that threatens America's global economic preeminence. To put things in proper perspective, a short review of economic history will trace America's ascendancy in the aftermath of World War II, which may elucidate Trump's erratic obsession with the imposition of tariffs and trade wars since his first term in 2016.

Bretton Woods system

In July 1944, 44 nations gathered at Bretton Woods, New Hampshire in the US, for a conference that established the post-World War II international monetary system, stabilizing exchange rates and promoting growth; among other things it fixed the value of the world's currencies to the US dollar, which itself was tied to gold at $35 per ounce. This made the US dollar effectively the world's primary reserve currency — the standard to which every other currency was pegged. The offshoot from that conference is America's self-appointed role as the "world's policeman" where countries can rely for protection under its military umbrella, and the allies who agree to these arrangements are given access to American consumer markets.

US economic primacy benefited the world economy but more so the American exporters and importers by reducing currency risk. The establishment of the World Bank (WB) and International Monetary Fund (IMF) allowed investment opportunities and increased funding, opening new markets for all, particularly those benefiting American businesses. This also enabled America to gain significant leverage in shaping the world's political and international economic policies. But the central theme is that the world, particularly America's allies, became rich — and America, richer.

The flip side

Newly industrializing countries and emerging economies often struggled amid economic conditions that favored bigger and much industrialized economies leading to imbalances. By the late 1960s, the Bretton Woods system caused significant strains worldwide leading to its collapse when the US government under President Nixon in 1971 decoupled the US dollar's convertibility to gold.

Global economic turmoil ensued. After which in the early 1980s, conservative guru President Ronald Reagan with his ideological soulmate UK Prime Minister Margaret Thatcher ushered in the neoliberal world order that among other things, imposed some direction if not discipline on international trade with three distinct diktats: 1) tariffs were lowered; 2) enable free movement of capital around the world by lowering barriers on investments; 3) currency exchange rates were made flexible — with the US dollar still the world's reserve currency; and 4) America guarantees security for everyone patrolling the major trading routes and the high seas with its fleet. This new world order played smack right into the US-Western cherished concept of democracy and free market principles and far less structured than that which America helped fashion at Bretton Woods; until Trump's appearance in 2016.

While the post World War II era was hailed as Pax Americana, contributing to a period of stability and growth, they also created dependencies and vulnerabilities that would later manifest as economic challenges. Many countries became overly reliant on the US dollar that US economic instability, brought about by its nefarious financial practices, impacted negatively on the world economy — like the 2008 global financial crises centered in the US, triggering the 2008-2009 world economic recession.

US deindustrialization

By the 1980s and 1990s globalization, the expansion of trade and elimination of trade barriers allowed companies to outsource manufacturing to countries with cheaper labor — China, India, South Korea, Vietnam, etc. These countries in the 1980s, 1990s and early 2000s had cheaper labor, but it is no longer true today.

A case in point is Apple's iPhone. Tim Cook, its president, explains why Apple is still in China despite its wages having gone high up relative to its neighboring countries. The underlying reason is that the Chinese government's socialist system, with a capitalist facade, invested heavily in infrastructure and human development and the training and education necessary to provide the advanced skilled labor necessary to manufacture these goods. By contrast, the US, a free-market capitalist system, has not invested similarly for decades. Apple products require precision, special materials and state-of-the-art tooling and China's pool of tooling engineers is readily available. Vocational expertise is deeply chiseled in the Chinese education system. In America, Trump even threatens to privatize education.

The economic environment of the 1980s, characterized by a focus on free markets, often favored capital mobility over domestic manufacturing. Industrial output declined and the migration of American manufacturing jobs abroad propelled America to shift to a service-oriented economy, such as finance, insurance, health care and technology — which will continue to grow and enlarge as these are profitable to the American capitalist class. But this transition has changed the nature of the American workforce and its role in global trade — no longer oriented toward blue collar manufacturing but toward white collar professionals.

This creeping deindustrialization contributed to economic disparities within the US, leading to job losses hitting the northeastern states of the American "Rust Belt" and midwestern states of the American "Heartland" — Trump's MAGA realm, where outdated factories and technology could not compete with foreign manufacturing.

So, Trump, confronted with the demise of the neoliberal order but incompetent to discern its implications, never developed the working policies implementing actual reindustrialization, embarking instead on a desperate extraneous solution to magically reindustrialize America. In his own words, "We're going to put tariffs on, and US corporations will simply be motivated by the free market and their corporate interests to reindustrialize."

Ignoring all evidence to the contrary, this will not happen!