On May 12, the United States and China announced that they would suspend reciprocal tariffs for 90 days. A joint statement said some tariffs will be retained as trade negotiations continue.
This is another reversal of the stable tariffs imposed by U.S. President Donald Trump in early April that stabilized the global economy and allowed the stock market to fall freely.
Although he claimed that his measures would "prosper" the U.S. economy, it was clear that they could not work properly from the beginning. The trade war cannot improve many American workers, nor can it bring manufacturing back to the country.
Today, the Trump administration is now cut by companies for shrinking U.S. gross domestic product (GDP) profit targets and reports appear to be cutting profit targets and reports. However, returning to economic liberalism under the guise of "stability" is not the right course of action.
The current global economic system has distorted its affluent policies for decades and has proven itself unsustainable. This is why we need a new world economic order that promotes inclusive and sustainable development in the North and South of the world and responds to global socio-economic challenges.
At present, the troubles facing economies around the world are the result of policies of the global northern elite in the past 80 years.
After World War II, the economic order proposed by the Allies in their initial Keynesian vision was designed to combine trade, labor and development best practices to promote inclusive growth. However, in the following decades, corporate opposition in the United States and Britain derailed the order with a skewed regime around the major economic tools in the global north, the World Bank and the International Monetary Fund, both created in 1944.
In the 1970s, economic elites attributed inflation and stagnation to temporary shocks such as the oil crisis, but rather their view as excessive concessions to organized labor: government overspending, strong unions and strict regulation. They then initiated an institutional counter-revolution against Keynesian models of power sharing and social compromise.
This counter-revolution was formed in the 1980s under the leadership of US President Ronald Reagan and British Prime Minister Margaret Thatcher, who actively adopted policies to restore corporate profitability. They cut taxes on wealthy, liberalized international capital flows, making it easier to migrate production to low-cost economies, relax financial sectors, weaken labor unions and privatize public services. As a result, outsourcing of labor, tax evasion, real estate speculation, financialization and credit bubbles became the main way for American companies to make profits.
In developing countries, the IMF, the World Bank and the Regional Development Bank have prompted governments to cut public spending, privatize state-owned enterprises, eliminate trade barriers, and quickly relax markets without considering social consequences.
As a result, decades were lost in the 1980s and 1990s as a result of the radical liberalization of many countries. These policies have triggered a huge job shock, rising inequality, surge in debt and ongoing financial turmoil from Mexico to Russia.
The East Asian economy is the exception because they have learned to bypass the strict areas of liberal globalization and have joined the global economy in their own way.
The biggest beneficiary of the system is the Western economic elite, as companies profit from low-cost production abroad and deregulation of households. This cannot be said for Western workers who face real wages, eroding labor protection and increasing economic insecurity under the pressure of competitiveness, relocation and automation.
For those who have studied the post-war economic order, it is clear that nationalists are nationalists, liberal counter-revolutionaries without correcting the trap of liberal globalism. We saw signs of it in the early days of Europe, where liberal populists rose, first gaining a foothold on the periphery, and then gradually expanding to Europe's most destructive forces.
In countries where they gained power, they adopted policies that looked like developmentalism. However, instead of real structural transformation, they promoted oligarchs dominated by elite politically linked. Instead of developing, they provide rent-seeking and resource extraction without increasing productivity or innovation.
Trump's economic policies follow a similar path of economic populist and nationalist rhetoric. Just as Europe's free economic policy failed, his tariffs would never magically reindustrialize or eliminate the pain of the working class.
If anything, tariffs (or threats imposed on them now) will accelerate China's competitive advantage by pushing for deepening domestic supply chains, fostering regional cooperation and reducing reliance on Western markets. In the United States, free reactions will delay labor standards, erode real wages through inflation, and support the elite through artificial protection.
Furthermore, Trump has no real industrial policy, which makes his reactive trade measures completely invalid. True industrial policy will coordinate public investment, support target sectors, implement labor standards, and carry out technological change to good jobs.
His predecessor, President Joe Biden, laid the foundation for this industrial policy agenda in reducing inflation and bargaining chip bills. However, these plans are now under attack by the Trump administration and the rest of the remains will have no meaningful effect.
Without these pillars, workers will face economic shocks and exclude them from growth, and the rhetoric of reindustrialization is merely a political manifestation.
While Trump's economic policies are unlikely to work, returning to economic liberalism will not address socio-economic dissatisfaction. Let us remember that past efforts to maintain such a deep flawed system to counterproductively.
After the 2008 global financial crisis, Western governments saved big banks and allowed financial markets to return to business as usual. Meaningful reforms to global economic construction have never been achieved. Meanwhile, working and middle-class families from Germany to the United States have been stagnated or declined, with wages leveling, housing prices soaring, and economic insecurity deepening.
We cannot return to this dysfunction again. We need a new global economic order that focuses on multilateral governance, ecological sustainability and people-centered development. This progressive global multilateralism will mean that governments will not only coordinate multinational corporations and curb taxes from tax havens, but also coordinate capital flows, set minimum labor and environmental standards, share green technologies, and jointly provide financing for global public goods.
In this new economic order, global economic governance institutions will implement industrial policies for development and emerging countries and establish stronger ties with public financial institutions to mobilize patients, sustainable capital. This collaborative approach will provide a practical alternative to liberal globalism by fostering responsible public investment and development-focused financial cooperation.
Parallel to ecological social developmentism in emerging economies, wealthy countries need to gradually accept later models. This strategy prioritizes well-being, ecological stability and social equity over endless GDP expansion.
This means investing in nursing work, green infrastructure and public services, rather than pursuing short-term profit or extraction growth. For mature economies, this goal should go from growth to better allocating and living within the limits of the planet. This will also provide more space for low- and middle-income countries to improve their living standards without over-exploiting our limited shared natural resources.
Through stronger collaboration between state and multilateral public finance institutions, as well as better tools to tax and regulate companies, governments can restore their ability to create stable, well-paid jobs, strengthen organized workforces and tackle inequality. This is the only way for American workers to regain their quality of life.
This progressive multilateralism will be a powerful long-term antidote against non-liberal populism. However, achieving this transformation requires the creation of strong global and regional political alliances to challenge entrenched corporate interests and balance existing free-capital-driven global frameworks.
The challenge is clear: not only criticize Trump’s destructive policies, but also propose a bold, coherent vision of industrial renewal, ecological sustainability, and global justice. The coming months will show whether anyone is ready to lead this transformation.
The views expressed in this article are the author's own views and do not necessarily reflect the editorial position of Al Jazeera.