The cementing of this economic regime change is based on Mr. Bessent’s unsparing diagnosis that, for decades, the United States was being played. America had essentially failed to recognize that economic security is integral to national security. Policymakers mistook historical comfort for enduring strength, operating under the naïve assumption that a growing roster of trading partners would engage with global markets fairly. Those days are over, he warned: “America welcomes its partners, and we are stronger because of them. But our partnership now carries expectations. And, in some instances, nonnegotiable obligations.”
During his first term, Mr. Trump weaponized tariffs in response to concerns that a trading system lacking reciprocity — with China, in particular — left the United States at a disadvantage. In his second term, his list of targets has expanded enormously. This move toward economic statecraft was amplified as the Covid pandemic exposed vulnerable supply-chain interdependencies and brittle networks for critical goods.
Then came Russia’s invasion of Ukraine and the U.S.-Israel attack on Iran, both of which unleashed a substantial tightening of sanctions. All of this gave way to an economic and financial strategy called Economic Fury that explicitly supplants the military strategy of the Epic Fury mission against Iran.
Until now, many on Wall Street have treated these decisions as stand-alone, ad hoc measures likely to be temporary. Wall Street even went so far as to embrace a term for last year’s tariff reversals: TACO, as in Trump Always Chickens Out. Mr. Bessent’s speech should force a fundamental reconsideration, especially in light of the five core principles that now underpin the administration’s doctrine of economic statecraft:
The more likely outcome will be the broader weaponization of tariffs, investment and payment systems against economic rivals. This will be accompanied by a more forceful industrial policy, increased use of export restrictions and mounting pressure on third parties, including the threat of secondary sanctions.
It’s a phenomenon that will be evident in peacetime, not just during wars. It will deepen in America in the years to come and inevitably spread to other countries as they adjust. The consequences will be felt profoundly across four distinct spheres:
For households, the era of ultracheap imported goods will continue to give way to one with less emphasis on cost and more on supply chain resilience. Consumers, including already stressed low-income households, will face some higher prices as the decades-long prioritization of pure economic efficiency is scaled back in favor of protecting vulnerable domestic industrial segments, bringing back priority processes such as chip fabrication, building backup supply chains and protecting jobs. The laissez-faire capitalism championed by economists like Adam Smith and Milton Friedman will face a much heavier government hand.
