By Nishthar Idroos –

Nishthar Idroos

Internationally, it seems protectionism is all over the horizon and increasingly coalescing. Also, one couldn’t but see the horizontally challenged caricature of President Donald John Trump looming big and extending the required impetus. Professor Geofrey Saches of Columbia University has used a sharp rapier to cut Donald Trump to pieces, especially for his lamentably poor understanding of Modern Economics.

Who could have thought that the United States of America, the epitome of free enterprise and capitalism would one day wallow in protectionist orgies? President Ronald Reagan must be banging his casket as hard as he could to open it and make a sprint to the White House to have a quick a tete a tete with President Trump. No doubt we are experiencing a noteworthy and persistent revival of protectionist policies globally, driven by geopolitical tensions and the pursuit of national economic security, and is widely expected by experts to stay or even increase in the near future. This marks a shift from the post-war era of trade liberalization. What kind of harbinger is this signaling to humanity?

The current rise in protectionism strongly linked to strategic competition between major powers, particularly the US and China. Countries realigning trade relationships and implementing measures like tariffs and investment screening to achieve economic self-reliance and national security objectives. Economists agree that there is a kind of nebulous corridor nations are either walking or will be walking on this area. None have any accuracy in terms of knowledge as to what the other has achieved in technology and other resources. It seems strengths need to be well protected if not hidden, hence various shades of protectionism.

Also by limiting imports, domestic industries can maintain or even increase employment levels, especially in sectors facing intense foreign competition. This is some what of a parochial view. Emerging industries may require temporary protection from established international competitors to develop and achieve economies of scale before they can compete globally. Not true, collaboration, cooperation and corroboration is more rational and robust approach. Restricting imports can help reduce a persistent trade deficit, improving a country’s overall balance of trade. True, it’s an inevitable reality. The only way to overcome this to increase trade both ways between nations.

Regardless economists largely agree that protectionism has a negative effect on economic growth and overall welfare, leading to inefficiencies, higher consumer prices, and the risk of retaliatory trade wars. However, the push for domestic renewal and supply chain resilience, highlighted by events like the COVID-19 pandemic, continues to fuel the trend. Such a landscape creates significant uncertainty for businesses, forcing them to adapt by diversifying supply chains to manage risks.

The Trump administration argues that its tariffs will promote domestic manufacturing, protect national security, and substitute for income taxes. This is an extremely poor understanding of the ground reality of the US. Its no exaggeration to say that the manufacturing base of the US is wiped out.The US cannot compete with countries like China, India, Vietnam etc. More over the Trump administration views trade deficits as inherently harmful, a stance economists criticized as a flawed understanding of trade. Protectionism involves government strategies designed to limit international trade to bolster domestic industries. This is a short term adrenaline boost. By the time President Trump’s term ends in three years time the reality will be very different. These policies aim to enhance economic activity within a domestic market and address concerns related to safety and product quality. While protectionism is debated, its supporters claim it fosters job creation and boosts GDP by shielding homegrown businesses from global competition. These kinds of policies necessarily narrow and insular.

Let’s talk about Donald Trump. Since the 1980’s, Trump has advocated for import tariffs as a tool to regulate trade and retaliate against foreign nations that he believes have taken advantage of Americans. This is an outrageous lie and defies the truth from multiple fronts.

The United States has historically dominated global innovation and maintained technological supremacy in critical sectors such as artificial intelligence (AI), semiconductors, and renewable energy. However, recent developments indicate that China has made substantial progress in this area, driven by a combination of state-led strategic initiatives and sustained investments. In the year 2023, for instance, China’s investment in R&D surged to approximately $722.8 billion, nearly matching the 784-billion-dollar figure recorded in the United States. The convergence of these trends signifies a notable shift in the balance of technological superiority, a matter of significant concern for US policymakers. The urgency of this situation is underscored by President Trump’s introduction of protectionist measures. Too little, too late. China today is much ahead, in every conceivable sphere.

The rapid growth in China’s innovation is evident in the surge in patent applications, particularly in the domain of AI and related technologies. In this sector, Chinese inventors have demonstrated a substantial lead in terms of the volume of patent applications compared to their US counterparts. Notwithstanding the continued preeminence of US researchers in the realm of pioneering research and the unassailable quality of US innovation, the escalating scope of China’s technological prowess portends a substantial strategic challenge to the United States in its role as a global leader in technology. Over time, this shift will chip away at the economic strength and military superiority of the United States, intensifying strategic competition and raising significant security concerns.

Some realistically fear an inevitable apocalypse if a multilateral detente is unachievable.