The financial advisors of Donald Trump see tariffs as a magic cure for America’s problems, as well as a chance to revive manufacturing, stabilize the dollar as the reserve currency, and reduce exploding public debt.
However, this strategy is based on conflicting financial goals that defy logic and are a property of accounts. Reciprocal taxes, including a staggering 145 % on China, perhaps bring in money for the government, but they also run the risk of long-term stagnation and fractious alliances because they fail to target America’s fundamental economic imbalances.
Trade partners like the EU and India face a significant threat of global economic integration as a result of the tax policy, which could stifle decades of economic development and alleviation around the world.
1.) Bringing back manufacturing
Trump’s team claims that American manufacturing has been harmed by China’s money manipulation, technology theft, and affordable exports.
According to them, offshoring destroyed 50 million American employment, a figure that was exacerbated by the impact of automation at once. However, digital photography replaced analog jobs, e-readers replaced printing, and robotics redefined recently manual assembly procedures—a fact that Trump’s advisors can’t seem to deny.
Manufacturing made up 11 % of the US GDP in 2024, down from 20 % in the 1980s, a decline that was caused by US technological advancement, US failures to retrain its workforce, and changing global supply chains.
Taxes aim to entice factories again and promise to restore America’s “great again” by preventing imports from domestic producers.
2.) preserving the dollar’s position of power
The economy’s position as the world’s reserve currency is also given precedence in the policy. Through BRICS , China and Russia are looking into options, which has prompted Trump to rely on taxes as a barrier.
Trump pledged 100 % tariffs on all countries pursuing de-dollarization in his inaugural address in January 2025. This threat has now materialized, with 14 % tariffs on China and various other countries ‘ levels within 90 days.
These tactics aim to intimidate trading partners into continuing to deal with the dollar while preserving the US’s ability to use profitably. India is at a high risk because of tariffs, which could stymie its ability to access National markets and stymie its export-driven development, with$ 120 billion in US business and$ 437 billion in full global exports by 2024.
3.) reducing debts and funding tax breaks
Lastly, Trump’s administration intends to pay off the country’s$ 36.21 trillion public debt, which is projected to total$ 50 trillion by 2035, while allowing for tax breaks for the wealthy and those making under$ 150,000.
Price income, which is expected to be$ 300 billion annually, is expected to cover these expenses and help maintain the strength of US Treasury securities by keeping the money strong. This trifecta of industrial revival, dollar dominance, and debt management appears strong but falters under scrutiny because each objective undermines the other in a jumble of monetary contradictions.
Contrasts in economics
A review of shared exclusion is the pursuit of a strong dollar and a rebound in manufacturing. A solid dollar drives up the price of US products, pricing them out of trade industry. US exports of goods totaled$ 2 trillion in 2023, less than China’s$ 3 trillion, a gap that was made wider by America’s higher wages and currency strength.
The 1985 Plaza Accord, which devalued the dollar by 50 % against the Japanese yen, helped US exports by 20 % in three years, demonstrating that a weaker dollar is necessary for the revival of manufacturing.
However, devaluing the dollar today would weaken its reserve currency because global central banks, which have an estimated$ 7 trillion in reserves, might convert to euros, yuan, or yen, cutting down demand for US Treasury bonds.
The industry balance and foreign investment in US Treasury securities are in conflict. Because trade deficits, which total$ 400 billion for China in 2023, create dollar reserves, countries like China, Japan, and South Korea, which together hold trillions of dollars worth of US bonds, invest.
Great taxes reduce these deficits by stifling US exports, which results in lower bond purchases. Local use, not just foreign business strategies, contributes to the$ 918 billion trade deficit in the US in 2024.
Taxes could lead to US inflation, which is projected to rise to 3 % in 2025, causing Fed rate increases that could halt economic growth and send a struggling economy into recession. The Fed issued a price cut announcement in 2024, but a weaker money or lower provides did dissuade bond investors, making debt management even more challenging.
The tension between the dollar’s power, Fed rates, and friendship appeal adds yet another layer of vacuity. A strong dollar maintains bond desire, but price reductions lower yields, which frightens foreign investors.
If inflation rises, which will lead to price increases, lending becomes more expensive, creating a tighter governmental buffer for income cuts. These contradictions highlight the vulnerability of the policy: tariffs that aim to revive manufacturing could potentially sabotage other goals like debt financing. Hence, the policy runs the risk of delving into the very goals it aims to achieve.
No unusual villains, but structural flaws.
Trump’s team claims that the trade deficit is the result of a story by foreigners to lie on the US, including China, the EU, Mexico, and Canada, but that America’s fundamental squander is the real culprit. The US runs a$ 2 trillion fiscal deficit of 6 % of GDP in 2024 because it uses more than its means.
The economy’s supply position, which encourages this” spend-now, pay-later” culture, contributes to the current account deficit, as well as the business gap. Compared to China, American households save only 3 % of GDP, while government deficits, which have grown due to tax breaks and subsidies, increase the imbalance.
Both the Republican and Democratic parties bear the brunt of the blame, favoring rich lobby groups and adopting policies that favor profit increases. A Senate-amended budget resolution that authorized$ 5.3 trillion in tax cuts,$ 521 billion in spending increases on defense and immigration, at least$ 4.2 billion in spending cuts, and a$ 5 trillion debt limit increase was approved by the House of Representatives on April 10, 2025.
With international central banks holding$ 7 trillion in resources, the US can borrow cheaply because of the economy’s pleasure. However, this conceals the root cause of persistent US spending. With a$ 2 trillion deficit, taxes are a drop in the bucket when it comes to reducing taxes or reducing debts without changes to rights like Social Security or Medicare.
Trump avoids Washington’s governmental recklessness by demonizing trade partners, putting the country at risk of having trade war that had cost its supporters, including India, Vietnam, the EU, and Canada, trillions in exports and destroy global markets.
Traditional errors only highlight the absurdity. The Smoot-Hawley Tariff Act of 1930, which raised tariffs to less than 60 % ( as opposed to tobacco at 64.78 % ) and sugar at 77.2 %, exacerbated the Great Depression by halting global trade.
Trump’s tariffs, while less drastic, sound this protectionist urge while disregarding the interdependence of contemporary markets. No tariffs can fix the trade deficit, which is a mirror of private choices that include low savings, great consumption, and deficit spending.
A mistaken expedition
Trump’s tariff plan is a quixotic attempt at financial glorification that often leads to failure. Depreciation threatens the dollar’s supply status and relationship demand, while a strong dollar smothers manufacturing.
Taxes does increase profits, but they also increase prices, causing harm to customers and friends like the EU, Japan, and India, whose trade markets are impacted by disturbance. The trade deficit is a reflection of America’s governmental constipation, no foreign hatred, and cannot be resolved by stricter laws only.
Washington must be reining in order to advance, not engaging in trade war. For green growth, it is essential to address excessive spending, including tax cuts and tax reforms that allow the rich and middle classes to pay fair amounts of taxes.
Debating lobbying’s influence on fiscal policy may reduce deficits more efficiently than tariffs, streamlining entitlements, and lowering house discounts. The US has rekindle trust with trading partners worldwide rather than turn them away with protectionist nonsense.
Without these difficult choices, Trump’s vision of American glory will continue to be a hallucination, leaving the US economy weak, the dollar falling, and the rest of the world skeptical of US leadership.
Bhim Bhurtel is a member of the X network, @BhimBhurtel.