Trump administration have a vision of Hamilton’s ‘American System’ economics

The Supreme Court decision striking down Donald Trump’s use of the International Emergency Economic Powers Act to impose tariffs at will has important implications for the balance of power within US institutions. The effects will, in fact, be more political than economic: While the Court has staked out its position on the limits of presidential power, the practical repercussions for trade policy are likely to be limited. The White House immediately announced new tariffs based on different sources of authority, which, despite requiring a more articulated rationale and also being subject to potential challenge, show that overall trade policy is unlikely to deviate quickly from the direction adopted in recent years.

There has been a deep shift in the US institutions that goes well beyond the haphazard, in-your-face style practised by Donald Trump. Decades of economic globalisation, in which trade deals were written to pursue low costs for businesses and high returns for shareholders, were a major factor in producing the populist backlash in both the US and Europe. Bank bailouts and austerity policies, accompanied by declining middle-class living standards, allowed for the emergence of politicians critical of global finance and multinational corporations, opening the door to a new direction in economic policy.

Trump’s solution, obviously, seems far from adequate. The US president has often deployed tariffs as tools of political coercion, generating friction with allies and risking trade wars with major powers. Blanket levies have not yet delivered significant progress in rebuilding the US industrial base either, as shown by the loss of 80,000 manufacturing jobs in 2025. Promises of trillions in new investment abound, but as Joe Biden also discovered, industrial policy takes time — and for now Americans are more concerned about immediate pressure on their cost of living.

Yet a more coherent economic strategy does exist. Piecing it together from Trump’s speeches may be difficult, but others in his administration have outlined a clearer vision of what is known as the “American System” of economics — the historic tradition that treats tariffs as part of a broader programme of investment in manufacturing and infrastructure aimed at strengthening the country’s productive capacity and thus independence. Chief among them is US Trade Representative Jamieson Greer, who at the World Economic Forum in Davos last month, delivered a remarkable speech that has gone largely unreported in the mainstream press.

Entitled From Hamilton to Today: Trade and US Economic Strategy, the address traced the development of American economic policy back to Alexander Hamilton’s 1791 Report on Manufactures, which pointed the way out of dependence on the British Empire through a mix of investment and protection for productive sectors. Greer revisited the battle of the economic nationalists throughout the 19th century, highlighting the role of infrastructure development and the effort to transform the country from a supplier of raw materials into an industrial power — including through cooperation with partners such as Germany, Japan and Sun Yat-sen’s China.

Central to this narrative is a critique of the slave-based economic model of the antebellum South, in which large landowners traded cotton with Britain in exchange for cheap manufactured goods. That low-cost model actually slowed American development, reinforcing a system of human and economic exploitation rather than fostering technological progress and a skilled workforce. Opposition to it was led by leaders like Abraham Lincoln, who in 1832 famously declared: “My politics are short and sweet, like the old woman’s dance. I am in favour of a national bank. I am in favour of the internal improvement system, and a high protective tariff.” The industrial surge that followed would help secure Union victory in the Civil War.

The critique of the economic model of slavery and empire is relevant for today. The promotion of low-cost production and exports produces distortion and inequality, rather than a truly free market and a strong middle class. This diagnosis has gained traction in the West in recent years, but the debate is often drowned out by polarisation around Trump’s more improvised actions. In Washington, however, a bipartisan consensus is emerging around the need for a more balanced trading system — one that counters unfair practices and brings the welfare of workers and producers back to the forefront.

So is a clear strategy finally taking shape? The conclusion of the US Trade Representative’s speech leaned more toward justifying Trump’s actions today than outlining a comprehensive plan for the economy going forward. Still, it shows that beneath the surface, some policymakers are seriously grappling with how to move beyond the post-industrial, hyper-financialised model of recent decades. For Europe, there is an important takeaway in the short term: Reacting against the anti-globalisation turn in the United States by defending the principles of the liberal international order, i.e. the system which Washington recognises as the cause of so many problems today, is a risky proposition. European nations should work to correct their own errors, and revive the similar pro-industrial principles which drove their growth in the past, before they adopted the current EU straitjacket which is proving so hard to overcome. 

Andrew Spannaus is an American journalist and political analyst based in Milan. He has written extensively on populist movements in the US and Europe, and lectures on US economic history at the Catholic University in Milan. He is a radio host and podcaster for Radio24, and a frequent commentator on international politics in Italian media.