A New Age of Empire? Trump, Trade Wars and Global Fragmentation

Donald Trump stormed back into the White House in January 2025, not to replay his first-term script, but to fast-forward a harder, sharper version of economic nationalism. His second presidency lands in a world already wobbling, fractured by wars, weakened by pandemic aftershocks and riddled with disillusionment in the promises of globalisation. Free trade is under siege, multilateralism is in retreat and the old neoliberal consensus is cracking.

The question now is blunt and urgent: Are we watching the end of an era, or just another disruption in capitalism’s long, chaotic evolution?

Retreat from neoliberal globalisation? 

The Trump administration’s approach to global capitalism reflects a sheer break from the neoliberal order set up in the late 20th century. The once-dominant principles of free trade, deregulation and multilateralism are now openly challenged.
Trump’s aggressive tariff regime, epitomised by the 10% universal import tax and targeted tariffs as high as 145% on Chinese goods, marks a return to neo-mercantilism.

The US trade deficit, which ballooned to $918.4 billion in 2024, is cited as evidence of a broken system. However, critics agree that Trump’s remedies are self-defeating. According to various sources, these tariffs may cost the average US household $3,800 annually in higher consumer prices.

This shift is occurring alongside a global re-evaluation of trade alliances and economic sovereignty. Countries that once embraced free trade are increasingly turning inward or forming regional trade blocs.

China is intensifying regional cooperation through the Regional Comprehensive Economic Partnership, while developing its digital yuan to reduce dependence on the dollar. BRICS nations are exploring new payment platforms amid Trump’s threats and persuasions, challenging the hegemony of US-dominated financial systems. Russia and Iran have strengthened barter and local-currency trade mechanisms, a signal of increasing resistance to dollar-based trade.

Europe, too, is reconsidering its position. Thomas Piketty observes that Trump’s “national capitalism likes to flaunt its strength, but it is actually fragile” and urges Europe to ‘regain confidence’ and ‘forge new alliances’. While some European leaders remain hesitant, others are calling for a more assertive stance on trade, technology and environmental governance.

Reconfiguration of trade and the global economy

Under Trump, trade policy has become weaponised. The administration’s commitment to the Heritage Foundation’s Project 2025 has resulted in the systematic dismantling of multilateral trade institutions.

Peter Navarro’s chapter in Mandate for Leadership argues for abandoning WTO principles and replacing them with the US Reciprocal Trade Act, allowing unilateral tariff hikes to match foreign rates. While touted as defending US industry, this approach ignores the interdependence of global supply chains. Navarro’s framing of trade as national security amplifies the zero-sum logic underlying Trump’s doctrine.

Trump’s revival of aggressive tariff strategies has created ripples across the Global South. Countries like South Africa, Mexico and India, previously seen as potential beneficiaries of US supply chain diversification, are instead facing punitive tariffs. Dean Baker warns that such tariffs are inherently regressive, hurting low-income households more than the wealthy.

The US has imposed new duties on South African steel and autos, while signalling a possible exit from AGOA. These moves threaten to reverse gains in industrial development and erode strategic partnerships.

Under Trump, the administrative state is being hollowed out in favour of executive power controlled by corporate elites. Photo: Zach Rudisin/Wikimedia Commons, CC BY-SA 3.0.

The imposition of retaliatory tariffs by China, the EU and others has already begun to distort trade flows. Vietnam, a major exporter to the US, has seen supply contracts redirected to other Asian economies. India’s pharmaceutical exports face increased scrutiny, while its ambitions to replace China in electronics supply chains are dampened by rising protectionist sentiment.

Even allies like Canada and Germany find themselves under threat of new trade barriers.

The net effect is a fragmentation of global trade into politically motivated regional spheres.

The ruling class reasserted: towards oligarchic control

Beyond trade, Trump’s second term represents a transformation in the structure of American capitalism itself. According to John Bellamy Foster, the US is now governed by a “tech-finance oligarchy”, with billionaires like Elon Musk, Peter Thiel and Tim Mellon directly shaping federal policy. The 2025 Trump cabinet includes at least 13 billionaires with a combined net worth of as much as $460 billion.

This is not merely a continuation of neoliberalism but its mutation into a more authoritarian and overtly class-driven form of governance.

This shift is not without precedent. The Powell Memo of 1971 had already called for a reassertion of corporate control over the US state, which neoliberalism fulfilled through deregulation and privatisation.

But Trumpism, particularly under Project 2025, seeks to dismantle even the facade of liberal-democratic governance. Nature Magazine reports the defunding of scientific research, mass layoffs at the National Institutes of Health and NASA, and a rollback of climate policies as manifestations of the Heritage Foundation’s blueprint to “dismantle the administrative state”.

Trump’s America is thus not merely protectionist; it is post-democratic. The administrative state is being hollowed out in favour of executive power controlled by corporate elites. Science, education and civil service, hallmarks of the postwar liberal state, are being recast as enemies of the people.

Impacts on the Global South and beyond

The implications for developing countries are far-reaching. Trump’s trade wars are not just about economic gain but geopolitical coercion. South Africa’s experience with punitive tariffs despite its strategic alignment with the US illustrates this asymmetry.

The revocation of AGOA benefits, reduction in aid and disregard for multilateral rules have pushed many Global South countries toward China and alternative blocs.

Indian exports in pharmaceuticals and technology face new scrutiny, while China is doubling down on domestic self-sufficiency and trade with BRICS nations. Russia, under sanctions, is increasing transactions in rubles and yuan.

Jayati Ghosh argues that nations in the Global South must abandon export-led growth and focus on domestic demand, equitable wages and sustainable production.

The Trump era presents both a challenge and an opportunity for these economies to rethink their place in the global system.

Meanwhile, global inequality continues to widen. The International Labour Organisation warns that rising protectionism could reverse decades of poverty alleviation. The IMF and World Bank, already weakened, are struggling to maintain consensus. If the current trajectory holds, we may see the rise of parallel institutions – Asian Infrastructure Investment Bank-style platforms that bypass Western-led norms.

The future of world capitalism

Is this the end of neoliberal globalisation?

Not quite. What we are witnessing is a chaotic transition – a contest between overlapping and diverging capitalist models. Neil Davidson warned against viewing neoliberalism as a singular system; rather, it evolved through crisis and resistance. Trump’s nationalist capitalism is not an aberration but a distorted continuation.

Trump’s America no longer functions as the shepherd of globalisation but as a predatory state driven by elite interests. This is not de-globalisation but re-globalisation on new, more authoritarian terms. Trump’s second term, fuelled by intellectual architects like the Heritage Foundation, reflects a decisive break in world capitalism – a mutation rather than a collapse.

Toward a post-American economic order?

Trump’s second term represents both the symptom and the cause of a structural crisis in global capitalism. His aggressive tariffs, retreat from multilateralism and oligarchic consolidation are reshaping the world economy into fragmented blocs, undermining the liberal global order. The realignment we are witnessing may not yet be a coherent alternative to globalisation, but it points to the exhaustion of the old regime.

Unless countered by international cooperation and progressive economic alternatives, Trump’s America may drag the world into a new era of economic disorder – defined not by the end of capitalism but by its mutation into a more authoritarian, unstable and contested global system.

Whether the world welcomes this drift or charts a different path will determine the nature and dynamics of the next global order.

K.M. Seethi is director, Inter University Centre for Social Science Research and Extension, Mahatma Gandhi University, Kerala. Seethi also served as senior professor of international relations and dean of social sciences at MGU.

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