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Posted: May 23, 2025
Want your economics questions answered? Send them to se4wp@proton.me, or on Instagram (@read.sewp).
Thanks to @bradleydorrance on Instagram for the first question in this series.
How is the global economic outlook in light of recent events and choices by the Trump administration?
First off, we must properly contextualize the latest Trump administration. Trump is an American imperialist first and foremost, as all American presidents have been, for all of American history. He is not an aberration. The main difference with the latest Trump administration is that the imperial levers of power no longer function as designed. That is because the global economy has already been rapidly shifting away from the American dominance that has characterized it post-WWII, and particularly since the collapse of the USSR (check out our Economics of Empire series to learn more about this history).
After WWII, the USA designed the global economy around the USD to work to their benefit, and has weaponized its trade and currency power against any country that attempts to build an alternative. The trade deficit (in terms of goods) that Trump complains about is an intentional and cornerstone element of this system, and benefits the USA as the basis of their material prosperity. The offshoring that eliminated millions of American industrial jobs in pursuit of more easily exploitable labour (hence higher profits) was also intentional.
However, even the lop-sided economic benefits to the American empire were not total. Negative side effects like social crises in former manufacturing regions have become an undeniable problem. Trump has skillfully ridden these problems to power, but he cannot solve them (i.e. reshoring manufacturing in the USA) without killing the empire’s golden goose: its global financial architecture.
The primary step towards any less exploitative global economy is an alternative global economic structure that cannot be weaponized in this same way. BRICS+ and the New Development Bank are in the early stages of such a system, but still a long way off. The unnerving part about the first few months of this Trump administration is how much he has accelerated the deconstruction of the current system, while whatever future alternative replaces American hegemony is still being created. This recklessness will speed up the pre-existing trends away from American economic dominance and the Dollar System. It will open opportunities for ideas to become real world applications (check out what’s going on with China’s use of the Digital Yuan in global trade, a topic we will cover in a coming article).
Let’s ground this historical analysis in two of the most revealing events from the last hectic month.
The first is how global investors have been breaking the link between the US stock and bond markets. For savvy professional investors, in times of stock market turbulence (like we saw in April 2025), the safe place to shift money was always the US bond market (government debt). However, the market movements caused by ‘Liberation Day’ saw both the stock and bond markets fall. What this means (at an extremely high level) is that investors are losing overall confidence in American markets as a safe long term home for their money. This is mainly due to the immense uncertainty created by the Trump administration’s daily shifting policies. Global capital relies on stability and certainty, especially for something as monumental as a hypothetical American reindustrialization.
On the topic of reindustrialization (the stated goal of the tariff madness), the Trump administration has made no mention of the necessary state-backed industrial policy and investment that have guided every successful industrialization plan throughout history. Without this type of centralized economic planning, it is supposed that industrialization will be achieved by fine-tuning the market incentives for private global capital. The broken link between the American bond and stock markets shows that global capital likely prefers pulling out of the USA altogether, than investing in lengthy, low profitability infrastructure and industrial investment.
The second major event was how overall Chinese exports for April 2025 actually increased by 8.1%. Exports to the USA fell 21% (compared to April 2024), but exports to the rest of the world rose 13%. China has spent the past decade greatly diversifying their trade partnerships, to reduce reliance on the USA as a trade partner. What this shows, fairly definitively, and contradicting what the Trump administration continues to claim, is that the USA needs China’s goods more than China needs American consumers. China can reroute its manufacturing to its massive and increasingly prosperous internal market, or to regions like Southeast Asia or Africa, in which trade with China has exploded over the past decade. To quantify this, so far in 2025, the annual increase in Chinese exports to non-US markets is 20x the annual decrease in exports to the US. The old global economic paradigm of ‘Chinese makes cheap goods for American consumers’ was already gone; Trump’s tariff policy only lifted the veil for the West to finally see it clearly.
From a Canadian perspective, we need to recognize that capitulating to American threats (like the UK recently did) is to tie ourselves to a shrinking future of increasing economic abuse. The necessary two-pronged approach is to 1) invest in building up our sovereign national industrial capacity, and 2) to improve trade relationships with the rest of the world, and China in particular. Chinese production excellence in goods like solar panels, EVs, robotics, and batteries is unmatched. Canadian companies would benefit greatly from the type of mutually beneficial tech transfer production relationships that China used so effectively in the 1990s and 2000s.
This two-pronged approach fits for basically every country on earth, which is why the overall outlook for the world economy is actually quite good. At the very least, a global economy based on sovereignty and cooperation is more equitable than the one dominated by American military and financial power since 1945. This transitionary period will likely be quite rocky. However, the ultimate outcome can easily be the economic decolonization of the Global Majority, which would finalize the political decolonization begun in the 1950-60s. The likelihood of this outcome only improves as the global working class struggles for such an outcome. We must remember that we are the economy, and can create any economic future we believe in through international solidarity, relentless struggle, and collective education.
Side note: if you really want to stare into the proverbial void, check out Nathan Tankus’ work over at Notes on the Crisis for further analysis of the Trump administration’s most existentially destabilizing legal and political policies.