The following article will appear in the upcoming issue of EIR magazine.
President Donald Trump has reshaped the U.S. economy in the first year of his second term. He has striven to create a billionaires’ economy dominated by stock plays and speculations, looting of other nations’ resources through a threatening imperialism, and unconstitutional tariffs as a substitute for taxes.
Though it was said that the Sun never set on the British Empire, the Sun is now beginning to set on Trump’s economic “experiment,” which was supposed to turn the United States into a manufacturing superpower once again, leading the world in technology, weaponry, and computer power. Manufacturing employment is steadily withering away, while overall employment growth is one quarter of what it was in recent years. Housing and healthcare are unaffordable for tens of millions of American households. Tariff revenue has peaked at much lower levels than expected by the administration. Inflation is on the rebound. China leads in many, if not most areas of technological advance. And interest rates for mortgages, business and auto loans have resisted attempts to lower them because of immense bubbles of unpayable debt in the stock markets, and more importantly in the Treasury market. Another global financial crisis originating in the American economy can be foreseen.
The U.S. Federal debt, soon to cross $39 trillion, is now being played by Treasury Secretary Scott Bessent like the hedge fund speculator he is, trying without success to lower the interest burden on that debt, which is now over $1 trillion/year in the $7 trillion U.S. budget. The unrepayable debt is being rolled over for shorter and shorter maturities, while it grows by $1.5-2 trillion/year.
Hedge funds now have 27% of U.S. Treasury holdings. Foreign holders, who had 50% in 2015, hold only 30% now. There is roughly $4 trillion every day in Treasury repurchase agreement—or repo—financing for derivatives speculations.
The Federal debt is in dire need of the stunning reorganization presented to Congress in 1791 by Treasury Secretary Alexander Hamilton, which transformed that debt into a national bank of credit for infrastructure and manufactures. The same can and should be done today.
Tariffs Producing Neither ‘Trillions’, Nor Exports
The President claimed that Bessent’s Treasury would be bailed out by “trillions” in new revenue flowing in from the rest of the world under his tariffs. But the actual total collected during Trump’s first year in office was $264 billion, according to the Congressional Budget Office, and was declining after hitting a high of $31.35 billion in October. The yearly total was much higher than prior years, but constituted less than one percent of the Federal debt.
Moreover, many Americans will be surprised to know that none of this tariff money
“flowed in from countries around the world.” A thorough study(https://www.kielinstitut.de/publications/news/americas-own-goal-americans-pay-almost-entirely-for-trumps-tariffs/) just published Jan. 19, 2026 by the Kiel (Germany) Institute for the World Economy, found that 96% of that $264 billion in tariff taxes were paid to the Treasury not by foreigners, but by American importers—wholesalers, retailers, manufacturers importing parts and systems, and consumers—more than cancelling out Trump’s business tax cuts. The other 4%, the Institute estimated, was not payments, but losses of exporters in other countries who had to lower their prices to “get in under” the tariffs. For the most part, those other nations worked to redirect some exports away from the United States to avoid the high tariffs.
Neither did the tariffs decrease the U.S. trade deficit. On a year-over-year basis, the overall trade deficit through November stood at $839.5 billion, or about 4% higher than the same period in 2024. The U.S. trade deficit in manufactured goods doubled from October to November, from $30 billion to $60 billion and rose again in December, finishing the year 2025 with roughly $3.15 trillion goods imports and $2.15 trillion in goods exports, for a $1 trillion goods-trade deficit.
The tariffs are a flat-out unconstitutional seizure by the White House of the Congress’ power to tax. None of the various “national emergency Presidential exception” laws on the books could apply to the impulsive and haphazard way that Trump has thrown tariff weapons against other countries, or in other cases withdrawn them just as quickly. If the Supreme Court does not act, the Congress will have forcefully to take its tariff authority back and deny it to the President.
Job Killer
President Trump’s policies have shown extraordinary power to kill jobs. The President fired the head of the Labor Department’s statistics bureau in the middle of the year because the bureau wasn’t reporting enough job growth. Still, at year-end it reported just 584,000 net new jobs for 2025 in a labor force of 165 million workers; the net job growth for 2024 had been triple that, 1.6 million. The Bureau’s Quarterly Census of Employment and Wages, which is published with a delay and based on much firmer payroll tax data, estimated an even lower job creation rate, just 210,000 for the first six months of Trump’s term, including the April 1 “Liberation Day” tariff announcements.
As for manufacturing jobs, the Wall Street Journal [reported on Feb. 2: “The manufacturing boom President Trump promised … is going in reverse.” Continuing a trend that resumed under Joe Biden’s Presidency, 200,000 manufacturing jobs have disappeared since 2023; manufacturing employment has dropped in every month of President Trump’s second term thus far. The Institute for Supply Management factory activity index shrank in 26 consecutive months through December 2025.
The Journal added that: “An index of factory activity tracked by the Institute for Supply Management shrunk in 26 straight months through December…”
The Trump tariffs are clearly a major job-killing factor for the U.S. economy, as productive businesses (nearly all of which have their supply chains influenced or even dominated by imported parts and systems) are unable to estimate their future costs or demand for their products amid the kaleidoscope of tariffs and tariff threats.
