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The United States (US) is one of the world’s largest economies, but it is presently facing a complex and evolving set of economic challenges. Decades of fiscal expansion, technological disruption, and shifting global trade dynamics have left the country grappling with record-high public debt, persistent income inequality, and increasing competition from emerging powers. 

Against this backdrop, the return of Donald Trump to the presidency brings renewed focus to his administration’s economic strategy. Let’s have a look at the key economic concerns and policy responses shaping the current administration’s approach.

The challenges 

1. Public debt. It now stands at USD36 trillion (as of May 2025)—that is USD36,200,000,000,000, and is estimated to grow at a rate of USD1 trillion every hundred days. The debt is the accumulation of persistent and massive budget deficits from previous administrations, particularly the fiscal years following the Global Financial Crisis of 2008 and the COVID-19 pandemic. This level of debt is unsustainable, and tax revenues earned may eventually fall short of covering servicing costs (i.e. interest payments).  
2. Income inequality. Blue-collar workers in the US have been experiencing stagnant real wage growth since the 1980s. They see their jobs moving overseas through massive offshoring to Asia because of cheap labour. The increased deployment of robots and automation in production and manufacturing further exacerbates this situation. The sense of insecurity, frustration, hopelessness and rising poverty among the lower-income group became the major fuel for Trump’s “MAGA” (Make America Great Again) movement.
3. Losing the lead in technology. The rapid rise of China in the field of technology in recent years has been sensational, but possibly threatening to the US. At the current rate, China is expected to surpass the US in a few years as the global leader in technology. Losing the lead, particularly in the Artificial Intelligence and microchip industries, may have severe implications for the US industry competitiveness and national security.

The game plan 

1. Reduce budget deficit to below 3% of GDP. This will reduce public debt and prevent it from spiralling out of control. However, reducing the budget deficit also means cutting government expenditure, affecting funding for healthcare, medicine, education, infrastructure development, and public-sector jobs. This will be a strategy with painful economic and social repercussions, but it is a price Trump is willing to pay. 
2. Increase GDP growth to 3%. This game plan will create jobs and increase the income level of lower-income groups. However, achieving this target is difficult when government spending is reduced. Past US presidents who achieved this 3% target mostly did so through significant public expenditures. 
3. Bring jobs back. Trump imposed steep tariffs (import taxes) on the rest of the world, aiming to compel foreign companies to relocate and invest in the US, thereby bringing jobs back to the local population. On 2 April 2025, Trump launched “Liberation Day” where he imposed arguably unjustified reciprocal tariffs on all trading partners. 
4. Impose tariffs. Tariffs will generate substantial revenue to offset the declining taxes introduced by Trump. Reducing taxes for all Americans is hoped to boost the US economy through higher domestic consumption.

The prospects

The world in 2025 is not the same as the one in 1990. The US may no longer be in a position to ride roughshod over other nations, particularly over other superpowers like China. Many of the smaller nations that may not have had strong bargaining power against the US in the past are now more economically robust. They have created essential trade links with one another and thus become less dependent on the US. 

Furthermore, reindustrialisation cannot be achieved within a year or two. It is a highly complex process that spans decades, requiring enough supply of skilled labour, massive investments, vigorous research and development initiatives, efficient infrastructure and reliable access to raw materials. The current US economy may not necessarily have all these prerequisites—without which, even with tariff shortcuts, reindustrialisation may remain an unattainable goal.