It is still early days in the second Trump administration, but one must already ask what it means to “Make America Great Again.”
After all, the country is already great, judging by all the most basic economic metrics. It accounts for between 15% and 26% of global GDP (depending on whether one uses the nominal figure or adjusts for purchasing power), and its economy is bigger than the rest of the G7 combined. Despite having a population one-quarter the size of China or India, the US dwarfs both economies (in nominal terms). The average American household’s income is far above that of any other country with more than 50 million people.
That said, the US has a dreadfully low domestic savings rate and exhibits extreme inequalities of income and wealth compared to its peers. Despite spending colossal sums on health care, it ranks below all other advanced economies in health outcomes, with some population cohorts even suffering declining life expectancy. Most economists would say that if America is to be made greater, it needs to improve its fiscal position, unlock higher social returns from its huge expenditures on health, and achieve more inclusive growth, with broadly rising incomes, especially for those at the bottom of the distribution.
Given its size and systemic importance, developments in the US economy tend to have implications for the rest of the world, too. Over the past few decades, everyone else in the global economy has taken for granted three key features of the US system: its huge defense spending (which reinforced its alliances and gave it power over adversaries); its central position in the postwar rules-based global system of governance; and, somewhat less discussed, its colossal consumer demand.
At the end of 2024, personal consumption expenditures accounted for 68% of US GDP. That is a very high level for any economy at any point in time, and in the US case, it has persisted for many years. The US share of global consumption of goods is significantly greater even than the US economy’s already large share of global GDP. And because there is a strong relationship between US consumption and US imports, the rest of the world – friends and foes, and providers of essentials (like energy) and luxury goods alike – has come to rely on this aspect of the US economy.
By constantly threatening higher tariffs against America’s largest trading partners, President Donald Trump and his advisers seem unfazed by the fact that reducing overall imports into the US will almost certainly harm the US consumer, either through higher prices or by forcing the US to increase its savings rate as the rest of the world turns its attention elsewhere.
Could this happen? Although the US accounts for 15-26% of global GDP, the rest of the world economy is still 3-5.5 times larger. So, it is easy to imagine a scenario in which other countries decide that they no longer want to rely so much on the US consumer. Why not diversify?
Consider the BRICS, which has been expanding its original composition (Brazil, Russia, India, China, and South Africa) to incorporate new members and “partner countries.” What if these countries suddenly decided to do more than hold symbolic annual summits? Instead of dictating the terms for projects in countries participating in its Belt and Road Initiative, China could start offering them low- or zero-tariff trade and investment. Together with India – whose population is four times larger than America’s – it could create the conditions for an explosion in global trade that excludes the US.
Similarly, one can imagine a new, more outward-looking German government finally realizing that its self-imposed “debt brake” has been holding it back. Like the relatively new Labour government in the United Kingdom, it could adopt a policy of not only permitting but encouraging more borrowing for domestic infrastructure and defense spending. And why not revisit those perennial French proposals to develop a European bond market, or finally get serious about extending the European single market to all goods and services?
If MAGA ultimately helps everyone break their dependency on the US consumer, the rest of the world will have much to thank Trump for. The only losers will be ordinary Americans.
Jim O’Neill, a former chairman of Goldman Sachs Asset Management and a former UK treasury minister, is a member of the Pan-European Commission on Health and Sustainable Development. Copyright: Project Syndicate, 2025, published here with permission.
3 Comments
Just watched the angry exchange between Trump and Zsky.
All in all, no country should work for the US interests at its own costs. That includes NZ.
The last paragraph is the clincher isn’t it. The thing is though the journey to that objective will hardly be uncomplicated and likely, in many regards, tumultuous. A lot of American interests and individuals have become almost obscenely wealthy on the back of the globalisation that Trump is seemingly bent on reversing. In turn, it stands to reason that that segment will soon become dissatisfied and how that will be expressed will be interesting, to say the least.
If MAGA ultimately helps everyone break their dependency on the US consumer, the rest of the world will have much to thank Trump for. The only losers will be ordinary Americans.
I agree it is good for the rest-of-the-world to rely less on the US consumer. But I'm not sure whether it will be all negative for Americans. Perhaps MAGA wants them to consume less. It does seem that is the case as there is knowledge that with tariffs prices will go up for Americans - and perhaps that's the intention.
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