Trump Tariffs Creating Less Manufacturing Jobs

By Jomo Kwame Sundaram  and Kuhaneetha Bai Kalaicelvan

KUALA LUMPUR, Malaysia, Feb 24 2026 (IPS) - 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 2nd April 2025 Liberation Day tariffs were ostensibly his primary means for generating manufacturing employment.

When the US Supreme Court overruled him on 20 February, he responded by imposing a 10% tariff on all imports, 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 $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 $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 $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 manufactures; this rose to $1 trillion in 2025, as $3.15 trillion in imports exceeded $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 $39 trillion, now requires over $1 trillion in annual debt servicing from the $7 trillion annual budget.

Growing by $1.5-2.0 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 $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 found the US labour market weakening over Trump 2.0’s first year. Overall, and manufacturing jobs growth both declined from 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 to 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.

Available online at: Trump Tariffs Creating Less Manufacturing Jobs

Trade Liberalisation Undermines Development

By Jomo Kwame Sundaram 

ZAMBOANGA, Philippines, Feb 10 2026 (IPS) - Despite lacking both evidence and theory, many economists claim trade liberalisation accelerates development. But only a few economies have gained many jobs from external market access.

Instead, most economies have experienced greater deindustrialisation and food insecurity, besides deepening their vulnerability to recent tariff threats.

Multilateral trade liberalisation

In conventional trade theory, gains from trade liberalisation are mainly one-time increases in output and exports due to static comparative advantage.

Post-World War Two (WWII) US foreign policy transformed multilateral relations and transnational institutions, including international economic governance.

With the growing power of transnational corporations, many multilateral institutions, including the United Nations system, have been reconfigured or marginalised.

The General Agreement on Tariffs and Trade (GATT) was a ‘second-best’ compromise after the US Congress vetoed the creation of the International Trade Organisation, despite widespread international enthusiasm for the 1948 Havana Charter.

Almost half a century later, the World Trade Organisation (WTO) was established in 1995, following the 1994 Marrakesh Declaration concluding the Uruguay Round of GATT negotiations.

Trade mahaguru Jagdish Bhagwati argued that multilateral trade has been undermined by plurilateral and bilateral arrangements favouring dominant partners.

With the era of trade liberalisation essentially over since the 2008-09 global financial crisis (GFC), free trade advocacy has received a new lease of life from mythmaking about the ‘pre-Trump’ era.

Uneven, mixed effects

Mainstream trade theory does not entertain the possibility of ‘unequal exchange’, however defined.

Nor does it even incorporate Bhagwati’s notion of ‘immiserising growth’ when productivity gains reduce prices for consumers, rather than increase producers’ earnings.

The three decades of trade liberalisation from the 1980s saw slower, but more volatile growth than the post-WWII quarter-century termed the ‘Golden Age’. More recently, stagnationist tendencies have dominated since the GFC.

With trade liberalisation, many developing countries have experienced greater food insecurity and deindustrialisation, as the manufacturing shares of their national income shrank.

Much import-substituting industrialisation after WWII or independence has since collapsed. Besides resource processing, very few new industries have emerged in Africa.

‘Aid for Trade’ for poorer developing countries implicitly acknowledges trade liberalisation’s adverse effects by mitigating some of them. Why then should they abandon protectionism if they need to be compensated for doing so?

Wealthy nations have also insisted that developing countries end manufacturing tariffs. But as Dani Rodrik has quipped, why rich nations “need to be bribed by poor countries to do what is good for them is an enduring mystery”.

African nations and Caribbean and Pacific small island developing states enjoyed preferential access to European markets, which full multilateral trade liberalisation would eliminate.

Such preferences for Sub-Saharan Africa have pitted African against Asian least developed countries, undermining the collective negotiating strengths of both.

Many countries had expected the current Doha Round to eliminate rich nations’ producer subsidies, tariffs, and non-tariff barriers, but that has not happened.

Cutting farm support in the North could make food agriculture in developing countries more viable, but would also raise food import prices in the interim.

World Bank ‘structural adjustment’ programmes and IMF fiscal discipline requirements have undermined rural infrastructure and productivity, setting back smallholder agriculture in most developing countries.

Setbacks, not gains

Trade liberalisation also reduces tariff revenue. Such losses have hurt developing nations, especially the poorest, for whom tariffs often accounted for up to half of all tax revenue.

Such revenue cuts severely undermined the fiscal means of developing nations, crucial for government spending and investment, including for development and welfare.

Most governments are unable to replace lost tariff revenue with new or higher taxes. Meanwhile, more borrowing to offset lost tariff revenue has worsened indebtedness.

Trade liberalisation advocates are typically vague about how it is supposed to raise exports, incomes, and tax revenue, besides compensating for lost tariff revenue.

Instead, tax burdens typically become more regressive as overall tax revenue declines. Real consumption is supposed to rise as import prices fall with lower tariffs, but could also decline due to increasing consumption taxes.

Less policy space

Trade liberalisation has also reduced available development policy tools, especially those relating to trade, investment, and industrialisation.

The constraints imposed by trade liberalisation and investment agreements have generally limited the scope for and potential of development policy initiatives.

The actual role and impact of trade policy for growth and employment remain moot. But there are no analytical reasons or robust empirical evidence that trade liberalisation per se ensures sustainable development.

World Bank and most other studies acknowledged modest, if not negative, net gains for most developing countries from any realistically achievable outcome.

It is often ignored that realistic expectations of gains from trade liberalisation rely crucially on a strong positive export supply response.

However, such a response is unlikely when internationally competitive, productive and export capacities do not already exist, as in most developing countries, especially the poorest.

Hence, most of the Global South has not been able to overcome the worst consequences of trade liberalisation to achieve sustainable development.

In any case, the WTO Doha Round talks were ended by rich nations in 2015.

With the increasingly blatant self-interested contravention of WTO rules by the US, European and other wealthy nations, developing countries may best enhance their development prospects by reverting to GATT rules.

This would allow them to opt in, as appropriate, rather than resign themselves to the uniform ‘one size fits all’ WTO rules and regulations, regardless of context, circumstances, capacities and capabilities.

Related IPS Articles

• No African Development from Western Trade Policies

• Trump Undresses Rival Trade Myths

• Trump’s ‘Shock and Awe’ Tariffs

• Trade Liberalisation Kicked Away African Development Ladder

• Trade Deception Returns in Pan-Africanist Guise

• Weaponizing Free Trade Agreements

• Trade Liberalization for Development?

• Agricultural Trade Liberalization Undermined Food Security

Available online at: Trade Liberalisation Undermines Development

Bullying Southeast Asia with Tariff Threats

Admin's note: This is a corrected version of the article, which originally appeared on IPS on 29 July here.

By Jomo Kwame Sundaram and Nadia Malyanah Azman

KUALA LUMPUR, Malaysia, Jul 29 2025 (IPS) - US President Trump has successfully used tariff threats to achieve economic, political and even personal goals. These threats, reminiscent of colonialism, have secured submission and concessions.

Indonesian template?

After hearing the 2024 US election results, Indonesian President Prabowo Subianto respectfully stood up in his Jakarta office to call to congratulate the winner.

Trump bragged about his tariff offer to Indonesia in mid-July 2025, profusely flattering its president. After initially hesitating, former General Prabowo agreed to join BRICS despite Trump’s clear disapproval.

“I spoke to their really great president, very popular, very strong, smart. And we made the deal. We will pay no tariffs … they are giving us access to Indonesia … the other part is they are going to pay 19% and we are going to pay nothing.”

An Indian commentator noted, “Those words say it all. This deal is clearly one-sided, and it should bother the whole world.” Americans, not Indonesians, will pay tariffs on imports from Indonesia.

The US is Indonesia’s second-largest export market, importing apparel, palm oil, footwear, and cosmetics. Initially, Trump had threatened a 32% tariff on such imports.

This has been reduced to 19%, still almost four times more than last year! In 2024, Indonesian exports to the US were taxed at 5% on average. The Indonesian president has not complained but instead seemed relieved.

Indonesia will lose not only exports, but also growth and jobs. As Trump loves to brag, he added insult to injury as he could not resist reiterating: “They will pay 19%, and we will pay nothing.”

Guaranteed sales

Indonesia will also buy $15 billion of US oil and gas, $4.5 billion of farm produce, and 50 Boeing jets. But the 2019 Lion Air plane tragedy, which the US plane manufacturer quickly blamed on Indonesian pilots, is still alive in the national memory.

Boeing’s reputation worldwide has not recovered from the investigation into the Nairobi air crash involving the same plane model, which led to its grounding.

Indonesia is among the US’s top 25 trade partners. The deal secures American access to the Indonesian market, allowing US goods to be sold tariff-free.

Last year, Indonesia shipped $28 billion worth of goods to the US. Higher tariffs are now expected to cut Indonesian exports by a quarter, GDP growth by 0.3%, and many jobs!

Other Southeast Asian lessons?

The Philippines’ Marcos II government is the most pro-US in Southeast (SE) Asia, hosting 11 American military bases.

Yet it was the only one without a US tariff offer before Secretary of State Rubio’s SE Asian visit earlier this month. The Philippines has since been offered a new US trade deal with the same 19% tariff rate despite its loyalty to Washington.

Loyal long-term support for the US, 11 military bases and serving as an additional ‘unsinkable aircraft carrier’ just south of Taiwan did not secure a better trade deal for the other archipelagic nation in SE Asia.

Trump wants trade deals even more favourable to the US than existing ones. With deadlines passing, the US is expected to announce more trade deals.

The tariff threats have been more effective for Trump, thanks to decades of trade liberalisation forced on the Global South, undermining earlier import-substituting industrialisation and food security measures.

Washington has already revised earlier demands, sometimes not just once, but typically to the chagrin of US trade partners. Vietnam’s Communist Party leader was initially thought to have negotiated a better deal than other SE Asian governments.

Lessons for others?

Will the US offer to Indonesia become a template for others? Or even for countries of comparable significance in the world economy? Nobody knows Trump’s strategy, let alone how it may still change.

Perhaps it begins with the threat of high tariffs, shock and awe. Then, a less painful deal is offered, dressed up as a concession.

This may be worse than the status quo ante, but it still seems preferable to the original threat. Nations will also be required to buy US goods that may not be needed or offer the best value for money.

Thus, US offers to SE Asia are being studied worldwide for lessons on better negotiating with Washington. Meanwhile, the US refuses to negotiate collectively except with the European Union.

All over the world, policymakers will continue to debate Trump’s tariff war strategy after Monday’s agreement in Scotland, which included a 15% baseline tariff on most EU exports to the US.

The US-EU deal makes clear the West, including Europe, has never really been committed to a rules-based international order, including multilateral trade liberalisation.

As American buyers pay the tariffs, imported goods become more expensive. US trading partners will lose exports, related growth and jobs. This will mean less expansion, employment and exports worldwide, deepening stagnation.

Meanwhile, most SE Asian governments believe they have little choice but to continue negotiating with the US, which is driving them to others willing to engage them on more favourable, if not fairer, terms.

Related IPS Articles

·                   Trump Undresses Rival Trade Myths

·                   Trump Accord Sows Discord in US Empire

·                   Trump’s ‘Shock and Awe’ Tariffs

·                   Weaponizing Free Trade Agreements

·                   Trade, Currency War Weapons Double-Edged

·                   What’s different about Trump’s tariffs?

·                   Trump’s Trade War in Perspective

Original available here: Bullying Southeast Asia with Tariff Threats