In a recent speech, Trump’s nominee for Treasury Secretary, Scott Bessent, called for a “massive restructuring of the global economy,” highlighting that economic growth is essential for addressing the federal government’s debt. He proposed reducing the budget deficit to 3 percent of GDP by 2028, boosting GDP growth through deregulation, and increasing daily oil production by 3 million barrels.
Analyzing these policies alongside Trump’s broader economic agenda — such as raising tariffs, curbing outsourcing, and revitalizing manufacturing — reveals that the incoming administration does not intend to rely on the same globalization model that fueled past economic growth. The old model, which leveraged global supply chains and positioned the U.S. at the top of profit-driven sectors like innovation and services, brought prosperity and rapid development to parts of the economy.
However, it also contributed to the decline of American manufacturing and the erosion of the middle class.
Meanwhile, globalization has established China as the global manufacturing hub. This shift has brought substantial benefits to China, including booming exports and job creation — at its peak, the manufacturing sector employed over 100 million people.
Although China has not secured higher profit margins, its industrialization and economic strength have undergone a transformative leap compared to the pre-globalization era. Over the last few decades, China has significantly enhanced its military power based on its superior manufacturing capability.
America suddenly finds itself facing renewed major-power competition and the ongoing and potential large-scale regional conflicts, and it is not prepared.
Trump’s “America First” vision marks a departure from globalization, aiming to address the damage wrought during the globalization era. However, this transition is likely to be impeded by domestic politics, entrenched interests, and economic inertia. Additionally, the economic cycle may not work to the advantage of Trump. Despite these obstacles, this transition is vital for America’s future.
On a narrower scale, it may be the most effective way to counter the mounting challenges posed by China, the U.S.’s most formidable rival. On a broader scale, it represents a critical battle for America’s enduring prosperity and global leadership.
Among the many consequences of globalization, the hollowing out of American manufacturing has led to increased military spending but a loss of U.S. military strength. The reliance on overseas production has complicated quality control, increased costs and diminished military readiness.
While the U.S. outsources significant manufacturing to allies such as Japan and South Korea, these countries cannot produce all advanced components. Critical research and development and core manufacturing, such as building aircraft carriers, must remain with American defense contractors.
Military strength relies on a robust civilian industrial base. Thriving shipyards with commercial contracts provide skilled workers, production capacity, and expertise, enabling efficient defense production. However, decades of reduced U.S. manufacturing investment have left its shipbuilding sector focused solely on military vessels.
Globally, China dominates the market with a 47 percent share, followed by South Korea at 29 percent and Japan at 17 percent. Meanwhile, the U.S. trails far behind with just 0.13 percent, often facing costs up to four times higher than those that China and other countries face for comparable military vessels.
The Russia-Ukraine war underscores the severe consequences of America’s declining manufacturing capabilities. In this war, conventional weapons and basic supplies have proven indispensable, while NATO’s difficulties in meeting ammunition demands highlight critical manufacturing shortfalls.
Future conflicts, such as those in the Taiwan Strait, are likely to depend on large quantities of conventional weapons rather than cutting-edge technology. China’s emphasis on quantity, supported by its robust shipbuilding and weapons production industries, provides it with a significant advantage over the U.S. in conventional military assets.
The U.S. must rethink its strategy. The erosion of its industrial base leaves it vulnerable, risking ceding supply chains to rivals and falling behind in defense. The Trump administration recognizes that drastic reforms are essential, but this shift from globalization will come with short-term economic costs.
Deglobalization would entail a degree of trade protectionism and supply chain localization, potentially leading to partial or significant decoupling from the Chinese economy. These measures could have economic repercussions for the U.S., with even the anticipation of such decoupling risking an economic downturn.
An economic downturn is particularly unacceptable now, as it could make debt burdens unmanageable and lead to instability. As Bessent noted, “The debt problem can only be solved by growing the economy.” Other policies, such as raising tariffs, would exert additional short-term economic pressure.
For example, higher tariffs on Chinese parts would increase costs for manufacturers like Tesla, which uses a significant amount of components made in China, while other automakers use components from Canada and Mexico.
Persistent inflation and vulnerabilities in sectors like commercial real estate compound these challenges. Additionally, the natural economic cycle may not work to the advantage of the incoming Trump administration.
The U.S. stock market’s capitalization relative to GDP suggests overvaluation at 200 percent, according to Warren Buffett’s formula, indicating potential correction. Buffett’s unprecedented $325 billion cash position may presage financial turmoil, reflecting patterns observed in his past operations.
Despite these short-term difficulties, Trump’s proposed reforms — reindustrialization, revitalizing manufacturing and reducing government costs — are essential for long-term stability and prosperity. These reforms demand a shift from a high-debt, borrowing-driven model to one focused on sustainable growth. While the geopolitical and economic timing may not favor such changes, they are imperative.
The Trump administration must convey to the American public that while conditions may worsen before they improve, the cost of inaction — ceding supply chains, weakening defense and risking economic instability — would be far greater.
Simone Gao is an independent journalist and her website is zoomingin.tv
