United States
Postwar global economic architect now deploying tariffs and industrial policy (CHIPS Act, IRA) to restore manufacturing; $35B data center construction as AI reshapes investment.
The United States built global economic dominance through continental scale, resource abundance, and immigrant labor—advantages it now deploys in a tariff-driven industrial policy that seeks to restore manufacturing while disrupting the trade system it once championed.
The geography was the foundation. A continental land mass with two ocean coastlines, navigable rivers connecting interior farmland to ports, massive mineral deposits, fossil fuel reserves, and climates ranging from subtropical to temperate. By the late 19th century, the United States had surpassed Britain as the world's largest economy. By 1945, it produced half of global manufacturing output while every competitor lay in ruins.
The postwar order institutionalized this dominance. The dollar became the global reserve currency. American multinationals spread manufacturing worldwide. The trade system that the US designed—GATT, then WTO—lowered barriers and integrated markets. For decades, America ran trade deficits financed by capital inflows, exporting dollars and importing goods. Manufacturing jobs declined from 25% of employment in 1970 to under 10% today.
The 2024-2025 tariff pivot represents the most dramatic reversal of this consensus since Smoot-Hawley. The Trump administration's renewed tariffs on Chinese goods, expanded to universal application, aim to restore domestic manufacturing through trade barriers. Steel, aluminum, automobiles, and critical components face duties designed to make domestic production competitive regardless of cost.
The industrial policy complements tariffs with subsidies. The CHIPS Act directs billions toward semiconductor fabrication in Arizona, Ohio, and Texas. The Inflation Reduction Act incentivizes battery and EV production. Data center construction for AI workloads has become the fastest-growing category of industrial construction—$35 billion expected in 2025 alone.
The results are contradictory. Manufacturing investment has surged. Unemployment remains near historic lows. But inflation proved stickier than projections, requiring Federal Reserve rates that strengthened the dollar and pressured trading partners. The tariff revenue comes from importers (and ultimately consumers), not foreign producers. Reshoring creates jobs but at higher costs than the offshoring it reverses.
By 2026, the question is whether tariff-driven reindustrialization can succeed without the consequences—inflation, retaliation, supply chain disruption—overwhelming the benefits. The United States retains advantages no competitor matches: domestic energy abundance, technological leadership in AI and biotech, deep capital markets, and continental scale. Whether protectionism enhances or undermines those advantages is the experiment now underway. The trade system America built is being dismantled by America. What replaces it remains unclear.