The long-term strategy behind Trump’s tariffs: A bold plan to reshape the global economic order

President Donald Trump’s recent imposition of sweeping tariffs on allies and adversaries alike has sparked confusion, outrage, and market volatility. Critics dismiss his approach as chaotic and economically destructive, while supporters argue it’s a necessary recalibration of America’s trade policies. But behind the apparent disorder lies a calculated, long-term strategy—one that seeks to dismantle the existing global trade system and replace it with a new, US-centric economic order.

This plan, as articulated by Trump’s top economic advisors—Treasury Secretary Scott Bessent and economic strategist Steven Miran—aims to reverse decades of US deindustrialisation, reassert American manufacturing dominance, and secure the dollar’s status as the world’s reserve currency.

To understand the rationale, we must examine the historical context of US-led global economic systems, the failures of neoliberalism, and the emerging vision of a “MAGA world order”.

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The historical context: Bretton Woods, Neoliberalism, and the decline of US industry

The US has engineered two major global economic systems in the past century:

The Bretton Woods System (1944-1973) – Established after World War II, this framework tied global currencies to the dollar (itself pegged to gold) and ensured US military protection for allies in exchange for economic cooperation.

The US allowed Europe and Japan to protect their industries while granting them access to American markets, fostering rapid reconstruction. However, the system collapsed in 1971 when Nixon abandoned the gold standard, leading to inflation and economic instability.

The Neoliberal Order (1980s-2016) – Championed by Reagan and Thatcher, this era emphasised free trade, deregulation, and globalisation. The US maintained dollar hegemony by allowing other nations to export freely to America while keeping their own markets relatively protected. This system enriched Wall Street and Silicon Valley but accelerated deindustrialisation, as manufacturing jobs fled to low-wage countries like China.

By 2016, US manufacturing had shrunk from 28% of GDP in the 1950s to just 10%, leaving entire regions economically devastated. Meanwhile, China’s industrial base expanded dramatically, posing both an economic and national security threat. Trump’s 2016 trade war attempted to counter this trend but failed to reverse offshoring. Now, his administration is pursuing a more radical solution.

The MAGA master plan: Tariffs as leverage for a new economic order

Trump’s economic team views the current tariff blitz not as an end goal, but as negotiating leverage to force a restructuring of global trade. Their strategy unfolds in three key phases:

1. Tariff chaos: Creating leverage

The administration is deliberately applying aggressive tariffs—even on allies—to demonstrate resolve. As Bessent stated, Trump uses tariffs as a “third leg of the stool” for negotiation. The short-term market turmoil is seen as a necessary sacrifice to pressure trading partners into concessions.

2. Reciprocal tariffs: Levelling the playing field

Unlike traditional trade wars, where countries retaliate asymmetrically (e.g., China raising tariffs higher than the US), the Trump team aims for true reciprocity—ensuring no nation can maintain unfair advantages. The goal is to force a rebalancing where:

Green countries (Allies) – Receive low tariffs, military protection, and dollar access in exchange for economic alignment.

Yellow countries (Neutrals) – Face moderate trade restrictions unless they make concessions.

Red countries (Adversaries) – Are economically isolated.

3. The Mar-a-Lago Accords: A new Bretton Woods?

The ultimate objective is a new global monetary and trade agreement, akin to the 1944 Bretton Woods summit. Key elements may include:

Currency adjustments – Persuading allies to let their currencies appreciate against the dollar, making US exports more competitive.

Security-for-trade deals – Nations that align with US economic policies gain military protection (but may pay for it, unlike in the past).

Reshoring incentives – Tariffs would decrease for countries that support US reindustrialisation, while those resisting face exclusion.

Can this plan work?

Economists remain skeptical. Historically, trade wars have often led to mutual economic harm rather than negotiated wins. However, Trump’s team argues that the US holds unique leverage:

The dollar’s reserve status – Countries need dollars for trade, giving America outsized bargaining power.

Military dependence – Many allies rely on US security guarantees, which could be contingent on economic cooperation.

No alternative markets – China and Europe lack a consumer base as vast as America’s, making US market access indispensable.

Yet, the biggest obstacle is trust. Past agreements like NAFTA and the Iran nuclear deal were abandoned unilaterally by Trump, making nations wary of long-term commitments. If allies refuse to join a new “MAGA order”, the US may face a stark choice: sacrifice the dollar’s dominance to regain industry or retain financial supremacy while relying on foreign manufacturing.

A high-stakes gamble

Trump’s tariff strategy is not impulsive—it’s a deliberate, high-risk effort to rewrite global economic rules in America’s favour. Whether it succeeds depends on whether trading partners accept a system where the US regains industrial strength without relinquishing financial hegemony.

If the plan works, it could revitalise American manufacturing and secure long-term prosperity. If it fails, the result could be economic fragmentation, slower growth, and a weaker dollar. Either way, the world is witnessing the birth of a bold—and controversial—new vision for global trade.

Sources:

Bretton Woods System (1944-1973)

US Department of State – The Bretton Woods Conference, 1944

IMF – The End of the Bretton Woods System (1972)

Neoliberal trade Order & Deindustrialization

Peterson Institute for International Economics – How the China Shock, Deep and Swift, Spurred the Rise of Trump

Economic Policy Institute – The China Trade Shock and US Manufacturing Job Loss

Trump’s Tariff Policies & Economic Strategy

The White House (Archived) – President Trump’s Trade Policy: Putting American Workers First

Brookings Institution – Trump’s Trade War Timeline

Dollar Hegemony & Reserve Currency Debates

Council on Foreign Relations – The US Dollar as the World’s Dominant Reserve Currency