There is a giant problem that commentators are ignoring. The United States’ trade deficit is of incredible proportions and is only sustainable because the dollar is the world’s reserve currency – a status it is going to lose.
The US trade deficit in 2024 was approximately 1.2 trillion dollars. GDP was approximately 30.1 trillion dollars. That’s a trade deficit of an eye-watering 4% of GDP. By contrast, the EU had no significant trade deficit as a percentage of GDP. Zero. Even the chronic UK trade deficit was only 2.2% of GDP.
Does it matter? Well, historically not much.
The US, as the world’s reserve currency, has been able simply to create more dollars through bonds or quantitative easing to finance its trade deficit. Nobody – including the US Federal Reserve – really knows how many dollars exist in the world. On the wide M3 measure encompassing cash, bank accounts, government bonds and all other instantly convertible dollar-denominated instruments, it is believed there are about 21 trillion dollars in the world. (This is a measure of money, not of assets such as property and shares).
Nobody knows how much of this money is held outside the United States; about 65% seems a broad consensus but you can find estimates from reputable institutions ranging from 45% to 75%.
Because the US is the world’s reserve currency and essential to trade, at least half and probably most dollars exist outside the US economy. That is what is unique about having the world’s reserve currency. It means nations will always be willing to borrow from you more money you have just created, to finance their purchases of oil, grain and other essentials and luxuries.
What prevents governments in general from just printing more money is fear of inflationary effects by devaluing the currency (though the notion that this is a simple relationship is less prevalent now than at the height of monetarism). However, the unique advantage of the United States is that any domestic inflationary effect from creating more dollars is effectively buffered by the fact that most dollars are not in your economy: they are in other people’s economies, or sitting in overseas reserves. You can thus create dollars without creating much domestic inflation.
So it is great to have the world’s reserve currency. There is no danger of the US not being able to finance trillion-dollar trade deficits in the next few years. But for how long?
What the trade deficit actually is, in practice, is the world giving the USA astonishing quantities of very real goods in exchange for some transferred data or bits of paper. That depends on a confidence which is waning.
In the simplest of terms, in 2000 the USA had approximately 30% of world GDP and China approximately 4%. Now the USA has approximately 26% and China approximately 18%. In manufacturing, China has overtaken the USA.
Attaining world reserve currency status ultimately depends on trust around the globe that your currency represents the best store of value. It is a status essentially linked to economic performance.
Famously, nations which moot using other currencies than the dollar for trading, particularly in oil, are immediately targeted for regime change. This represents a realistic appraisal by the USA of the importance of retaining its global currency status. In time, people and institutions are simply going to want to hold yuan not dollars. The dollar-oriented Bretton Woods institutions are already losing ground to Chinese finance in importance to development in the Global South.
Proposals such as a BRICS basket of currencies for trade are only symptoms of the coming change; the configuration of institutional and trading arrangements as the dollar loses its dominance do not affect the big picture.
How crypto will ultimately fit in with the governmental systems is a very large question. If it does have a significant role, that too can only be a threat to the dollar’s necessity for trade.
To circle back, the US cannot enter the period of loss of reserve currency status with this level of trade deficit. Whether Trump sees this, or is rather fixated on the social effects of globalisation and the gutting of manufacturing in Middle America, I do not know.
Leaving aside the total chaos of Trump’s on/off tariff implementation, I do not see how Trump’s policy can succeed. The difficulty is that America’s manufacturing capability has been destroyed. There are no great rows of blast furnaces sitting there just waiting to come back on and replace imported steel.
Take the cotton industry, once massive in the USA. The 46% tariff proposed on Vietnam and the 37% on Bangladesh relate primarily to imports of clothing. The cotton textile industry is a fine example of the effects of globalisation. Levi Strauss, Fruit of the Loom, Hanes and Carhatt outsourced their factories to Latin America and Asia, almost entirely ending US production. American Apparel tried to hold out, but went bankrupt in 2017 and now produces largely overseas. Only niche production (organic or upmarket) remains.
This has happened since the 1990s – Levi Strauss, for example, stopped all US manufacturing in 2003. Entire cities were devastated. The Amalgamated Clothing Workers of America (ACWA) union folded for want of members.
But can the clock really be turned back? The factories are gone. Will sticking a 46% tariff on Vietnam cause Fruit of the Loom or Levi Strauss to return manufacturing to the USA, or will it just make clothes more expensive in the USA? That might itself reduce the trade deficit by causing people to buy less clothes. But for cotton manufacturing to return to the USA, entailing massive investment, companies would have to be certain the tariffs were permanent. That appears to be the least likely obstacle to overcome. Tariffs would also have to be sufficiently high to overcome the difference in labour costs; that is dubious.
The USA is still a massive exporter of cotton, in large part to those countries where it is manufactured into textile and sold back to the USA. Whether there is a labour force inside the USA waiting to work in textile and clothing factories I am less sure. Insofar as there is, I suspect Trump is trying to deport it.
I have just taken cotton as one example, but import substitution is much more difficult to achieve than to say. I am not such a fan of globalisation that I automatically decry tariffs. I enjoy cheap Chinese electronics and inexpensive underpants as much as the next man, but the profits have disproportionately gone to the billionaire class while working class manufacturing communities have indeed been devastated. But you can’t run an economy on nostalgia.
Trump’s tariff policy has been astonishingly chaotic and is not well articulated. But the underlying dynamics repay study beyond mockery, and the problem he is seeking to tackle is very real indeed. Those viewing Trump’s proposals as a joke need to say what they would do about the US trade deficit. Because the world is not going to supply them free goods forever.
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Trump’s trade calculations appear to be based on goods only and don’t include services. How much do global citizens pay American companies for subscriptions to services like Netflix, Amazon Prime, Disney, Spotify, Microsoft etc etc etc? Surely when taken into account many of America’s trade deficits with other nations become trade surpluses.
Irrespective of how Trump calculated his tariffs, the 4% of gDO trade deficit figure of 1.2 trillion dollars does take into account American exports of invisible.
I must admit I’m not very familiar with gDO computing, but meanwhile trading balance and domestic product are basically unrelated. So Janice might still have a point here. Actually, several European finance ministers agree with this, for what it’s worth. Precisely because of the invisibles…
That’s wrong. 1.2 trillion is goods only. In services the surplus is about 300 billion, so the overall trade deficit is only about 900 billion.
There’s also about 300 billion of repatriated profits from US investments abroad that help finance imports.
Janice, i remember recently reading that the average UK household pays out around £2500 a year to US owned service industries.
Here is my proposal. All countries cease all trade with USA. We buy nothing from them and sell them nothing. The other 7.7 billion people on the planet can take up the slack.
Well, yes, but how are you going to persuade them? My wife and I have been a 2-person boycott of US exports for years; for example we order new books from Blackwells and we run Linux and LibreOffice on our computers – nothing from Microsoft. But I think you’ll find that a very hard sell to the majority of people.
Maybe the Americans will do the persuasion themselves….
“In a move that stunned traders, analysts and policymakers alike, China has just announced a complete halt on all liquefied natural gas imports from the United States. ”
https://johnmenadue.com/post/2025/04/us-lng-crippled-as-australia-seizes-us1-5b-trade-overnight/
There are other signs the worm is turning.
On a semi related note, Microsoft is reintroducing its recall ai feature into win 11. The ai takes a snapshot of what your doing on your PC every 3 seconds.
https://www.theregister.com/2025/04/11/microsoft_windows_recall/
Every non US government on the planet should be switching entirely to Linux. If the above ain’t spying I dunno what is.
Manufactoring, once outsourced overseas, cannot be just started up. It takes years to get the infrastructure in place and the supplies lines, then you need the skills – once these are lost it takes decades to educate and train – assuming anyone is interested in ‘real work’. Even if Trump’s policies were correct, it would take decades to see the impact. And, in the meantime the rest of the world has moved on.
The UK has also been gutted by various governments, but particularly the Tories, I cannot see a way back, apart from free trade with the rest of the world.
China never wanted to trade with the west because we didn’t have anything they wanted. Then, thanks to silver, Opium and Mao things changed. Now they want to trade, but still they don’t really need us, but we truly need them.
I have read threads suggesting that what Trump is attempting to do with tariffs (apart from line the pockets of his billionaire friends through insider trading) is to force countries to chose their side, and so partially isolate China. The 90 day pause ( that does not apply to China) is designed to allow time for countries (e.g. Vietnam) to cut a deal with the US. That deal requiring them to trade primarily with the US and not China; i.e. you threaten a nation, then give them an opportunity to cut a deal with you. Mafia style, or ‘the art of the deal’, depending on your viewpoint.
I’m not sure I buy it; for one thing I think the idea of Vietnam cutting trade links with China would be a non-starter, but maybe for Latin American countries might go for this.
Interested in the thoughts of others.
Additionally, as if to prove your point Craig
https://www.yicaiglobal.com/news/aseanchina-japan-and-south-korea-add-yuan-to-currency-swap-network
responding to Trump’s tariffs ASEAN countries, inviting China and 6 Arab countries, will organise an international conference in Kuala Lumpur (Malaysia) in May –
https://www.thestar.com.my/news/nation/2025/04/12/m039sia-to-host-historic-asean-gcc-summit-with-china-also-invited-says-anwar
Yes. Seen this too. A china trading block vs US block split has always been on the cards for some point in next 10 years.
The coups, attempted coups, refusal to accept impeachments around the world point to that – South Korea, Romania, Pakistan, are just the better know examples, all where US has a hand on one side or other. Grabbing at Canada/Greenland/Ukraine natural resources is also part of this.
It did feel like Trump full tarriffs could make it US vs everyone else, and yes the 90 day pause does make it look like he wants the world against China.
Agree it won’t work. At present nobody’s tarriffs with China have changed so rest of world trade with China can grow. The Brics/SCO network is strong and plenty of countries like Turkey are likely to choose Brics ahead of Nato.
If anything the chances of core EU staying with US have probably dropped from 98% to 80% – quite a big risk increase.
Yes, I agree with pretty much of that.
As Craig points out the US economy is in a deep, deep hole. One that’s essentially been growing since starting expensive military adventures overseas in Korea, whilst maintaining standards of living in the US not supported by the country’s earnings. The Nixon Shock decoupling from gold and the Petrodollar system were fixes, but they only work as long as the US has full spectrum dominance.
As I see it, the US economy works largely as a massive ponzy scheme (or Mafia style protection racket) hence the need for a huge military and 800+ bases around the World. You can only persuade people to give you their goods in return for bits of paper for so long, unless the alternative is the ‘boys are sent round’, ‘That’s a nice country you have there, it would be a shame if anything happened to it’. China and Russia are now testing that system, the irony being that the US has forced Russia to develop alternatives.
I think the big concern is that, IMO, the US is currently run by unhinged fanatics. It seems likely that this attempt to economically isolate China will fail; what is happening in Gaza, Syria and Lebanon shows the lengths they will go to to achieve their ends if non-violent methods don’t work.
“what is happening in Gaza, Syria and Lebanon ”
… and what happened to Libya after it proposed pricing its oil in Euros instead of dollars.
There seem to be a lot less coups these days than there used to be. I reckon there’s a network that’s monitoring and sharing the activities of the Western spooks and ways to counter them.
Steve Hayes
There are a lot less “colour revolutions” these days, because countries got wise to US machinations, and have learnt how to head them off. Syria happened in December because Asad made a big mistake, and, perhaps, was not very interested in staying in power (remember Bashshar was chosen because his brother was killed in a car accident).
Great article here, along similar lines, by Mike Whitney at the Unz Review:
“Trump Concocted the ‘Tariffs Hoax’ to ‘Decouple’ with China”
This site doesn’t allow links to the Unz Review so search Unz review with your favourite search engine.
Article: Unz Link /trump-concocted-the-tariffs-hoax-to-decouple-with-china/
Thare’s a short video at the end from Arnaud Bertrand which is well worth looking at.
Thanks. good article.
I don’t think Trumps actions are really anything to do with lowering imports, I think he’s effectively making a GDP grab. It is inevitable that if the tariffs stay in place some manufacturing will return to the USA. Will Americans really pay 145% extra for an iPhone, very doubtful, will Apple allow itself to be pushed out of its own domestic market, also very doubtful.
If he is successful in bringing back even a few hundred billion dollars into the USA the trade gap will narrow as a percentage of GDP and he will claim victory, undoubtable as the small business go to the wall he will shout about the big business that he re-shored.
You could argue that its all part of the global plan to make sure you don’t actually own anything, that everything you have is “rented”. Get rid of all those inconvenient small business and create a fully controllable economy, run purely for the benefit of the ultra rich.
Some people appear willing to pay almost anything for Apple products. Beats me why. Slick marketing, I suppose.
It’s a bit like Coca-Cola. The stuff damages your health and didn’t taste particularly good last time I tried it (admittedly, a very long time ago). But masterly marketing can evidently persuade the masses to buy almost anything.
Re: ‘The stuff [Coca-Cola] damages your health’
Warren Buffett’s still with us at 94, Townsman. The story goes that he was looking through some actuarial documents one day and discovered that six-year-olds have the lowest death rates, so he decided there and then to only eat and drink the things they do.
Trump’s irrational policies (including putting crackpots and incompetents at the head of government departments) may well lead to a world recession. But countries outside the US can form trade agreements with each other to mitigate the damage. Hopefully the damage within the USA will destroy the Republicans in future elections, and the policies of people like FDR, Bernie Sanders and (hopefully for younger people) AOC will have a revival, and the Second Gilded Age will be no more!
But there’s another problem in America – lack of patriotism. I don’t mean lack of flags and baseball caps. I mean half of the electorate failing to their duty as citizens by voting, because they don’t care enough about the survival of their democracy. Another fraction choose to believe Trump’s lies about reducing prices. That’s how Americans get the governments they deserve. I’m not rejoicing at the thought, though Putin might. I hope the last line of defense, the judiciary holds, so that with this plus the activists already mentioned, American democracy may recover eventually.
Turnout in the last two US presidential elections has been around two-thirds, MJ, higher than the 60% turnout for last year’s general election in the UK. Don’t forget that in the UK, we have the Lib Dems (who these days get around 10% of the vote) as well as several other parties like the Greens, Reform UK, and the SNP & Plaid Cymru in Scotland & Wales respectively. In the US, outwith the GOP & Dems, they only really have the Libertarian Party and the Green Party, neither of whom I believe currently have a single seat in Congress or any state legislature.
I stand corrected, concerning the turnout; the turnout according to wiki was 64% of the eligible population, a little better than the UK’s, as you say.
“because the dollar is the world’s reserve currency – a status it is going to lose”
I keep hearing this, but it doesn’t seem to happen – largely because people want it to happen but don’t understand what money is.
Money is:
1. medium of exchange (what actually settles the deal). This is easy to replace with electronic settlement.
2. A pricing Unit for short term and long term. With all the hedging infrastructure for FX and commodity prices build around USD as a base currency, the importance of the USD is not going away.
3. A Store of value (where do those with the big surpluses put their money).
The alternative media rightly celebrates that Brics is coming up with alternatives to USD for settlement – but this is a trivial victory.
The Price on the Ticket is difference. If Russia sells China oil for monthly delivery over next 2 years the settlement is probably in Rubles. But be sure that the price on the deal is USD, with an agreement to switch to Rubles at the fixing price 2 days before settlement date.
No one is trading oil for dates 2 or 3 months out (and up to 4 years) priced in anything but the dollar.
Finally Store of Value (reserves). Imagine you are Japan, say with a $ trillion of foreign currency reserves to place (or a big corporate or a S American drug dealer with $ 10 billion). You need to find short term assets that are seen to be safe and liquid which you can invest into in minimum amounts of $ 1billion a hit. And get them out in $ billion shots! And find alternatives in that size.
There is no alternative to US money markets and won’t be one until China starts to issue highly liquid low risk short term assets in huge quantities. That won’t happen until China runs a trade deficit of $ 1trillion a year. Right now China is $ 2 trillion short of that.
It will not be trade that destroys the US currency, it will be a credit credibility crisis. Reserves can’t really be moved out of USD, but if the dollar collapses they can simply be devalued to zero, USA’s ability to run a continued trade deficit disappears, and new reserve currencies will be formed by the future trade deficit countries.
“That won’t happen until China runs a trade deficit of $ 1trillion a year”
I learn every day. Before I read your comment, I thought China was having a trade SURPLUS of about this amount. But then, short of is slightly misleading…
https://tradingeconomics.com/china/balance-of-trade
No 3 is what makes it a “reserve currency”. No 2 doesn’t actually require any dollars to operate.
Economists keep saying that, but evidently none of it is true:
Money is not a medium of exchange, it can be a subject of exchange, in that you can exchange things for money. Or other things. Money is not what makes an exchange a trade.
In barter trade, virtual currency is involved as a measure of value, but that assumes that the value of the currency does no longer change. But where money is used directly, its value does change constantly due to fluctuation and inflation. Measuring things in monetary units is often useful (when you want to exchange something for money), but for exchanges of anything else, monetary units are not a reliable or even useful metric, and not only because a metric that becomes a target stops being a metric. (Not that that would stop economists from using them as such anyway.)
And because money has no intrinsic value, it is also not a store of value. What you get for a fixed amount dimiuishes exponentially due to inflation. At most, money can be a cache of credit, but so can Pokémon trading cards, which are not money; and private surplus wealth (not necessarily measured in USD, see above!) is typically stored in things that do have intrisic value, such as land, factories, or overpriced art pieces – things not affected by inflation. (Countries, not being private entities, stash trade surplus as money reserves instead, but they can always dump their reserves, thereby intentionally devaluing that currency for international trade, like the former colonial powers do with African currencies.)
What money actually is is a means to pay debt; in particular, taxes, duties, fees, and fines. This is what gives money its value, as long as it is accepted (in lieu of goods and services) by the respective issuing government.
This is why there is actually no world reserve currency. The Bretton Woods agreement tried to make gold the thing that backs all currencies (other than the Soviet Union’s ruble), and that agreement fell apart when Nixon decoupled the USD from gold. The thing that backs the USD now is the world’s dependency on oil, which should have ended forty or fifty years ago, and not just because of the oil shocks. But as our gracious host described, the USA shy no costs to keep the world on the petrodollar. (Not always successfully: Venezuela sell their oil to Cuba in Euros (which is not no-one!), despite hundreds of failed coup attempts. And Russia is selling its oil in rubles; according to the latest available data its biggest customer is the USA, and it is no secret that the USA would like to see a regime change in Russia. Plus, renewable energy is much cheaper than oil, and renewable.)
But you might be interested to know that China offers a digial Yuan to its trading partners, similar to the digital Euro and digital CHF used in Europe for international short-term loan purposes. There is your highly liquid low risk short term asset.
“So it is great to have the world’s reserve currency.”
Exactly. Or to phrase it as Mel Brooks used to: “It’s good to be the king”
Some people make fun of Americans for being obsessed with the British royal family, but they don’t seem to realize that the true power is and will remain on the other side of the pond.
1000% agree. The US trade problems are real. It’s just that Trump’s approach to addressing them is a joke. Also, it’s likely to prevent others from trying to fix these problems for many decades I’m afraid – enough that billionaire-owned media decry any proposals as “Trumpism” and reforms will go nowhere. To the detriment of millions of hard-working Americans.
One thing is missing from the discussion. Is Trump making the US stronger in the long term? And is a stronger US good for the world? From my comfy chair in Europe, I support that idiot wholeheartedly: his incompetence is getting us closer to the end of American dominance faster than anyone would ever foresee.
Again, would that be good for the world? Would the UK and Europe be able to find their place in the suddenly China-dominated world? Would China take over economic exploitation of poorer nations, as they’ve been doing internally anyway? Curious to hear your insights.
China, in its long history, has never been interested in overseas military adventures or colonisation. China’s fleets explored much of the eastern hemisphere in the Ming dynasty (before the British and even before the Portuguese) but the object was peaceful trade, rather than colonisation.
Talk about Chinese “domination” comes mainly from the USA; Americans seem to have difficulty in understanding any kind of behaviour other than fighting and domination. A world in which China is the biggest economy would probably leave other countries freer to set their own paths. Just don’t expect China to act as the “world’s policeman”; I don’t think they’d be interested.
Capital always goes to where the profit is greatest, a western corporation ‘must’ invest the share holders money in the best money making place, in fact the CEO of a company is legally required [fiduciary duty] to do so, patriotism is not the overriding factor in these decisions. The Chinese [as an example] pay the cheapest wages and is the fastest growing market in the world, it also has an educated workforce, when western capitalists were invited to China, they went, they also sold or promised to share all their technology, nobody stole anything. True to form capital did make huge profits. Some time ago this would be looked at as ‘the American way’ and those “capitalist running dogs” would be lauded as good Americans. Because the Chinese have now proven to be better capitalists than the Americans/Europeans, that realization has come home to roost, ‘They cheated,’ no they didn’t they are simply better capitalists than you. Now you must suck it up or more likely you will try and disrupt, contain or generally sanction those countries supplying China with raw materials or other goods vital to the Chinese manufacturing economy. Also encouraging and arming US allies, the Philippines and Taiwan to act as proxies i.e, Ukraine. The US has been bragging about Taiwanese chip makers investing billions in Texas, the US are seriously thinking ahead here, proof they are hedging their bets regards defending Taiwan. Considering all these machinations I am sure the Chinese have factored them into their future, and, short of nuclear war, the US can do nothing about it, or can they? Calling John Bolton.
Kacper,
America has created its own financial and economic woes.
At present it is in debt beyond 35 trillion dollars – a self-inflicted wound.
While soldiers, navy sailors and fighter pilots all have jobs in the military it is still hard to justify and/or rationalise one country having about 800 military bases scattered across the globe. It is a horrendously large expense to maintain this level of militarisation but Eisenhower in his farewell speech had warned about what would happen. Now, the US economy is wedded to militarism:-
https://www.youtube.com/watch?v=Gg-jvHynP9Y
Now, we find Trump pleading for understanding and sympathy by claiming victimhood, when the true story is quite the reverse:-
https://www.globalresearch.ca/tariffs-trade-paradox-biggest-exploiter/5884109
The military-industrial complex is a source of employment as well as wastage – it does not produce goods for consumption and global export, so it does contribute significantly to the deficit and remains a threat to peace in the world.
Trump’s policies are based on false assumptions, lack of honest analysis, and self-inflicted wounds. By way of example, since China provides some critical items for the US economy and US consumers – what sense is there in starting this trade war with China while not having any readily available alternative supplier to turn to. At 145% tariff rate America is more harming the US consumer than China while Trump brags to the world that world leaders are coming to him for “Kissing his arse” ( his diplomatic phrase – not mine).
As Craig says about halfway through his post, “Famously, nations which moot using other currencies than the dollar for trading, particularly in oil, are immediately targeted for regime change.” I’d suggest that having 800 military bases scattered around the globe helps a great deal to make that threat credible.
Yalt,
” I’d suggest that having 800 military bases scattered around the globe helps a great deal to make that threat credible.”
Indeed – but can it be sustained in the current world environment?
As Craig pointed out, as long as the US dollar is the global currency, countries will keep stocking it however much is printed. A circular economy of sorts: the US military ensures constant demand for US debt worldwide, and the revenue is spent to sustain the military among others.
Trump didn’t grasp that – he seemed to believe that foreign spending made the US poorer… whereas it was the main mechanism to guarantee the US gets richer and richer.
Not the only mechanism: soft power was another one, mainly exerted through the Bretton Woods institutions. US funding for them, and for many UN agencies, was aimed to ensure that half of the globe did not enact own protectionist policies, move away from the dollar, etc. It’s well documented. And Trump again failed to understand the significance of that investment.
If these mechanisms ensuring US influence go, or at least get significantly weakened, will it be a relief for the developing world, or will China take over with similar ruthlessness?
Apres moi, le deluge.
Nothing in the current world environment is sustainable, and I doubt there are any illusions on that score. It’s just a matter of getting to one’s personal finish line with one’s wealth and comfort intact.
“Trump didn’t grasp that – he seemed to believe that foreign spending made the US poorer… whereas it was the main mechanism to guarantee the US gets richer and richer.”
That does seem to be the case, which is worrying.
Dear CFRB, the so-called US national or govt “debt” is just the accumulated savings of the US private, and foreign external sectors.
It’s neither a “good” nor a “bad” thing; it simply exists, and will continue to do so unless and until it is spent on USD-denominated goods or services (at which point some taxes will be imposed and the dollars deleted), or used directly to pay US-imposed taxes.
The US has been enjoying a great deal, importing real stuff, created by sweated foreign labourers, in exchange for little portraits of Benjamin Franklin, but the real problem is not the resulting national “debt” (effectively a deposit account facility for those dollar earnings)… but the fact that in exchange for those real goods, the US has handed over what were American jobs, and imported what was previously foreigners’ unemployment – with all the damaging domestic social, economic, and political effects with which we are now so familiar.
Regarding US military spending; this seems to be about the sole ideologically-acceptable recipient for generous amounts of govt spending in the US economy.
Disastrous that it is so pernicious and destructive, and the fiscal multiplier is so notoriously poor, but remember money does not stop at first use, so, whatever remains after taxes on those transactions, the dollars paid to defence recipients continue to circulate within the economy, impelling other economic transactions not necessarily connected to the military.
Ofc it could be better spent, but we are talking about the idiocracy/oligarchy that is the USA!
Best, Mr S
That is a myth. There is no such legal requirement.
There is a contractual obligation for the CEO to obey the board of directors. This may require investing in the most profitable opportunities, or even abandonding the business model, or declaring bankruptcy and selling off any remaining assets or swallowing the debt from other businesses. But doing any of those things is subject to contract; no law requires doing any of those things specifically.
Keeping the myth alive is very useful to the locusts, but that doesn’t make it a fact.
Here is an excellent article from a US industrialist who knows by experience the perils of having US re industrialize [not that it s a bad thing] and the issue of Trumps tariffs. Because he has managed businesses in the US and China, he notes that it takes a long time and is very expensive to set up or move a business, he lists 14 examples, one of which I have listed here..
The labor does not exist to make good products.
9/ There are over a billion people in China making stuff. As of right now there are 12 million people looking for work in the United States (4% unemployment). Ignoring for a moment the comparative inefficiency of labor and the billions of people making products outside of China, where are the people that are going to do these jobs? Do you simply say “make America great again” 3 times and they will appear with the skills needed to do the work?
And where are the managers to manage these people? One of the reasons why manufacturing has declined in the United States is a brain drain towards sectors that make more money. Are people who make money on the stock market, in real estate, in venture capital, and in startups going to start sewing shirts? It’s completely and totally unrealistic to assume that people will move from superficially high productivity sectors driven by US Dollar strength to products that are low on the value chain.
The United States is trying to bring back the jobs that China doesn’t even want. They have policies to reduce low value manufacturing, yet we are applying tariffs to bring it back. It’s incomprehensible.
https://twitter.com/molson_hart/status/1908940952908996984
The west cannot compete with the global south. We have become too soft, too complacent and overburdened with bureaucracy, DIE, regulations and health and safety. We had an example recently where a 20p biro would cost well over £10 within the NHS because of the bureaucracy needed to buy it. Our existing industries aren’t lean and mean or competitive any more. When I was an apprentice I trained with skilled craftsmen who had a lifetime of experience, those people don’t exist anymore and you cannot magic up that experience overnight. And a room of young, spotty computer types cannot supply the basic intelligence and experience in their wonderful AI apps.
China is the future, Russia is the now and the West is the past.
Good article. I would think that should the US have behaved properly to the rest of the world and seen its reserve currency status as something to be used fairly – is fiduciary the word? – and to work with the rest of the world on, as the Chinese say – win win, they may have found more sympathy. However, living in Canada, I can only see their present behaviour as a great opportunity in which to chart our own sovereignty and run our own affairs – can you think of anything stupider than trucking car parts back and forward over a border to build a car! We are rather like Russia (Russia’s doing fine under sanctions), we are a huge country with many resources, a well educated population, and somewhat of an industrial base. We can grow our own internal markets and manufacturing and use the profits to invest in the country – not multinationals, casinos etc. We can run our own foreign policy. We can make friends with the rest of the world – China, Russia, Iran and everyone else. We can stand against Israel and genocide. We can be so much better if we tried. We might even become a democracy which works!
Sorry about Paypal. Miniscule contribution reinstated through direct deposit. Scotland forever!
The main topic that Trump was supposed to be good at – the economy – he fails miserably. Tesla stock is down some 38% past 5 months. I am sure if Kamala Harris would rule that stock would probably be up 38% by now so Trump policies makes no sense.
One thing I do not get is, first, why impose these irrational high tariffs and secondly why impose it on so many nations on the same day knowing full well that the economy will take a huge hit? And then the next day pausing the tariffs. This flip-flopping by Trump have already damaged the credibility of the US market for investors, perhaps for years to come. How many american companies will not go bankrupt because of these policies by Trump?
It seems that if Trump is wrong on one thing he will not admit that he was wrong and instead keep going the other way even though it will only backfire on him even more.
It is insane how 1 man and his whim-of-the-day control world economy like this.
Craig hints at one aspect of this; much of the goods China exports are made for US corporations and it’s they who are making the big profits not the Chinese. I didn’t notice the price of Levis come down when they moved manufacturing to Asia, a pair of 501s might still set you back £70 and Levi makes a profit of nearly $4 billion. The same is true of the likes of Apple and Microsoft. Toy maker Mattel’s CEO gets paid more than their entire Chinese workforce. Even Trump’s buddy Musk has a factory employing 10,000 making Tesla’s in China.
Whilst it might be no bad thing to see these companies have their wings clipped they still have enormous power in the US and aren’t going to be too pleased at having their profits threatened.
You are correct on this one. My 1st Levi 550s bought in 1992 were made in the USA and priced at $28.50; my 2nd pair of the same 550s bought a couple of years later was made in Mexico but priced at the same $28.50. When Ford moved manufacturing to Mexico, the Fords haven’t become less expensive, although the average labor cost in Mexico was around $4.50/hr compared to ~$20/hr in the USA. This is exactly why globalization increases inequality: corporation get higher profits, workers lose their high-paying jobs in manufacturing and have to take low-paying jobs in service..
Thanks for your example, Yuri. It clearly shows that, by finding a way to reduce costs, a business nevertheless doesn’t reduce the retail price of the product, thereby maximizing its profits.
Capitalism
I recently learned that in my country during the communist period, under Stalin’s regime, every April there was an Annual Price Drop.
Unbelievable!
I’m not a communist at all, but I find this to be one of the advantages of a non-capitalist economy.
“It clearly shows that, by finding a way to reduce costs, a business nevertheless doesn’t reduce the retail price of the product, thereby maximizing its profits.”
Such behaviour long long predates the idea of Capitalism. It’s how we trade and always have done.
Yes, they did this 6 times in 1948-54!
If you examine the arguments against deflation, they seem to boil down to it being bad for debtors, as their debts increase in real value and bad for economic growth. The first is only a bad thing if you have the majority of the population in debt, with the government leading the field by a long way. I doubt that this was the case in the Soviet Union in 1948-54. The second is only bad if you have a powerful section of the economy making money by charging interest on loans, as without growth, the debtors cannot afford to pay their debts. I doubt that the Soviet Union was like that either.
Absolutely agree, Bayard.
My parents’ generation (born after the war) is still skeptical about the idea of buying on credit. They are used to earning money first and only then buying, that is, with their own funds. But their tactics made sense in their time and in their position as people who own housing and land and work at a state enterprise with all the social, health and pension guarantees. And their purchases were mainly made for consumer purposes.
In my generation, this didn’t work. There were no state guaranteed benefits, no jobs, no free education etc. I provided myself with work and other necessary things, and I would not have been able to buy housing and commercial premises without bank loans.
An even younger generation now has different realities.
They don’t see the point in buying anything at all, preferring to rent, this applies to both real estate and transport. Only when they start a family they may decide for mortgage, since we have a significant “maternity capital” – a state payment for the birth of a child. This is often used as a down payment on a mortgage loan.
Yuri, I’m curious if the end of that practice of lowering prices on consumer goods is connected to Stalin’s death in 1953?
There is an opinion that Ukrainians are such a special mentality, who will not let go of what they have got into their hands. I mean, lowering prices while reducing production costs is something fantastic in a country ruled by an Ukrainian. Actually, today you can easily see this when watching Trump trying to milk Zelensky for a return of American investments in the war. Russians wish Trump luck, sarcastically, and stock up on popcorn 🙂
Stalin was an ethnic Georgian, as were his closest comrades Ordzhonikidze, Yanukidze and Beria. With his death in the USSR, the “Georgian” top was replaced by a “Ukrainian” one. Stalin was succeeded by Khrushchev. A guy, an ethnic Ukrainian, who simply wrote a paper about the transfer of Crimea to the Ukrainian republic. That happened in 1954. He also amnestied the Ukrainian Nazi collaborators and allowed them to return to the country.
And Khrushchev was succeeded by another ethnic Ukrainian – Brezhnev. It’s no surprise that among other USSR members, Ukraine was the richest republic with every chance of becoming a prosperous independent state.
Although I think that for the world they were all just Russians
Tatyana, Avel Enukidze and an even higher ranking Georgian, Sergo Ordzhonikidze, fell into Stalin’s disgrace much earlier; the former was executed in 1937 and the latter shot himself that same year. Beria was not Georgian, he was a Megrelian. This may be all the same to some, including the authors of Wikipedia who listed him as a Georgian, but in the Caucasus people are quite sensitive to each other ethnicities and if you tell someone that Georgians and Megrelians are the same thing, boy, you are looking for trouble. Anyways, there is no evidence that Stalin really cared about the ethnic roots of his comrades at the top. Khrushchev was born in Kursk area and built his career in Moscow. The fact that he was appointed the 1st Secretary of Ukraine in 1938 did not make him Ukrainian.
“My parents’ generation (born after the war) is still skeptical about the idea of buying on credit. ”
My parents, born just before WWII, were also sceptical. When the bank sent my mother, unasked, one of the first credit cards, she cut it in half and threw it away, but then she had been a social worker before her marriage. For many of their generation, the only loans they took out, apart from overdrafts, were mortgages.
It is a common misconception that all commerce works on a cost-plus basis – they take the cost to produce the goods and add a percentage to cover overheads and profit and that’s the price. In fact only a very small part of commerce operates in this way, the rest charges the maximum the market will bear and cuts the cost of sales down to the lowest possible. The difference, whether it’s 5%, 50% or 500% covers the overheads and profit. The move to Mexico by Levi’s was in order to reduce costs and thereby increase profits. However, the difference between Mexico and the US is not that all Americans live high on the hog and all Mexicans live in abject poverty, but that the Americans need to be paid more to enjoy the same standard of living as the Mexicans, probably because Mexico doesn’t have 800 military bases overseas to support.
I agree with almost everything you said, Bayard, except the standards of living in the US and Mexico.
If you look closely, you will be surprised to find that standards of living is a product for marketing in itselt, and can be ”sold” to people at a very attractive retail price.
This is especially true if price, standard, consumption, investment, market, trade and other similar ‘things’ are indoctrinated into society and every infant learns it before making his first step or uttering his first word.
I had the chance to spend my childhood in the country before we were introduced to the market economy. My childhood was filled with the happiness of existence, the joy of being with loved ones, the excitement of joining new groups, exploring the world, science, literature, sports, arts and my own mind, regardless of the cost of all this.
“If you look closely, you will be surprised to find that standards of living is a product for marketing in itselt, and can be ”sold” to people at a very attractive retail price.”
True, unfortunately, like many other things, it has become a commodity. Take “heritage” for example, which is history also turned into a product for marketing. However, that doesn’t mean there is not a real thing called standard of living, meaning how comfortable you feel about the way you live and the amount you have to spend to stay like that. This can be eroded in two ways, either by making you unhappy with the way you live, which is a product of consumerism – you can’t sell much to someone who has, in their eyes, enough, you have to make them keep wanting more – or you impoverish them by taking away more of their income in taxes or making everything more expensive through inflation or both. I would hazard a guess that both factors operate less in Mexico than in the US.
Mostly correct, except today cotton’s share of the world’s textile trade is only 25%, and polyester’s is 55%, so do not emphasize cotton’s role. This is just a technical correction, all my polyester pants, shorts, T-shirts, socks, undies etc are made in China, Vietnam, Bangladesh etc anyway.
I’d say Trump’s plan is to keep tariffs high on China – and persuade the EU and other nations to take less imports or set high tariffs against China – and in return, Trump will ease tariffs on nations that comply with this – for me Trump is trying to crush the Chinese export economy – using not just US high tariffs against China – but, making sure other nation allied or semi-allied, or reluctant nations to do the same to China – in order to save their own export economies.
As you point out the global economy is linked – and any severe restrictions via tariffs on Chinese exports will surely have a global knock-on effect – ultimately it will be the consumer who suffers the most via price rises.
Essentially, this all boils down to the question, how did globalization change the USA?
Globalization erased inequality between countries but it increased inequality within countries, so it increased inequality in the USA. The growth of inequality resulted in the 2008-9 crisis and social unrest in the USA. Inevitably, citizens asked the trademark Russian questions: who is to blame and what shall be done?
There were 2 answers given. One answer was “Blame the Big Business!” given by the Occupy movement and later Bernie Bros. They do not want to fight globalization, they want redistribution of its fruits according to their social justice understanding. The other answer was “Blame the Big Government!” given by Ron Paul and Tea Party. They want to cut spending, which, in effect, is also redistribution in favour of small business.
Trump represents none of these. He will cut some spending, but not the military spending because being “great” means military might. He adopted the neocons foreign policy because no politician in the US can survive if he goes against the military-industrial complex and/or the Israeli lobby; he only wants to limit the sphere of influence by excluding Europe. He declared he will restore the American industry by reversing globalisation through tariffs, but this is unlikely to happen. He may succeed in reducing the US trade deficit but he’ll do this at the expense of common Americans who will pay more for Chinese goods, in effect, subsidizing the government (and the Pentagon). American manufacturing industry is unlikely to recover because the logistics are broken, the manufacturing culture has eroded, the specialists either retired or got other jobs, and so on. Americans already have become used to be a nation of consumers, not manufacturers.
To sum it up, the inequality in the US will continue to increase and this will bring social unrest this way or the other.
The problem for China as I see it – is that the US market on imports is a huge one as Americans buy anything and everything – and many Americans have the money to do so – I think Trump is banking on that, when he set out the tariffs – as for Europe, just taking European cars as an example – the US market is a huge one for them – of course China now has many rich citizens – but do they buy in a more domestic fashion, than US citizens.
As some have already said it will – end up with two-separate trading blocs, one that rallies behind the US market – and the other that rallies behind the Chinese one – of course business is fickle, and they’ll be a bit of swapping and trading off-the-books between nations of the two-blocs – I guess this will be a marker for Trumps second tenure – I wouldn’t put it past him – to try and change the constitution to get a third – however when Trumps tenure ends, will the tariffs end as well – and will it be too late to go back to an open global economy – I suppose business always finds a way.
The US trade ratio is far smaller than the EU’s and Britain’s, and smaller than China’s too.
True though that US imports are huge in absolute value.
Yes, but there is a nuance (c). EU consists of a buch of smaller countries who trade mostly with each other. In fact, in 2023 the volume of the trade within the EU was 1.6 times larger than the volume of EU trade with the rest of the world. Think of this like when the gasoline from a distillery in Alabama is sold in Colorado, California wine is sold in NY, oranges from Florida are sold in Maine, and a container packed with yellow rubber ducks arrives from China to LA and then crosses the borders of 10 states, each crossing counting as an act of trade, and so on. Thus, for a fair comparison, the trade ratios of the EU countries should be divided by 2.6. This way the trade ratio of the US turns out to be slightly higher than those of France and Italy.
There is an interesting challenge for Scotland. Should it plan to re industrialise after indy or should we forget the past and move forward. Of course there is also the need for a Scottish pound which the SNP gas still not grasped
For Trump to aim at eliminating the US trade deficit yet also insisting the dollar should continue to be not only the reserve currency but also the only currency for trading by all nations is non-sensical.
There are only two legal ways to obtain the greenback, a country could buy the US debt, ie Treasuries or it get the dollars running a trade surplus with the US, that’s it.
It seem buying US bonds is no longer what countries do if an uncertainty strikes, as the tariff war accelerated at the start of this week investors dumped the paper even though everyone was expecting the opposite, which would have reduced the yield, brought the cost of money down lowering the servicing of the US huge mountain of its sovereign debt. It was the first time that a major uncertainty pushed investors out of the dollars rather than into them.
The reason for the sell-off of the Treasuries could well be the weaponisation of the dollar, why should anyone buy an asset that the Americans can purloin as they did with the holdings of the Russian owned Treasuries (the Europeans have done the same as the holdings are entries on a spreadsheet held by the Treasury Departments of the countries where the assets were acquired).
That leaves trade to get the dollars to hold as a reserve currency. Should the US deficits get eliminated, as Trump wishes, there would only be the illegal way of obtaining the greenback – counterfeiting it.
Surely how you view the Trump spectacle depends on how you view the management and success of capitalism. Do you want it to be well managed, well oiled, with sophisticated rational people keeping the system going with the minimum of resistance. Or do you believe Capitalism will never truly deliver and are happy for it to falter and fail in the hands of an irrational narcissist managing the system on a day-to-day basis? If you think well oiled and well run capitalism ain’t the solution than Trump putting a spanner in the works can’t be all bad. No system is going to fail without a mess and that’s certainly what Trump is delivering. What is not being commentated on is the popularity of Trump which is currently standing up, he has friends politically but they’re only fair weather friends when his popularity falters, when hundreds of thousands of his supporters addicted to consumerism can no longer afford to consume and there is booing at the rallies, that’s surely when problems for Trump seriously start and his fair weather political friends turn on their heels. How long that takes to happen is anybody’s guess but Americans get loud and angry quickly, they certainly are commodity fetishists and if they can’t shop like any junkies they get very unpredictable when withdrawal symptoms set in
I thought it was interesting that the commander of the US base in Greenland said the remarks about Denmark having mistreated Greenland weren’t anything to do with her, and that Trump then sacked her for disrespecting Vance and himself.
Will things get as far as the huge military parade he wants in Washington on his birthday, 14 June? It would be bigger than any others in the country’s history apart from the victory ones after the civil war and WW2. Remember Anwar Sadat.
A cynic would ask what he’s doing picking trouble with China. Did his nerve not hold against Denmark, Canada, and the EU?
It’s not clear what has happened to Colonel Susannah Meyer. She has been removed from command at the base, but AFAIAA not put on a charge or discharged from the forces entirely.
Edit: the notion of commodity fetishism may need to be revised for the smartphone epoch. Also it’s possible fetishism is travelling along slightly different paths in the US as compared with China and the rest of the “far East”, althought the difference may soon be eroded by “AI”. (Just hypotheses. I retain a Marxist approach as I think you do too.)
Another good example is solar panels. The US could never get real development of them because investing in factories, etc. requires a fairly stable situation. For awhile, the government subsidized solar. When those subsidies ended, sales went way down.
China invested in solar; they went all out. As a result they are the foremost producer of solar panels in the world, the best and the cheapest.
“That is what is unique about having the world’s reserve currency. It means nations will always be willing to borrow from you more money you have just created, to finance their purchases of oil, grain and other essentials and luxuries.”
This is the wrong way round. By buying dollars, other countries are lending to the USA.
Brian Red,
” By buying dollars, other countries are lending to the USA.”
You are correct – and where we have reached in the process gives real meaning to the saying – ” When the elephants fight, the grass gets trampled.” Substitute ‘grass’ with ‘people’.
Is this not the reason for the vast US trade deficit? If you import more than you export, the difference is covered by exporting your national currency, in the case of the US, the dollar. Having other countries holding your national currency means that they will be able to return that currency by buying your debt. The trade deficit is there to enable the US to run a fiscal deficit. The dollars go out to pay for imports and come back to pay for T-bills. Without this circular movement of dollars, the US couldn’t finance its vast and bloated military. If the rest of the world spends all its dollars buying US exports, where is it going to find the dollars to buy T-bills?
Brian Red
Not an expert – Michael Hudson no doubt, will know much better than I.
I think it works both ways.
The US buys/sells in Dollars and China buys/sells in Dollars.
No- one in the US would buy in Yuan or sell in Yuan.
As far as I know the ‘ convertibility ‘ of nearly all countries currencies for exports/imports is in Dollars.
Plus the US is in charge of the Swift Payment System hence their choosing of who is sanctioned and who isn’t.
The thing here for Trump and his fellow Bandits is not necessarily how countries will react but how the Bond markets react.
Musk and a few others think that they have Mega ( or should that be MAGA?) amounts of money but there are big investors who make them all look poor.
And Bonds are bought in times of fear and trepidation.
So, if these massive Bond Markets decide to buy US Bonds as a Safe Haven until all the trouble goes away then for Donald and his people that means less money for investment in allegedly building the factories to make all the stuff that China makes and exports to the US and maybe less for property speculation.
Pension Companies and Banks may do the same.
It’s not easy to define what the damage will be but Trump wants to do all his tariffing and have a $2 Trillion tax cut mainly for the rich and I am assuming that he thinks he can raise enough and more just by tariffing.
He will get away with that with the UK and the EU the current situation with Russia/Ukraine militarily shows that despite the hollering and howling of the EU that without US Security Guarantees it will not happen.
The same thing will apply economically as Trump knows what he is dealing with vis the EU.
China’ s exports to the US amount to just 2% of its GDP and yes it will be hit but China has many more avenues to divert and explore than the US.
Trump has not mentioned any factories being built except the one’s that Biden already started with attracting ( with subsidies) the like of Volkswagen and a Taiwanese Chip maker.
Taking account of the Bond Markets and their understandable reluctance to take risks in these Trump troubled times I don’t see them piling into the Make America Great Again fray.
That leaves mainly the Billionaires and a few others the only players in town to invest in American companies manufacturing.
Takes years to get a return on factory production and the history of Finance Capital is not used to that slow return on investment.
Not much hope their for the expectant MAGA workers I think.
Trump may be gambling on a race to the bottom – lower your price to us – that comes at a cost – an electoral cost as, say in the EU that means an attack on the Social/Welfare State and a lowering of wages.
It had already started in the UK and France before these tariff threats and I suspect it will become the norm in the EU.
Never mind the US’s Military Security Guarantee the EU needs a Dollar and Swift System Security Guarantee as well.
You don’t want to fall out with the US and attract sanctions like Russia and the others do you?
Plus – of course there is now the big issue of Trust.
Lack of trust stirs up uncertainty – you do a deal with Donald?
Can you trust him – no – so why bother unless you have to and unfortunately quite a few will have to as they have no other choice.
will have to
Professor Michael Hudson’s 1970’s book Super Imperialism sets out clearly the novelty and benefits to the US economy of having the oil purchases denominated in dollars and how this finances US imperialism. Professor Hudson has also done fascinating research on how the Greek and then Roman oligarchs leveraged loans of compound interest to indebt large swathes of the populace and remove their assets when they could not pay. He also references the older more civilised societies of the near east who practised debt cancellation to restore balance and social justice to the society and economy.
He may be getting on now but Professor Hudson can be still be seen on Ben Norton’s channel Geopolitical Economy report.
On the contrary, Brian: by obtaining vast quantities of dollars, due to the trade deficit, China can buy capital assets of other countries around the world, which also trade in dollars. China owns 10% of Ukraine’s farmland, and much of Africa and South America. China is competing with Bill Gates to take everything which ought be be sovereign assets. Free Trade is anything but free, and American law states that countries must give their trade freely to the US, so Trump’s manipulation of tariffs is opening up discussion about what really is of value. Market economies and shareholder profits underpin the inequality of access to real resources.
This is a political choice, because all countries with their own currencies can put as much of it into circulation as they have assets to underpin it. This used to be the gold standard, as a finite commodity, but a country’s resources include its solid assets and its population’s skills. Japan is a country which maximises both these things, and is currently waiting to find out whether its outright purchase of American Steel can go ahead. Trump has said he does not wish for American steel to be foreign owned.
Our UK Parliament has been recalled this weekend to look at renationalising British Steel, because the processes need capital investment to update them with newer fuel sources, and to be able to put scrap metal back to a strong reusable material. The Welsh Government was pleading for this capital investment when the unfortunate Vaughan Gething was leader of the Welsh Government and he made a very strong case for either full national ownership or part ownership with the companies which were having to pull out and shut down the industry.
“How crypto will ultimately fit in with the governmental systems is a very large question. If it does have a significant role, that too can only be a threat to the dollar’s necessity for trade.”
Crypto is merely a computer simulation of the worst type of money – non-fiat token money (trade tokens, unsecured IOUs, shop credit notes, etc). It has zero intrinsic value and is tantamount to a scam akin to the South Sea Bubble inflicted on the gullible by tech entrepreneurs. No sensible government would allow its use for trade. In China, for example, it’s effectively illegal.
But Trump’s government may well be crass enough to allow its use in some instances, security for loans maybe. The threat then comes in the form of yet another almighty banking collapse.
quote “But you can’t run an economy on nostalgia.” take a look at the music industry right now… all tribute acts and a walk down memory lane… new artists are generally not being supported by the generation i am associated with.. instead nostalgia is what everyone wants in the form of music too… many musicians i know are busy doing just this…
thanks craig!
It feel like we’ve entered the end of the Roman republic. Et.tu Vance
“ Et.tu Vance ”
As well as his last-gasp, “Et tu Brute”, Caesar is also famous for the phrase, “Veni, vidi, vici.”.
Apply his (classical) Latin pronunciation of “ v ”, to JD’s surname and you get something like “Wankie”..
When you are no longer the world’s reserve currency you inflate your way out of debt.
Cotton was, and perhaps still is, a trade that Ursula von derided Leyen’s family gained great wealth from. So, maybe textiles from the USA with a tariff on top will lead to profits for the cotton merchants of the USA, who might be related to Ursula. Her husband’s family were into silk.
But you can’t run an economy on nostalgia.
Post Industrial “Theme Park. Britain” would beg to differ, with Ye Olde Gifte Shoppe at every historical tourist attraction, usually stocked with Made in China products.