Is America Doomed behind the Market Fundamentalism of Donald Trump?
Donald Trump wants to make America great again with tariffs. That is so because America is first in Mr. Trump's patriotic or corrupt thinking, which by no means makes a significant practical difference to anybody in the way he organises his thoughts together. The new, old US president intends to shrink the budget and trade deficits and reinstate manufacturing in his native country. The main culprits for the US’s current plight and his respective endeavours to correct it are China, after it manufactures too much and too cheaply and the EU, created specifically to harm the always good America. The tariffs should twist the hands of these two rascals and punish them by forcing their bad elites to pay America for what they are staging as misconduct. When the culprits pay, it will open new industrial jobs in the U.S., and thus America will become great again. Then the fate would kiss Donald on his forehead with its historically sacrosanct lips, and he is going to stay and beam in the American hearts forever.
It is a story that would perhaps never take place, although it sounds sweetly encouraging. The bitter taste of its denial comes from the mere facts, alas. In other words, the facts deny the American Dream and its naïve positivism promoted through market fundamentalism by some ultra-smart oligarchs whom people like me cannot grant the merits they probably deserve for their intellectual and moral power. Therefore, I am in no position to rank Donald’s talents as a representative of them, but as a European scoundrel, mulling day and night over how to blemish America, I shall make use of my inborn impertinence to show how and why Mr. Trump is fundamentally wrong about the US economic hardships.
Let me start my exercise of scoundrel from a numeric data that shows a cumulative GDP growth for the U.S. between 2014 and 2023 (constant $ 2015) amounting to 24.14%, while the average salary in the period 2014 – 2024 went up by 52.2% and the inflationary rate by 31.10%. These figures are also accompanied by a tremendous growth of the public debt, 103.4%. Further, the wealth of the richest Americans saw a massive surge between 2014 and 2024. In 2014, the combined net worth of the top 400 wealthiest individuals was approximately $2.3 trillion. By 2024, this figure had more than doubled to $5.4 trillion. The top 25 billionaires alone accounted for $2.5 trillion of this total, nearly half of the entire Forbes 400 list. The manufacturing output growth in April 2025, however, was 0% vs. the output size in 2017. The U.S. trade deficit increased considerably between 2014 and 2024. In 2014, the trade deficit was approximately $508 billion, while by 2024, it had grown to $1.13 trillion, marking an increase of over 122%. The U.S. saw a surge in imports, particularly in consumer goods and industrial supplies, while the energy and arms exports grew (plus services), but they were not enough to offset the overall deficit. Between 2014 and 2024, U.S. household debt saw a substantial increase, rising from $11.3 trillion in 2014 to $18.0 trillion in 2024. This represents a 59.3% growth over the decade, driven by rising mortgage balances, student loans, and credit card debt.
Key components of the household debt in 2024:
· Mortgage debt: $12.8 trillion (largest portion)
· Credit card debt: $1.18 trillion
· Auto loans: $1.64 trillion
· Student loans: $1.63 trillion (resumed reporting after a pause)
The U.S. National Debt Clock, which tracks real-time debt figures, displayed a debt level of around 36.89 trillion U.S. dollars at the end of 2024, or it was 126.42% vs. the US GDP.
The investment-to-GDP ratio varies significantly across countries. In 2014, the U.S. had an investment-to-GDP ratio of 20.1%, which was lower than many emerging economies but comparable to other developed nations.
Here is how some countries compared in 2014:
· China: 46.0% – One of the highest, driven by massive infrastructure projects.
· India: 30.0% – Strong investment in manufacturing and services.
· Germany: 20.8% – Similar to the U.S., reflecting a stable economy.
· France: 21.6% – Slightly higher than the U.S.
· Japan: 29.0% – Higher due to industrial and technological investments.
The same comparison in the period Q1/ 2023 – Q4/2024 (as per the data available) seems as follows:
· United States: 20.7%
· China: 41.1%
· India: 30.5%
· Germany: 21.2%
· France: 21.5%
· Japan: 25.7%
After China presents the biggest business competitor to the U.S., let us have a look at similar numeric data linked to it. The country’s GDP rose between 2014 and 2023 by 66.31%. Between 2014 and 2024, the average salary in China saw a significant increase. In 2014, the average yearly wage was approximately 56,339 CNY, and by 2023, it had risen to 120,698 CNY. This represents a more than twofold increase over the decade. Between 2014 and 2024, China's cumulative inflation was approximately 21.2%. Consequently, the prices increased by that percentage over the decade, affecting the purchasing power of the Chinese yuan. For example, ¥100 in 2014 would be equivalent to around ¥121 in 2024. The inflation rate fluctuated over the years, with notable spikes in 2019 (2.9%) and 2020 (2.42%), while 2023 saw a near-zero inflation rate of 0.25%. Between 2014 and 2024, China's household debt saw a drastic increase, rising from approximately $5.6 trillion in 2014 to $11.5 trillion in 2024. This represents a more than twofold increase over the decade, driven largely by rising mortgage balances and consumer loans.
Key components of the household debt in 2024:
· Household debt-to-GDP ratio: Increased from 38.9% in 2014 to 60.1% in 2024, reflecting growing reliance on credit.
· Mortgage debt: Accounts for around 60% of total household debt, with moderate loan-to-value (LTV) ratios.
· Debt growth slowdown: While debt surged in the early years, growth decelerated to 4.4% year-over-year in 2024, compared to a 17% annual growth rate from 2013 to 2023.
In 2024, China's public debt reached approximately 16.56 trillion U.S. dollars, which accounted for 88.33% of the country's GDP. This marked a huge increase from 2023, when the debt was 82.01% of GDP. Some estimates suggest the debt-to-GDP ratio may have climbed even higher, reaching 89.8%.
China's foreign trade surplus saw serious growth over the decade. In 2024, the surplus reached approximately 992.2 billion US dollars, marking a substantial augmentation compared to 2014 by 159%. The size of the Chinese foreign trade surplus almost offsets the US trade deficit in 2024. (992.2 billion US dollars vs. 1.1 trillion US dollars) in the global economy.
What does this simple numeric data tell us?
Technically, it tells us that the Chinese economic model, based on manufacturing and export, gains ground on the American one that relies mostly on domestic consumption and services. China can maintain more competitive exports (in larger volumes too), more investments, cheaper labour cost, lower inflation, smaller indebtedness and a growing share in the world economy. These advantages cannot be eliminated by the US superiority in wealth, i.e. a bigger GDP, higher GDP per capita, a more liquid domestic market and a monopoly over the dollars printing. Once it is so because the wealth superiority counteracts the significantly lower cost of living in China:
China
United States
Cost of living for one person
$656
$2498
Cost of living Family
$1847
$5861
One person rents
$279
$1595
Family rent
$535
$2818
Food expenses
$228
$638
Transport expenses
$70.2
$100
Monthly salary after tax
$843
$4485
GDP per capita
$12614
$82769
On the other hand, the yuan can be devalued against the US dollar, whereas the opposite operation is impossible. Between 2014 and 2024, the Chinese yuan (CNY) depreciated against the U.S. dollar (USD). In 2014, the exchange rate was around 6.20 CNY per USD, while by 2024, it had weakened to approximately 7.30 CNY per USD, reflecting a devaluation of about 17.7%. It happened despite that the Chinese cumulative inflationary rate was lower than the US one during the same decade.
Then comes the third trump card of China against the American wealth superiority – its economy’s share in the global economy went up stronger between 2014 and 2024, while the US share went up more modestly in the same years. In 2014, China's share of the global economy was approximately 13.2%. By 2024, this share had increased to around 19.45%, reflecting China's continued economic expansion over the decade. In 2014, the U.S. accounted for approximately 22.1% of the global economy. By 2024, the American share had increased to around 26.3%, or China demonstrated a higher dynamism (by about 49%) of its economic model in the period. All that leads to a Chinese dominance in a lot of international supply chains, which is a prerequisite for further gaining advantages against the U.S. in the global competition.
What are the outcomes for the U.S. from the current Chinese success in the economic models competition?
They are mainly higher levels of domestic inflation, growing trade deficit, falling in supply dependencies, lagging behind in industrial innovations (China registers annually more innovations) and a gradual loss of geopolitical weight. The same outcomes could end up as technological backwardness and weaker national security. The fear of decoupling and the pacifism towards Putin’s war in Ukraine are good examples of where the U.S. stands nowadays in its economic competition with China.
Can the tariffs overcome the impending threats?
No. Taken as a single tool, they are a pro-inflationary measure, and the inflation rates from January onwards confirm that even the uncertainty about the tariffs’ application to prevail in these months over the tariffs themselves, the American inflation has not been snoozing. Besides, we can see that Trump is not consistent with them from a strategic point of view and prefers to use their role more as a racketeering instrument in his foreign policy. If we assume that one day he may try to start imposing tariffs for protecting the US manufacturing sector, then we need to remember that the effects of the tariffs can be erased by inflation. This requires their constant raising, which, of course, will pick up more inflation, too. The higher inflation, the higher interest rates. High inflation, high interest and high labour cost, coupled with a scarcity of well-qualified industrial workers, are not pro-investment drivers. It means that the US manufacturing sector will not grow without massive new investments. And it is going to be the first big failure of the market fundamentalism of Trump, who pretends to deify the tariffs as typical incentivizers of the free market. The most what the tariffs, however, may achieve is to depreciate through inflation the debts in the national economy, as the government, being the biggest debtor in it, will be the happiest beneficiary. The society as a whole, and especially its middle class and the lower classes, will pay the cost by inflationary austerity. Unfortunately, this austerity will not save the money necessary for investing. The savings may come only from tax levies. The market fundamentalism denies such practices.
Who should be charged by these levies the most? Not the Americans with non-supervised employment and the following chart shows why:
The chart clearly indicates that after 1975, the labour productivity in the U.S. surpasses more and more the real hourly compensation for the workers. It means that the workers are exploited more and more, but the productivity attained by them turns out to be insufficient to make America as competitive as to encounter China on equal grounds in the global markets (although the Chinese productivity is hilarious). Who is to blame in the situation, then? I think it should be the people with supervisory functions in the economy and, first of all, the oligarchs who possess and manage the largest businesses nationwide. They are simply the bosses of the workers. And if the average salary in the country during the last decade grew by 52.2%, the wealth of the richest 400 individuals was more than doubled from $2.3 trillion to $5.6 trillion, while the US trade deficit is only $1.13 trillion. Obviously, the American tycoons are not much keen on investing in manufacturing and their proclivity can be corrected by tax levies, but certainly not by the pro-inflationary tariffs which if ramp up the inflation, is by presumption against the investment climate. The stronger manufacturing presumes larger exports and smaller trade deficits. But here we have the second failure of market fundamentalism, because according to it, the richest people are always angels and engines of the society, and as such, they should not be penalised for their entrepreneurial talents. Poor Donald, he should be very confused in this ambience of his!
My piece is not written to defend workers’ rights. The workers and the middle class in America as far as I can see should take on their burden in the austerity aimed at shrinking the public debt, because it is larger than the national GDP (by 24%) and in 2024, the annual cost of servicing the U.S. public debt surpassed $1 trillion, marking a significant increase from previous years. These figures and the ratios between them in many smaller countries would lead to the state’s bankruptcy. In the U.S., they show that the public debt servicing exceeds the annual expenses for national security. Under these circumstances, the dollars abundant printing stoppage seems impossible. But the printing opens the easiest gates for further increasing of the public debt and the trade deficit. Is it then achievable to shrink the debt and the deficit within the present US economic model, based on the domestic consumption and service sectors’ development? Is America doomed by the market fundamentalism paradigms?
I shall abstain from answering these questions, because I am a European and belong to a Union established only to harm the U.S. Therefore, my opinions may be treated as hostile propaganda against Mr. Trump’s endeavours with his tariffs. If somebody wishes to learn more about what I have written on the subject, he or she may read my previous post focused on the first 100 days of Donald in the office. Here I shall only mention that he may reconsider the US sales tax by getting familiar better with the VAT in Europe, which at the moment bothers him as a levy only on the American imports, but it is a tax on all the sales (not only the American ones), because the US sales tax otherwise reminds remotely to the turnover tax used earlier in the former communist countries in Europe.