About a year after taking office, the results of Donald Trump’s tariff policy are mixed and contradictory. The number of industrial jobs in the U.S. has actually declined slightly, as rationalization in the production process continues to advance, driven in part by AI programs.
In and out of tariffs – this is the only constant in U.S. President Donald Trump’s tariff policy. Last week, new U.S. tariffs of 10 percent on nearly all imports went into effect. They replace the tariffs that the Supreme Court had ruled invalid on February 20. In his initial angry reactions to the ruling, Trump had even announced a 15 percent tariff. The government is still considering further increases of this magnitude.
The only certainty is that the protectionist policy will continue, even though its legal basis has changed. The Supreme Court ruled that imposing the previous tariffs under the International Emergency Economic Powers Act (IEEPA) of 1977 was unlawful. Treasury Secretary Scott Bessent immediately announced that the government would simply rely on other trade laws instead. Currently, Section 122 of the Trade Act of 1974 applies. It allows the government to impose tariffs for 150 days; after that, Congress must approve them.
Politically, too, Trump’s tariff policy remains controversial, even within the Republican Party. Just under a year ago, Trump began raising the U.S. average tariff rate, which stood at 2.4 percent at the time; at the end of last year, it was around 17 percent. Protectionism is intended to “make America great again” – specifically, to reverse the crisis-driven deindustrialization and loss of manufacturing jobs. But the results have been mixed.
Although Trump keeps touting ever-larger, astronomical figures purported to demonstrate a massive surge in foreign investment – in October 2025 he spoke of $17 trillion, and in his address to the nation on February 24, the figure had already risen to $18 trillion, which he claimed had been pledged to him through bilateral trade agreements, among other channels –these figures have little basis in reality. Instead, the administration adds together forecasts of actual high corporate investment in the context of the AI boom, non-binding letters of intent from governments interested in appeasing Trump, vague agreements on potential economic cooperation, and binding agreements—and thus arrives at an absurdly high investment volume that would amount to four times the annual investment activity of the U.S. private sector, which ranges from about $4 to 5 trillion. Foreign investment in the U.S. amounted to only about $151 billion in 2024.
But has the U.S. government actually succeeded in extorting substantial investment commitments through the threat of tariffs? Japan has committed to $550 billion in industrial investments by 2029; South Korea has pledged $350 billion; Apple plans to pour $600 billion into U.S. manufacturing facilities and actually manufacture a Mac Mini in the U.S. There are also binding commitments worth billions from TSMC, Nvidia, Honda, Hyundai, Johnson & Johnson, IBM, Merck, and Roche. The list could go on, but it remains to be seen whether all these commitments will be fulfilled – and whether corporations are simply passing off investments they had planned anyway as a return to “Made in America” in order to gain political capital with Trump.
Huge U.S. Trade Deficit
The massive U.S. trade deficit has not shrunk – at least not yet. Trump said in late February that these investments would not yield economic results for “a year.” The annual trade deficit remained virtually unchanged at $901 billion in 2025. Looking solely at goods trade, excluding services, the deficit actually rose by 2% to a new record of $1.24 trillion, as the AI boom has been accompanied by rising imports, particularly of microchips from Taiwan.
However, the composition of trade flows has changed. Imports from China plummeted by 25% to just $242 billion, Japan’s exports to the U.S. fell by 12%, and those from Germany dropped by 9.4%. Canada also exported less to the U.S. in 2025: goods worth $291 billion instead of the previous $308 billion. Mexico recorded the largest growth last year, and with an export volume of $399 billion, it is now by far the leading exporter to the U.S. Moreover, the slump in imports from China was offset by nearly 50% increases in imports from Taiwan and Vietnam. At least part of these changes can be attributed to the fact that goods produced in China are simply being rerouted through countries such as Mexico or Vietnam to circumvent the particularly high U.S. tariffs imposed on China.
The picture is similarly ambiguous when it comes to production in the United States. Industrial production has indeed risen by more than 1% since Trump took office a year ago, yet the number of industrial jobs has declined slightly over the same period – by a good 108,000. This reveals the inherent limitation of capital – the market-driven tendency of capitalist commodity production to minimize wage labor in the production process through rationalization. Trump is shadowboxing, for the crisis process is by no means rooted in trade practices supposedly disadvantageous to the U.S., but will only be intensified by the current AI boom and advances in robotics.
No Boom in the Labor Market
Furthermore, while protectionism may benefit certain industries, it often does so at the expense of other sectors that rely on the smooth import of materials and parts as part of the internationally organized division of labor. U.S. steel tariffs, for example, have led to an increase in employment at steel mills, but this came at the expense of those sectors that had sourced inexpensive steel products from abroad and have now cut tens of thousands of jobs, as the New York Times calculates. Consequently, there can be no talk of an overall boom in the labor market. Despite economic growth of 2.2% last year, the number of jobs rose only minimally – even though the expected waves of rationalization associated with AI programs are still to come.
For consumers, tariffs drive up inflation because they are passed on in the form of higher prices. The New York Times cites a study indicating that the inflation rate last year was more than half a percentage point higher due to the tariffs. It stood at 2.7% in 2025, and 3.1% for food. The Trump administration implicitly acknowledged this by promising every U.S. citizen a one-time “tariff dividend” of $2,000 as compensation. Whether this will still happen following the Supreme Court’s ruling is questionable.
Above all, however, the tariff revenues were intended to finance government spending. Following the tariff ruling, Trump also imposed substitute tariffs because the revenues had already been budgeted. Last July, the Trump administration sharply reduced taxes – especially for the super-rich – with the so-called “Big Beautiful Bill,” causing the national debt to rise even more than it already had. In part, the customs revenue was intended to cushion that impact – in other words, a de facto consumption tax was meant to finance the tax breaks for capital and top earners.
The U.S. Dollar’s Status as the World’s Reserve Currency is at Risk
As of November 2025, revenue from the tariffs imposed by Trump totaled $236 billion, of which approximately $175 billion was collected under the IEEPA regulations that have now been declared illegal. These funds will now be the subject of protracted legal disputes; they are not available to the Treasury, as companies such as FedEx have already filed lawsuits to secure the refund of these paid customs duties.
Ultimately, Trump’s protectionism threatens the status of the U.S. dollar – which has been steadily losing value – as the world’s reserve currency. U.S. trade deficits provided an incentive for countries and economic regions with large trade surpluses, such as China, Japan, and Europe (which is economically dominated by Germany), to accept the dollar’s dominance. Now, the special status of the U.S. – which has been able to incur virtually risk-free debt in the world’s reserve currency – is in danger of becoming a thing of the past. This became clear, for example, during the disputes over Greenland, when U.S. bond prices plummeted on January 20 after several Scandinavian funds announced they would liquidate their positions.
The U.S. national debt now stands at more than 120% of gross domestic product, while yields on 10-year U.S. Treasury bonds – which averaged less than 2 percent during Trump’s first term – are now above 4%. At $1.1 trillion annually, debt service is now one of the largest items in the federal budget; it has doubled over the past five years and even exceeds military spending. Should, for example, the impending AI disruption once again necessitate trillions of dollars in government crisis measures, the U.S. would have little capacity to do so, unlike during the financial crisis beginning in 2007.
Originally published in jungle.world 10 in 03/2026
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