“Tariffs is the most beautiful word to me in the dictionary,”
- Donald Trump
In early 2025, the world has watched with concern as the Trump administration has implemented sweeping tariffs against both allies and rivals alike, triggering market instability and international tension. But behind this apparent chaos lies a calculated strategy—one that aims to fundamentally restructure the global economic order that the United States itself created.
The Vision: America’s Re-industrialization #
Trump’s economic team, led by Treasury Secretary Scott Bessent (a former hedge fund manager who worked with George Soros) and top economic advisor Steven Miran (a Harvard economist), has identified a singular threat to American power: de-industrialization.
The numbers tell the story. In the 1950s, manufacturing accounted for 28% of U.S. output; today, that figure stands at just 10%. This decline has had two critical consequences:
- The devastation of America’s industrial heartland, which overwhelmingly supported Trump in the 2024 election
- A strategic disadvantage against rivals like China in terms of industrial capacity, which poses significant national security concerns
JD Vance, Trump’s Vice President, has highlighted the severity of the situation: one of Beijing’s state-owned firms built more commercial ships last year than America has produced since the end of World War II. This industrial disparity raises serious questions about America’s ability to mobilize in case of conflict, particularly regarding Taiwan.
Historical Context: America’s Previous Global Orders #
To understand Trump’s current strategy, we must examine the two previous global economic orders created by the United States:
The Bretton Woods System (1944-1973) #
This system established after WWII required participating countries to:
- Fix their currency values to the U.S. dollar (which was tied to gold)
- Rely on U.S. military protection
- Receive American assistance to develop competitive industries
In return, the U.S. gained staunch Cold War allies, export markets for American goods, and the “exorbitant privilege” of the dollar as the global reserve currency.
However, this system contained an inherent flaw—the “Triffin dilemma.” As the global economy grew, the need for dollars increased, but the gold supply remained relatively stable. This tension ultimately led President Nixon to suspend dollar convertibility to gold in 1971, ending the Bretton Woods era.
The Neoliberal World Order (1980s-2016) #
Ushered in by Reagan and Thatcher, this system featured:
- Lower tariffs globally
- Reduced barriers to international investment
- Flexible exchange rates
- U.S. security guarantees for friendly nations
Under this system, countries had strong incentives to accumulate dollars by maximizing exports to the U.S. while limiting imports. The World Trade Organization even permitted developing nations to maintain higher tariffs against the U.S. than vice versa.
The U.S. benefited from an even stronger “exorbitant privilege,” enabling it to maintain global military dominance despite its relatively diminished economic position. However, the strong dollar made domestic manufacturing increasingly uncompetitive, accelerating de-industrialization—especially after China joined the WTO in 2001.
The resulting inequality and industrial decline helped propel Trump to power in 2016, marking the beginning of the end for the neoliberal order. His first trade war targeted China but failed to halt American de-industrialization or China’s manufacturing ascendance.
The Biden administration attempted to address these issues through massive industrial subsidies, successfully attracting new factories to the U.S., but at the cost of significant government deficits.
The MAGA Master Plan #
Today, the Trump administration appears to be executing a three-step strategy to create a new global economic order:
Step 1: Tariff Chaos (Current Phase) #
The administration is imposing high tariffs on allies and adversaries alike, demonstrating its willingness to accept short-term economic pain to create negotiating leverage. As Bessent has noted, while he didn’t initially view tariffs as a negotiating tool, Trump “added a third leg to the stool” by using them precisely for that purpose.
Step 2: Reciprocal Tariffs #
The long-term goal is to establish a level playing field in international trade. As Bessent explains, tariffs are designed to create a system that rewards “ingenuity, security, rule of law, and stability, not wage suppression, currency manipulation, intellectual property theft, non-tariff barriers, and draconian regulation.”
Critics argue this approach risks repeating the disastrous trade wars of the 1930s. However, Miran counters that America’s unique position as the issuer of the world’s reserve currency gives it unparalleled leverage: “They’ve only got the United States to sell to. There’s no alternative.”
Step 3: A “Mar-a-Lago Accord” #
The ultimate goal appears to be a new global agreement rivaling the 1944 Bretton Woods or 1985 Plaza Accord—one that would allow the dollar to weaken enough to boost U.S. exports and manufacturing while maintaining its reserve currency status.
This new order would likely sort countries into what Bessent calls “green, yellow, and red buckets” based on their relationship with the United States:
Green countries would potentially peg their currencies to the dollar with agreements to appreciate when the dollar strengthens too much. In return, they would receive access to the U.S. consumer market, security benefits, and privileged access to the dollar system—but likely at the cost of paying for U.S. military protection, effectively becoming “vassal states.”
Yellow countries would face more restrictive trade terms.
Red countries would be largely excluded from the benefits of the U.S.-led system.
As Bessent describes it: “The international trading system consists of a web of relationships—military, economic, political. One cannot take a single aspect in isolation. This is how President Trump sees the world: not as a zero-sum game, but as interlinkages that can be reordered to advance the interests of the American people.”
The Critical Challenge: Trust #
The fundamental flaw in this strategy may be the matter of trust. For countries to voluntarily commit to currency arrangements that favor the U.S., pay for military protection, and essentially accept subordinate status requires enormous faith in American leadership and commitment.
This trust was present during the Bretton Woods era and when countries agreed to the Plaza Accord in 1985. But after watching the U.S. tear up existing trade agreements and threaten even close allies, potential “green bucket” nations may be hesitant to place their economic futures in America’s hands.
If the Trump administration cannot persuade other countries to join its new economic order, it faces a stark choice: either abandon the dollar’s reserve currency status and the power it confers, or maintain the strong dollar and accept continued reliance on foreign manufacturing capabilities.
The coming months will reveal whether Trump’s ambitious plan to reshape the global economic order will succeed where previous attempts at re-industrialization have failed—or whether it will simply accelerate the fragmentation of the international system the United States spent decades building.