This article first appeared in Forum, The Edge Malaysia Weekly on March 2, 2026 – March 8, 2026
President Donald Trump has shaken up the world economy and the rule of international law in the first year of his second term — ostensibly to make America great again, particularly by reviving US manufacturing jobs.
The president has assumed authority from the US Congress to wage war, impose taxes, make treaties, set budgets, regulate federal-state relations and more.
Tariffs
Trump’s April 2, 2025 “Liberation Day” tariffs were ostensibly his primary means to generate manufacturing employment.
When the US Supreme Court overruled him on Feb 20, he responded by imposing a 10% tariff on all imports, which he raised to 15% the next day.
The tariffs are a blunt means for reviving US manufacturing jobs. The policy assumes US manufacturing jobs have been mainly lost due to what the White House deems “unfair” competition from cheap imports.
Undoubtedly, US and other transnational corporations have relocated production and generally sourced imports from abroad to reduce import costs.
Imposing tariffs on imported goods to raise their prices is supposed to induce manufacturers to relocate production and jobs to the US.
Higher tariffs were imposed on countries with larger goods trade surpluses with the US. This ignores the services trade balance, generally more favourable to the US.
Tariff threats are now among the Trump administration’s choice weapons or means of economic coercion, including sanctions, to advance and secure its interests.
Revenue
The president claimed trillions of dollars in additional tariff revenue for the Treasury from foreign exporters to fund his massive military spending hike.
But only US$264 billion was collected during Trump 2.0’s first year, much higher than before, but still less than 1% of US federal debt.
Tariff revenue peaked in October 2025 at US$31.35 billion, well below expectations, months before the Supreme Court decision.
The Kiel Institute for the World Economy found only 4% of tariffs “absorbed” by foreign exporters losing some export earnings. US importers paid the 96% balance of US$264 billion in tariffs, weakening the impact of Trump’s business tax cuts.
But Trump’s tariffs have not reduced the US trade deficit, not even for manufacturers; this rose to US$1 trillion in 2025, as US$3.15 trillion in imports exceeded US$2.15 trillion in exports.
Although mortgage and loan interest rates have not fallen, inflation continues. The additional tariff revenue would not even have covered the extra military budget Trump has promised.
Congress could have reclaimed its tariff authority, though the current Trump-dominated House of Representatives has not tried.
But with the November midterm elections looming, Forbes reported that the president’s disapproval rating rose to 55% in mid-February, as fewer are confident his administration prioritises curbing inflation.
Financialisation
The US federal debt, around US$39 trillion (RM151 trillion), now requires over US$1 trillion in annual debt servicing from the US$7 trillion annual budget.
Growing by US$1.5to US$2 trillion annually, this unrepayable debt is being “rolled over” for ever-shorter maturities. Hedge funds now hold 27% of US Treasuries, while foreigners, who held half in 2015, now have only 30%.
Treasury bond repurchase — or repo — agreements provide about US$4 trillion in financing daily for derivatives speculation. Another financial crash can wipe out many more trillions of often dubious “value”.
While the US economy, productive employment and research funding diminish, various bubbles of unrepayable debt are growing rapidly. Worse, so-called stablecoins and cryptocurrencies have infiltrated financial markets.
Meanwhile, some US mortgage delinquency rates have reached levels worse than in 2007/08. By the end of 2025, financial news agencies were publishing ominous reports of financial vulnerabilities.
Hundreds of billions of promised investments, coerced from other nations using tariff and other threats, will be invested in US financial asset markets but little of this will create manufacturing jobs.
Manufacturing comeback
Trump has promised to make the US a manufacturing superpower once again, leading the world in technology, computing power and military weaponry. But China leads in many — if not most — areas of recent technological advancement.
Dean Baker, co-founder of the Center for Economic and Policy Research, found the US labour market weakening over Trump 2.0’s first year.
Overall payroll growth and manufacturing jobs growth both declined from former president Joe Biden’s last year.
US manufacturing jobs have long been threatened by transnational corporate globalisation and labour-saving technical change, especially automation.
US policy in recent decades has left the private sector responsible for ensuring US industrial technology leadership and progress. Meanwhile, problems, such as poor infrastructure remain unaddressed.
Trump’s tariffs may also inadvertently reduce US jobs. Many industrial processes require imported parts, with the tariffs proving disruptive.
Trump’s policies have not created enough manufacturing jobs. The president fired his Labor Department’s statistics head in mid-2025 for not reporting enough job growth.
Nonetheless, it reported only 584,000 net new jobs for all of 2025, compared with 1.6 million in 2024, for the US labour force of 165 million.
The Wall Street Journal noted, “The manufacturing boom President Trump promised … is going in reverse.”
The Trump administration could still use the Supreme Court’s ruling to change its strategy to make America great again by drawing better lessons from US economic history and adopting a more pragmatic approach. But so far, it seems unlikely to do so.
Jomo Kwame Sundaram is currently senior adviser at Khazanah Research Institute (KRI). A former economics professor, he was United Nations assistant secretary-general for economic development. He is a recipient of the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.
K Kuhaneetha Bai studied at the University of Malaya and does policy research at KRI.
Save by subscribing to us for
your print and/or
digital copy.
P/S: The Edge is also available on
Apple’s App Store and
Android’s Google Play.
Source link
