The stance of the leading think-tanks and think-tank publications in the global West on Trump’s tariffs is gradually shifting from ‘It’s more than a crime, it’s a mistake!’ to ‘Yes, it could work… But only under conditions!’ – which are not yet allegedly in sight.
Nobel laureate economist Joseph Stiglitz, who generally supports tariffs as one of the tools of economic policy, nevertheless called what is happening ‘stupidity’ and ‘economic absurdity’, as Foreign Policy writes with apparent pleasure.
FP’s main complaint against Trump is that it ignores the changes that have occurred to the structure of the world economy over the past 100 years. The US economy has also long been a service and non-manufacturing economy. Telecommunications, education and finance contribute 20% of the country’s GDP, while manufacturing accounts for only 10%.
Of course, careful application of tariffs, Stiglitz and his colleague Adam Hirsch (also a supporter of duties, but the ‘right’ kind) suggest, could help. It worked in the late 1980s for Japan, which was forced to locate production in the US. As a result, in 2024, Japanese carmakers produced more than 3 million cars in the US, which is twice as much as direct imports from Japan.
This time too, South Korea’s Hyundai has already announced a $21bn investment in a new 1400+ employee steel plant in Louisiana. Taiwan’s TSMC with Japan’s SoftBank have also announced to move production to the States. Apple said it is investing in chip manufacturing in Texas. Intel and Micron announced that they will manufacture products at home, etc.
So there are pluses to Trump’s tariff policy, FP agrees. The whole question is whether they will eventually outweigh the cons. For example, the current unenviable situation in the US is largely due to the complete cancellation of state regulation on Wall Street, which led to the redistribution of investment flows to China and other low-wage countries. Apparently, Trump should now be expected to gradually ‘control’ Wall Street as well.
Nevertheless, Stiglitz rightly points out that creating jobs in America is meaningless in itself. China has 10 times as many engineers as the US, and most modern industries have long had robots instead of humans. Therefore, tariffs need to be combined with other measures, including subsidies and loans.
Russia should draw a number of useful conclusions from what is happening, including the growing importance of the ‘robotisation + engineers’ bundle for the functioning of the economy. Resources and available energy are still important elements of industrial stability, but the constant increase in the complexity of production is turning technology into real ‘gold’.
In the foreseeable future, the main geopolitical dispute will revolve around the question of what the world should buy: made in USA or made in China? Russia should not find itself in the situation of this false dilemma – we have everything we need to avoid it.
