Written by: Ghaffar Hussain
Translated by: Daisy, Mars Finance
Why Trump's Tariffs Can't Fix the Broken Fiat System
Trump's tariff policy will not revive the US economy as he hopes, but perhaps Bit could play a role where tariffs fall short.
Trump was elected with the "America First" platform, promising to restructure the global trade landscape to benefit the United States. This includes encouraging companies to produce domestically, bringing jobs, industries, and prosperity back to regions that have declined due to free trade and outsourcing. Supporters believe that the US has become increasingly dependent on cheap imported goods produced in countries with lower labor and transportation costs, leading to the "Rust Belt" and declining living standards for blue-collar workers in increasingly hollowed-out cities.
The strategy to achieve this economic restructuring seems to be trade tariffs. By imposing tariffs on imported goods (especially Chinese products), Trump hopes to increase the cost of consumers buying foreign goods and companies outsourcing production. He claims this will revive the industrial centers of the United States, making the country more self-sufficient during crises, while reducing trade deficits and lowering the impact of exchange rate manipulation (which Trump accuses China of) and consumption dependence.
Another key point of Trump's tariff policy is its impact on the US dollar. By imposing import tariffs, Trump hopes to weaken the dollar—as global demand for the dollar will subsequently decrease. This is intended to make US products more competitive in the global market, thereby promoting exports. Trump expects this to bring long-term stability and prosperity to the US economy, rewarding his blue-collar supporters.
However, tariffs not only have serious economic flaws that make their effectiveness questionable but also fail to address the root of the problem. Tariffs are essentially import taxes that can benefit some domestic producers by raising the prices of foreign goods in the short term, but also increase import costs for US consumers and businesses. These rising costs, coupled with potential retaliatory tariffs from trading partners, will harm US consumers—with price increases across a range of goods from electronics to clothing that will impede economic growth.
In fact, China has announced 34% retaliatory tariffs and is even considering no longer protecting US intellectual property, which could be devastating to US businesses. The EU, India, and Turkey are also preparing countermeasures that will damage US exports. Although the US has a massive domestic market that the world covets, US businesses are also extremely dependent on global consumer markets. With many factors involved, tariffs could trigger unpredictable consequences and are far from a quick fix for US economic difficulties.
Moreover, after decades of outsourcing, it is impossible to revive domestic industry overnight. High-quality manufacturing requires massive investment in machinery, technical workers, and infrastructure, which have drastically declined in the US while countries like China continue to advance. This huge gap cannot be narrowed in just a few years. The increasing prevalence of automation and artificial intelligence also means that domestic manufacturing is unlikely to bring back jobs and economic prosperity to the US Rust Belt, as these technological advances reduce dependence on manual labor.
Even if blue-collar jobs suddenly appeared in the Rust Belt, they would not produce the effect hoped for by Trump's supporters. The average annual salary for US blue-collar workers is about $53,000, with a post-tax monthly income of around $3,300. Average monthly rent is about $1,750, average health insurance is about $700, average food expenses are about $350, and utility bills average around $600. In other words, such an income is barely enough for a worker to live alone, let alone support a family or a partner.
The true challenge facing the US economy can be traced back to a deeper issue: the decoupling of the dollar from the gold standard in 1971. Before this, the dollar was pegged to gold, meaning the government could only issue currency corresponding to its reserves. This system imposed natural limits on the money supply and controlled inflation. When President Nixon terminated the dollar's convertibility to gold, the US government was able to print money freely without any backing, leading to the rise of fiat currency.
Fiat currency has no physical commodity backing and is essentially an IOU issued by the government. While this system provides flexibility in the short term, it leads to inflation in the long term. As more money is printed for government spending and debt repayment, the purchasing power of each dollar declines. In reality, this means everyday goods and services become more expensive, while wages rarely keep pace with price increases, making it harder for people to maintain their standard of living. This is why blue-collar workers in the 1980s could easily buy a house, a car, and support a family, while today they cannot. As the saying goes, quantitative changes will lead to qualitative changes.
What the US truly needs is an alternative to fiat currency and a form of money whose value is determined by market forces rather than government policies. Such a currency could hedge against the inflationary pressures exacerbated by fiat currency policies over decades. It could also create conditions for fairer trade and stabilize the global economy by providing an alternative store of value not influenced by central banks, traditional banking systems, and exchange rate fluctuations. Fortunately, Bit is such a currency.
Trump's trade tariffs are unlikely to achieve the goals of reviving the Rust Belt or addressing the deep systemic problems of the US economy. Because they do not touch the core issues causing declining living standards—fiat currency and the inflationary pressures from continuous money printing. To address these challenges, a fundamental change in monetary policy approach may be needed, and Bit, with its decentralized nature and limited supply, now offers a viable alternative.
