Donald Trump’s return to the White House marks the revival of an economic strategy that dazzles at first glance but falters under scrutiny. His policies—anchored in aggressive tariffs, sweeping tax cuts, and trade wars—recall the image of a gleaming sports car roaring onto the highway. It commands attention, promises power, and excites those watching. But as we learned during his first term, the glossy exterior conceals an engine prone to overheating and wheels poorly aligned for the long haul.
The stakes this time, however, are far higher. Conflicts in Central Europe and the Middle East are straining Western defence capabilities, while China and Russia are rapidly advancing their military and economic influence. At this critical moment, Trump’s economic policies risk destabilising industries that are central to both national security and global dominance. The military-industrial complex, the very engine of America’s power projection, could find itself stalling just as the race with China and Russia heats up.
The Flash of Trump 2.0: Tariffs and Tax Cuts Return
Trump’s economic philosophy hasn’t changed. His return will likely usher in deeper tax cuts, expanded tariffs, and a reignition of trade wars. These moves may win applause from his base, but for industries already weakened by his first term, the consequences could be severe.
Agriculture, for instance, remains one of the most exposed sectors. During Trump’s first term, retaliatory tariffs from China left American farmers scrambling as key markets for soybeans and other crops disappeared overnight. China’s pivot to Brazil and Argentina proved devastating, with U.S. farmers relying on government bailouts to stay afloat. Under Trump 2.0, further trade wars could widen these rifts, leaving family farms struggling against rising costs and reduced global demand.
The Rust Belt’s steel industry, another cornerstone of Trump’s populist rhetoric, tells a similar story. Tariffs on steel and aluminium briefly boosted domestic production but sent shockwaves through downstream industries like automotive manufacturing and construction. Companies like Harley-Davidson, caught between rising material costs and retaliatory tariffs abroad, were forced to shift production overseas. In a second term, an expanded tariff regime could drive even more manufacturers offshore, undermining the revival Trump so confidently promised.
A Critical Engine at Risk: The Military-Industrial Complex
Among all the industries impacted by Trump’s economic policies, none is as strategically important—or as vulnerable—as the military-industrial complex. This sector doesn’t just produce jobs or revenue; it underpins America’s ability to project power globally and maintain an edge over adversaries like China and Russia.
The defence industry operates in a uniquely complex ecosystem, dependent on global supply chains and specialised materials. During Trump’s first term, tariffs on steel and aluminium drove up costs for defence contractors, forcing them to either absorb losses or request higher budgets for programmes like fighter jets, naval ships, and missile systems. A second round of tariffs could exacerbate these pressures, particularly if expanded to include critical components like semiconductors or rare earth elements.
Rare earths, processed primarily in China, represent a glaring vulnerability. These materials are vital for advanced military technologies, including missile guidance systems, radars, and electronic warfare capabilities. Any disruption to their supply—whether from tariffs or broader trade restrictions—could cripple production, leaving the U.S. scrambling to fill the gap.
Global Alliances in Jeopardy
The military-industrial complex also thrives on exports, supplying advanced weaponry to U.S. allies. Yet Trump’s tariffs risk alienating these partners, pushing them to seek alternative suppliers. Retaliatory tariffs from NATO members or Middle Eastern allies could make American defence products less competitive, opening doors for Russian or Chinese arms sales.
The strain extends beyond dollars and cents. Tariffs targeting NATO allies could fracture relationships at a time when unity is paramount. The war in Ukraine has underscored the importance of collective defence, but if European nations feel penalised by U.S. economic policies, they may shift defence spending toward domestic firms like Airbus. Such a shift wouldn’t just reduce America’s economic influence—it would weaken the alliances critical to countering Russian aggression.
In the Middle East, where tensions are escalating in Gaza and Syria, alienating partners like Saudi Arabia or Israel could have equally dire consequences. China’s growing presence in the region already poses a challenge to U.S. influence, and any perceived instability in American defence support could accelerate this trend.
The Cost of Stalled Innovation
Perhaps most concerning is the potential impact on innovation. The military-industrial complex relies on constant advancements in technology to maintain U.S. superiority. Programmes focusing on artificial intelligence, hypersonic weapons, and missile defence are essential to countering the rapid developments of China and Russia.
Yet tariffs and tax cuts could undermine this foundation. Rising costs for materials and components, combined with reduced government revenue from tax cuts, might force defence contractors to divert funds away from research and development. This would come at a critical moment, as adversaries race to close the technological gap. A slowdown in U.S. innovation risks leaving the military-industrial complex unprepared for the conflicts of tomorrow.
A World on Edge
Trump’s return comes at a time when the global stage is more volatile than it has been in decades. In Central Europe, Russia’s war in Ukraine has pushed Western military supply chains to their limits, with U.S. arms manufacturers scrambling to meet demand. In the Middle East, tensions in Gaza and Syria threaten to destabilise the region further, drawing American allies into complex conflicts. Meanwhile, China’s territorial ambitions in the South China Sea signal its intent to reshape the global order, posing an existential challenge to U.S. dominance in the Indo-Pacific.
In this context, Trump’s economic policies appear dangerously short-sighted. By prioritising short-term gains—through tariffs, tax cuts, and trade battles—they risk weakening the very industries that sustain America’s global power. The military-industrial complex, already stretched thin, could struggle to meet the demands of a rapidly changing world order.
The Final Breakdown
Trump’s economic policies remain as bold and attention-grabbing as the man himself. But as his first term showed, their hidden costs often outweigh their immediate benefits. The soybean crisis and steel tariffs exposed the vulnerabilities of key industries, while his trade wars created rifts with allies that have yet to fully heal.
Now, with Trump back in the driver’s seat, the risks are even greater. The military-industrial complex—the engine of America’s national security—faces rising costs, disrupted supply chains, and diminished innovation. In a world defined by escalating conflict and great power competition, these vulnerabilities could leave the U.S. dangerously unprepared.
The car may look good, but it’s still running on borrowed time. And in the race against China and Russia, America can’t afford to break down.
