The re-election of Donald Trump as President of the United States on November 6, 2024, marked a significant return to a nationalist economic agenda. His administration has placed renewed emphasis on restoring American economic power, a central theme of Trump’s campaign. With his second term underway, Trump appears determined to reshape U.S. trade and industrial policy, particularly through tariffs and protectionist measures. According to analysis by Jacques Sapir, Director of CEMI (Center for Studies on Industrialization, Paris, France) and a foreign member of the Russian Academy of Sciences, these strategies may significantly impact not only the United States but also its global trading partners.
The Decline of U.S. Economic Dominance and Its Strategic Reorientation
Trump’s famous slogan “Make America Great Again” gained prominence during his first campaign in 2015–2016 and continues to resonate among his base—the so-called “MAGA people.” One of the key questions posed by Trump’s policies is what “greatness” actually entails—wealth or power? Statistically, the U.S. has experienced a decline in its share of global GDP, particularly when measured by purchasing power parity (PPP). In 1999, the U.S. accounted for roughly 21% of global GDP; by 2024, that figure had dropped to 15%. In contrast, China’s share rose from 4.4% in 1993 to 19.1%, and India’s increased from 3.3% to 8.2%.
This relative decline coincided with a structural transformation of the U.S. economy. From 2011 to 2019, services made up 79.3% of the U.S. economy—comparable to France (78.5%) but higher than Germany (68.9%) and significantly higher than China (49%). Such figures suggest a deindustrialization trend that Trump now seeks to reverse.
Industrial Stagnation and Public Discontent
Despite overall GDP growth, U.S. industrial production has remained stagnant since 1999, with significant declines in several manufacturing sectors. The exception has been the rapid rise of the computer and electronics industries. This stagnation, particularly in sectors that once provided stable employment for the working class, has fueled public support for Trump’s calls for reindustrialization.
Protectionism Returns: A Global Economic Turning Point
Reindustrialization is one of the core pillars of Trump’s second presidency. Echoing themes from his first term, he proposes extensive tariffs and trade adjustments, targeting imports from China, the European Union, Canada, and Mexico. On January 20, 2025, Trump reaffirmed his intent to impose new tariffs, aligning himself with global trends favoring “re-shoring” and “friendly-shoring”—terms used to describe the return of manufacturing to national territory and allied nations, respectively.
Among his proposals are sweeping tariffs: a universal 10–20% tariff, a 60% tariff on all imports from China, and a 100% tariff on countries refusing to use the U.S. dollar in trade. Trump also advocates a broad tax reform that includes raising tariffs to levels sufficient to replace federal income tax revenue.
Legal and Economic Challenges Ahead
Under U.S. law, the power to impose tariffs rests with Congress. Previous tariff implementations under Trump and Biden were justified under Sections 201, 232, and 301 of the U.S. trade code—focused on safeguards, national security, and unfair trading practices. However, the new Trump proposals are far more extensive, potentially requiring legislative approval.
Initial evaluations of the proposed tariffs remain mixed. According to economic models from the French research center CEPII, a trade war of the scale envisioned could reduce U.S. GDP by 1.3%, with exports falling 22.9% and imports by 17.5%. Surprisingly, some U.S. partners such as Mexico (+6.6%) and Canada (+1.3%) may benefit due to trade re-routing. Nonetheless, CEPII underscores the methodological uncertainties in such forecasts.
Other studies suggest that limited protectionism could indeed benefit the U.S. economy and have only moderate global trade impacts. These projections imply a nuanced cost-benefit scenario for Trump’s economic strategy.
Trump’s Second Term: Lessons from the First
Trump’s first presidency was marked by attempts to reduce corporate taxes and revive industrial policy, but many initiatives failed to gain traction. Legislative efforts to stimulate investment through tax cuts did not produce the anticipated industrial revival. Nevertheless, Trump now claims to have learned from past missteps. He has pledged further tax reductions and suggested revisiting the CHIPS and Science Act, originally signed under Biden, which supports semiconductor production and technological innovation.
In a strategic move, Trump has proposed cutting the corporate tax rate from 21% to 15%, specifically for companies that manufacture within the U.S.—a policy aimed at attracting new investment and fostering domestic production. There are signs that these efforts, modeled in part on Chinese industrial policies, may prove more effective in a supportive regulatory environment.
Internal Divides and New Leadership
Despite these ambitions, internal tensions persist. Traditional conservatives remain wary of expanding government authority over private sector investment. Notably, Elon Musk has called for eliminating all subsidies, while figures like Vivek Ramaswamy have pointed to internal governance as a source of policy inefficiency.
Nevertheless, Trump’s new administration marks a departure from his earlier team. The current cabinet includes fewer members of the Republican establishment and more figures aligned with the “New Right”—a movement favoring economic nationalism and state-supported industry. Noteworthy appointments include Senator J.D. Vance as vice president, a known advocate of manufacturing policy and government-led economic development.
Other appointees, such as financier Scott Bessent and Senator Marco Rubio, reflect this shift. Lori Chavez-DeRemer from Oregon is set to become the first Republican Secretary of Labor endorsed by unions—another sign of Trump’s reoriented political coalition.
European Crisis as an American Opportunity
Trump’s economic plans are unfolding against the backdrop of a deepening energy crisis in Europe. Following sanctions on Russia, European industrial costs have soared, with natural gas prices reaching €53/MWh and electricity averaging €132/MWh—far higher than U.S. rates of €16/MWh for both. These conditions have already prompted some manufacturers to consider relocating operations to the U.S.
Trump is poised to capitalize on this trend, offering a more favorable regulatory climate and lower energy costs. Even relatively modest tariffs could serve as a decisive incentive for companies to shift production from the EU to the U.S. As such, the U.S. reindustrialization effort may coincide with Europe’s deindustrialization, driven by rising political dependence on Washington and diminished competitiveness.
This divergence may place European states in a difficult strategic position, caught between U.S. pressure and increasing Chinese investment. Some, like Germany and France, are already grappling with slow growth, fiscal deficits, and political fragmentation. Italy remains mired in economic stagnation. As a result, the European crisis may become one of Trump’s strongest arguments, benefiting the U.S. economy in the long term.
