Among the reasons US President Donald Trump cited for imposing sweeping new tariffs—now effective on more than 90 countries, including the Philippines—is his view that America is in severe distress after having been “ripped off by freeloaders” in trade deals.

“We’ve been taken advantage of for many, many years by countries, both friends and foes, and frankly, the friends have been worse than the foes on many occasions,” he told White House reporters last July. “Our country was a dead country; we were going nowhere except down. We were the laughingstock all over the world.”

As he kept pushing his notion of a suffering and victimized USA, the narrative painted an image of a desolate and hollowed-out country with deserted factories, jobless workers, and low or stagnant wages for those still employed.

Of course, the reality is the opposite of that bleak picture. The US still reigns as the world’s top economic power. In fact, it has even surged far ahead of competing economies. Average wages are now 40 percent higher than those of advanced industrialized countries, compared to the 1990s when US wages were only 20 percent higher.

The US economy is now almost three times the size of Eurozone countries, whereas it was about the same size two decades ago. Compared to Japan in terms of GDP per capita, economists point out that the average American is around “150 percent richer” than the average Japanese, and that even residents of the poorest American states, like Mississippi, “have a higher GDP per capita than Great Britain or France.”

Thus, many countries are bewildered by the notion that the US has been in economic decline over the past several decades. Some economic analysts suspect that Trump’s worldview is still set in the 1960s, when the US was at the top echelon of the world’s manufacturing powers.

It seems that at the heart of the Trump administration’s economic agenda—particularly its pursuit of tariffs—is a grand promise: a great American manufacturing revival. Among Trump’s main goals, as he has repeatedly said himself, is to restore America’s industrial and manufacturing might, and to bring back the towering factories producing goods for the world to buy.

While such image of an economic powerhouse is alluring, even seductive, it belongs to a bygone era, as pointed out by global affairs analyst Fareed Zakaria in The Washington Post.

“It is an image of the past, not the future. The most advanced economies in the world today are almost all dominated by services. Services account for the vast majority of jobs in the world's richest industrialized countries. In America, services account for over 80 percent of all non-farm jobs. Manufacturing is less than 10 percent,” he wrote.

“America's distinctive exports to the world are software and software services, entertainment, financial services, and other such intangible things. And in these, the United States runs not a trade deficit, but a surplus with the rest of the world,” he said.

Why the transformation from manufacturing to services?

“Because as people get richer and better educated, they spend more money on services and not goods. In 1960, American consumers allotted more than 50 percent of their consumption spending to goods. By 2010, it was only 33 percent. And the money for companies is not in goods, but in services. A sneaker may cost $25 or $30 to make. The value, then, is in the design, marketing, and sales that allow you to sell it for $100,” Zakaria explained.

The decline of manufacturing jobs isn’t unique to the US. It’s been a global trend. In 1973, manufacturing accounted for 25 percent of US jobs; today, it’s merely eight to 10 percent. Similar declines have occurred in the UK, Canada, Germany, France, and Japan.

Japan, in particular, followed the kind of industrial policies Trump seems to admire—shielding domestic markets with high tariffs and prioritizing manufacturing with government intervention. But instead of thriving, Japan stagnated as government protection propped up outdated industries like VHS recorders and Walkman players.

While Japan leads in robotics, it is only now trying to catch up with digital technology. Even countries like Germany and France, which fought to sustain manufacturing or protected workers with strict labor laws, ultimately saw manufacturing decline while failing to capitalize on the digital economy.

The US, on the other hand, embraced digitalization and innovation. Its strongest exports are not cars or steel, but software, entertainment, and many other intangibles indeed. It now dominates the service economy, exporting $1 trillion in services. Professional and business service jobs in the US pay an average of $43.60 per hour—far more than the $34.83 earned in manufacturing.

So, if manufacturing revival can’t be a realistic motive for the tariffs, what are other reasons? As it’s turning out, a key purpose of the tariffs, which have been subjected to many deadlines and adjustments, is to pressure countries to adopt policies beneficial to US interests.

In that regard, Trump seems to be making progress, as many countries slapped with high tariffs have been eager to negotiate better deals. Tariffs have been used to get Japan, according to published reports, to invest some $500 billion into the US, or for Indonesia to purchase 50 Boeing airplanes.

He also used tariffs to retaliate against Brazil for persecuting former Brazilian President Jair Bolsonaro, and against India, slapped with as much as 50 percent, for buying Russian oil which the US banned as part of sanctions against Russia for its invasion of Ukraine.

Trump’s tariffs, ranging mostly from 10 to 40 percent, might be an effective bargaining chip for extracting concessions, but many economic policy experts worry about its adverse impact on the global economy—from the decimation of small economies particularly in Asia, to the weakening of US global influence. ([email protected])