Latest news with #TheWealthofNations
Mint
12-05-2025
- Business
- Mint
Dani Rodrik: Mercantilism isn't always bad but Trump's trade policy is
When economists celebrate the 250th anniversary of the publication of Adam Smith's The Wealth of Nations next year, US President Donald Trump's mercantilism will constitute an incongruous backdrop. After all, Trump's obsession with bilateral trade balances, glorification of import tariffs and zero-sum approach to international trade has revived—in defiance of Smith's teachings—the worst mercantilist practices. Economists are right to denigrate Trump's trade policies. Other countries' unfair trade practices are not the main reason for the US trade deficit and targeting bilateral trade imbalances is downright silly. While the trade deficit has contributed to the decline of US manufacturing, it is hardly the most important factor. Besides, it enables American consumers and investors to borrow cheaply—a privilege most other countries would love to have. Also Read: America's war on trade gaps has a highly risky flip side In truth, mercantilism has never been as dead as economists thought, nor is it necessarily as misguided as they insist. Thanks to Smith's followers, laissez-faire and free trade often did find favour in leading countries, but others that were trying to catch up with frontier economies typically adopted a mixed strategy. For example, Alexander Hamilton in the US and Friedrich List in Germany explicitly rejected Smithian ideas and advocated import protection to grow infant industries. The Argentine economist Raúl Prebisch and others of the 'dependency school" thought that developing countries should shield their manufacturing industries from import competition. Some countries that followed their advice, like Brazil, Mexico and Turkey, experienced decades of rapid economic growth. Similarly, East Asian governments pursued a mix of mercantilist and Smithian approaches, leveraging exports and private enterprise, but often behind protectionist walls. Many saw the result as an economic miracle. While few of these policymakers would explicitly associate themselves with mercantilism, the 'developmentalism' they espoused shared many of its features. Also Read: Alexander Hamilton wrote the manufacturing playbook. Trump is shredding it. The fundamental difference between the Smithian and mercantilist approaches derives from how consumption and production are treated. Modern economics takes its cue from Smith in focusing on consumption as the ultimate goal of economic activity. Smith countered mercantilists by arguing that 'consumption is the sole end and purpose of all production," noting that, 'the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer." Mercantilists, on the other hand, emphasize production and jobs. What a country produces matters. It is absurd to claim, as one of George H.W. Bush's advisers once put it, that there is no difference between producing potato chips and producing computer chips. Moreover, once production, especially of manufactured goods, becomes the top priority of policymakers, it follows that a trade surplus is preferable to a trade deficit. It is possible to reconcile these two perspectives by adding various market failures to the conventional mainstream account. Also Read: Adam Smith's 'Wealth of Nations' has valuable lessons for eternity Contemporary economists' Smithian focus on consumption leads them to underestimate the importance of jobs in determining well-being. In the standard 'utility function' that economists use to characterize consumer behaviour, jobs are a necessary evil: they create purchasing power, but otherwise have negative value insofar as they decrease leisure time. But, in truth, jobs are a source of meaning, esteem and social recognition. Economists' failure to appreciate the personal and social costs of job losses made them insensitive to the consequences of the China trade shock and automation. Another key difference revolves around the government's relationship with firms. Smith thought one of mercantilism's defects was that it promoted cozy relationships between policymakers and the private sector, which was a recipe for corruption. Contemporary models of political economy and rent-seeking emphasize the importance of keeping firms at arm's length from policymakers. But in settings such as frontier innovation, green industrial policies or regional development, close iterative relationships between governments and firms have been highly successful. There is a good reason for this. When there is significant uncertainty (whether technological or of some other kind), working closely with firms can be preferable to maintaining strict separation. The latter would make it difficult to learn about constraints and opportunities, and what is working and what is not. Also Read: Vivek Kaul: 'Stupid, stupid, stupid' is the only way to describe US tariffs Each perspective has its own blind spots. Mercantilists too easily associate the interests of producers, especially those well-connected to the state, with the national interest. Smith's intellectual children, on the other hand, underplay the importance of production and jobs, and overlook the advantages of public-private collaboration. Good policy is often a matter of getting the combination right. This does not vindicate Trump's approach, of course. His chaotic and indiscriminate trade policies do little to expand critical strategic investments in the US, and they are riddled with cronyism, exempting politically connected firms and allowing them to game the system. There will be no upside to Trump's mercantilism because it embodies the strategy's worst defects. ©2025/Project Syndicate The author is a professor of international political economy at Harvard Kennedy School, and the author of 'Straight Talk on Trade: Ideas for a Sane World Economy'.
Observer
08-05-2025
- Business
- Observer
Mercantilism isn't all bad, but Trump's version is worst
When economists celebrate the 250th anniversary of the publication of Adam Smith's The Wealth of Nations next year, US President Donald Trump's mercantilism will constitute an incongruous backdrop. After all, Trump's obsession with bilateral trade balances, glorification of import tariffs, and zero-sum approach to international trade has revived – in defiance of Smith's teachings – the worst mercantilist practices. Economists are right to denigrate Trump's trade policies. Other countries' unfair trade practices are not the main reason for the US trade deficit, and targeting bilateral trade imbalances is downright silly. While the trade deficit has contributed to the decline of US manufacturing, it is hardly the most important factor. And besides, it enables American consumers and investors to borrow cheaply – a privilege most other countries would love to have. In truth, mercantilism has never been as dead as economists thought, nor is it necessarily as misguided as they insist. Thanks to Smith's followers, laissez-faire and free trade often did find favour in leading countries, but others that were trying to catch up to frontier economies typically adopted mixed strategies. For example, Alexander Hamilton in the United States and Friedrich List in Germany explicitly rejected Smithian ideas and advocated import protection to grow infant industries. The Argentine economist Raúl Prebisch and others of the 'dependency school' thought that developing countries should shield their manufacturing industries from import competition; and some of the countries that followed their advice, such as Brazil, Mexico and Türkiye, experienced decades of rapid economic growth. Similarly, East Asian governments pursued a mix of mercantilist and Smithian approaches, leveraging exports and private enterprise, but often behind protectionist walls. The result was what many saw as an economic miracle. While few of these policymakers would explicitly associate themselves with mercantilism, the 'developmentalism' they espoused shared many of its features. The fundamental difference between the Smithian and mercantilist approaches derives from how consumption and production are treated. Modern economics takes its cue from Smith in focusing on consumption as the ultimate end goal of economic activity. Smith countered mercantilists by arguing that 'consumption is the sole end and purpose of all production,' noting that, 'the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer.' The trade deficit has contributed to the decline of US manufacturing. Mercantilists, on the other hand, instinctively emphasise production and jobs. What a country produces matters. It is absurd to claim, as one of George H W Bush's advisers once put it, that there is no difference between producing potato chips and producing computer chips. Moreover, once production, especially of manufactured goods, becomes policymakers' top priority, it follows that a trade surplus is preferable to a trade deficit. It is possible to reconcile these two perspectives by adding various market failures to the conventional mainstream account. Today's Smithians would acknowledge that policymakers should not remain indifferent to the structure of production when certain manufacturers produce technological spillovers or are subject to coordination problems. But one's starting point also matters. Unless there is strong and compelling evidence to the contrary, a mainstream economist will generally oppose 'picking winners.' Someone with a mercantilist or developmentalist bent, on the other hand, will not hesitate to make choices about what to produce and how. The question is who bears the burden of proof, since this determines whether we treat, say, East Asian-style industrial policies as normal or as an aberration. Contemporary economists' Smithian focus on consumption also leads them to underestimate the importance of jobs in determining well-being. In the standard 'utility function' that economists use to characterise consumer behaviour, jobs are a necessary evil: they create purchasing power, but otherwise have negative value insofar as they decrease leisure time. But, in truth, jobs are a source of meaning, esteem, and social recognition. Economists' failure to appreciate the personal and social costs of job losses made them insensitive to the consequences of the China trade shock and automation. Another key difference revolves around the government's relationship with firms. Smith thought one of the defects of mercantilism was that it promoted cosy relationships between policymakers and the private sector, which was a recipe for corruption. Contemporary economics has taken this warning to heart. Models of political economy and rent-seeking emphasise the importance of keeping firms at arm's length from policymakers. But in many settings – such as frontier innovation, green industrial policies, or regional development – close, iterative relationships between governments and firms have been highly successful. There is a good reason for this. While keeping firms and governments apart may minimise the risk of capture, it also makes it very difficult to learn about constraints and opportunities, and about what is working and what is not. When there is significant uncertainty (whether technological or of some other kind), working closely with firms can be preferable to maintaining strict separation. Each perspective has its own blind spots. Mercantilists too easily associate producers' interests, especially those well connected to the state, with the national interest. Smith's intellectual children, on the other hand, underplay the importance of production and jobs and overlook the advantages of public-private collaboration. Good policy is often a matter of getting the combination right. None of this vindicates Trump's approach, of course. His chaotic, indiscriminate trade policies do little to expand critical, strategic investments in the US, and they are riddled with cronyism, exempting politically connected firms and allowing them to game the system. There will be no upside to his mercantilism because it embodies the strategy's worst defects. @Project Syndicate, 2025
New Statesman
30-04-2025
- Entertainment
- New Statesman
From Philippe Sands to Simon Park: new books reviewed in short
Wreckers: Disaster in the Age of Discovery by Simon Park According to Adam Smith in The Wealth of Nations, the discoveries of America and a passage to the East Indies by Columbus and Vasco da Gama were 'the two greatest and most important events recorded in the history of mankind'. What wasn't recorded quite so diligently were the disasters, privations, deaths and sheer haplessness that accompanied the 16th-century voyages into the unknown. In this rollicking but reflective account of those early sorties, the Oxford historian Simon Park presents an alternative view of the 'action-hero version of history'. Wreckers is about the mariners who ended up 'kidnapped, stranded, abandoned and betrayed' in the pursuit of personal wealth and national glory and of the numerous attempts at colonisation that failed. Park is an adroit storyteller and makes the most of his picaresque stories, such as that of the German explorer Hans Staden, taken captive by the Tupinambá people of Brazil who kept him in a state of permanent fear with threats of eating him, and Martin Frobisher, who sought the North-West Passage but returned defeated with nothing more than a hold full of rocks. Empire-building, says Park, was not 'unstoppable' but uncertain. By Michael Prodger Viking, 368pp, £25. Buy the book The Dream Factory: London's First Playhouse and the Making of William Shakespeare by Daniel Swift Walking down London's West End, it's hard to imagine the capital without a single theatre. But theatre-less London did exist – until 1576 when the city's first ever playhouse was erected in Shoreditch. Daniel Swift's The Dream Factory traces the remarkable history of the aptly named playhouse, the Theatre, thanks to numerous litigations associated with the family behind it – the Burbages. Without James Burbage and the Theatre two significant parts of the history of theatre would be missing: Shakespeare and the Globe. Shakespeare began his writing in the Burbages' playhouse. It was here that A Midsummer Night's Dream and Romeo and Juliet were written, and the son of James Burbage, Richard, is thought to have inspired many well-known Shakespearean characters. Deftly navigating social politics, the plague and preachers wishing for the Theatre's downfall, Swift tells its history in the most original way. The Burbages' dramatic life truly was well suited to their industry. By Zuzanna Lachendro Yale University Press, 320pp, £25. Buy the book 38 Londres Street: On Impunity, Pinochet in England and a Nazi in Patagonia by Philippe Sands Calle Londres intersects Calle París in central Santiago. Once a place of the elite, it was revitalised by cultural and political figures in the mid-20th century. Calle Londres 38, after which the bestselling author Philippe Sands' latest book is titled, was an unassuming house – until the military dictatorship of Augusto Pinochet. Under Pinochet, Londres 38 was turned into the detention and torture centre of the National Intelligence Directorate (DINA). Sands' 38 Londres Street is a gripping blend of memoir, investigative journalism and courtroom drama, with a narrative spanning decades and thousands of miles. It includes his own involvement as a barrister for a human rights organisation during the 1998 arrest of Pinochet in London, and his discovery of personal links to those affected by the dictator's regime and to the murders of Walther Rauff, the Nazi behind the gas vans used to kill thousands of Jews. Speaking to lawyers involved in Pinochet's later trial, Chileans affected by DINA's torture and disappearances and those who knew Rauff (after he settled in the city of Punta Arenas), Sands convincingly makes a connection between Pinochet's regime and the Nazi in exile. Most importantly, he shows why the dictatorship must not be tucked away into the past. By Zuzanna Lachendro Weidenfeld & Nicolson, 480pp, £25. Buy the book The Fall of the House of Montagu by Robert Wainwright On 24 January 2017, Alexander Montagu, the 13th Duke of Manchester, was sentenced to prison in Nevada for a melange of offences. He served 14 months in jail. Shortly before he committed a burglary, in 2016, he made a visit to his ancestral seat, Kimbolton Castle, and visited the family crypt, where his father and grandparents are buried. He was only a guest, however: the estate is now the home of a public school. Subscribe to The New Statesman today from only £8.99 per month Subscribe 'How did it come to this?' you might ask, and if you did Robert Wainwright is your man. His new book closes with Alexander's sorry tale, the most recent tragedy in the decline and dissolution of a family first granted land by William the Conqueror. In some ways the story is typical: financial troubles thanks to mounting death duties; American heiress wives imported to maintain solvency; the eventual sale of the estate in a changing postwar landscape. But the Montagu story provides enough diverting specificities – bankruptcy, gambling dens and colonial exile – to make this a dramatic and pathos-inducing read. By Nicholas Harris Allen & Unwin, 352pp, £22. Buy the book [See also: Joan Didion without her style] Related
Yahoo
15-04-2025
- Business
- Yahoo
History shows tariffs like Trump's come with painful pitfalls
Feeling tariff whiplash? You're not alone. On April 2, President Donald Trump announced sweeping new tariffs -- a 10% levy on nearly all U.S. imports, along with targeted duties aimed at punishing countries he accuses of exploiting American markets. Just a week later, on Wednesday, his administration abruptly paused much of the plan for 90 days, leaving markets and allies scrambling for clarity. The proposed tariffs were pitched as a way to revive U.S. manufacturing, reclaim jobs and counter what Trump considers unfair trade practices. But they immediately rattled the financial markets and raised alarms among economists and America's global partners. Critics across the political spectrum revived a familiar warning: "beggar-thy-neighbor." History shows that such policies rarely succeed. In today's interconnected world, they're more likely to provoke swift, precise and painful retaliation. What is the 'beggar-thy-neighbor' strategy? The phrase comes from economic history and refers to protectionist measures -- tariffs, import restrictions or currency manipulation -- designed to boost one country's economy at the expense of its trading partners. Think of it like cleaning your yard by dumping the trash into your neighbor's property: It looks tidy on your side until they respond. This approach starkly contrasts with the principles laid out by Adam Smith. In The Wealth of Nations, he argued that trade is not a zero-sum game. Specialization and open markets, he observed, create mutual benefit -- a rising tide that lifts all boats. Trump's tariffs disregard this logic. And history backs Smith. In the 1930s, the U.S. adopted a similar strategy to the one Trump is experimenting with through the Smoot-Hawley Tariff Act, raising duties to protect domestic jobs. The result was a wave of global retaliation that choked international trade and worsened the Great Depression. A case in point: Lesotho As an example, consider the 50% tariff the United States imposed on imports from Lesotho, a small landlocked African nation. The measure took effect at midnight on April 3, but was reportedly subject to the 90-day pause starting midday April 4. The tariff rate was calculated by taking the U.S. trade deficit with Lesotho -- $234.5 million in 2024 -- and dividing that by the total value of Lesotho's exports to the United States, or $237.3 million, and dividing that by two. The 50% tariff would have a negligible effect on the U.S. economy. After all, out of the $3.3 trillion the United States imported in 2024, only a tiny fraction came from Lesotho. But for Lesotho, a nation that relies heavily on garment exports and preferential U.S. market access, the consequences would be severe. Using the same tariff logic across all partners, big or small, overlooks basic economic realities: differences in scale, trade capacity and vulnerability. It epitomizes beggar-thy-neighbor thinking: offloading domestic frustrations onto weaker economies for short-term political optics. Lesotho is just one example. Even countries that import more from the U.S. than they export, such as Australia and the United Kingdom, haven't been spared. This "scoreboard" mentality -- treating trade deficits as losses and surpluses as wins -- risks reducing the complexity of global commerce to a tit-for-tat game. The return of a familiar -- and risky -- playbook Such thinking has consequences. During Trump's first term, China retaliated against U.S. tariffs by slashing imports of American soybeans and pork. As a result, those exports plummeted from $14 billion in 2017 to just $3 billion in 2018, hitting politically sensitive states like Iowa hard. The European Union responded to U.S. steel and aluminum tariffs by threatening to target bourbon from Kentucky and motorcycles from Wisconsin -- iconic products from the home states of former GOP leaders Mitch McConnell and Paul Ryan. Canada and the European Union have shown a willingness to use similar tactics this time around. This isn't new. In 2002, President George W. Bush imposed tariffs of up to 30% on imported steel, prompting the European Union to threaten retaliatory tariffs targeting products such as Florida citrus and Carolina textiles made in key swing states. Facing domestic political pressure and a World Trade Organization ruling against the measure, Bush reversed course within 21 months. A decade earlier, the Clinton administration endured a long-running trade dispute with the EU known as the "banana wars," in which European regulators structured import rules that disadvantaged U.S.-backed Latin American banana exporters in favor of former European colonies. During the Obama years, the United States increased visa fees that disproportionately impacted India's technology services sector. India responded by delaying approvals for American drugmakers and large retail investments. Not all forms of trade retaliation grab headlines. Many are subtle, slow and bureaucratic -- but no less damaging. Customs officials can delay paperwork or may impose arbitrary inspection or labeling requirements. Approval for U.S. pharmaceuticals, tech products or chemicals can be stalled for vague procedural reasons. Public procurement rules can be quietly rewritten to exclude U.S. companies. While these tactics rarely draw public attention, their cumulative cost is real: missed delivery deadlines, lost contracts and rising operational costs. Over time, American businesses may shift operations abroad -- not because of labor costs or regulation at home, but to escape the slow drip of bureaucratic punishment they experience elsewhere. Tariffs in a connected economy Supporters of tariffs often argue that they protect domestic industries and create jobs. In theory, they might. But in practice, recent history shows they are more likely to invite retaliation, raise prices and disrupt supply chains. Modern manufacturing is deeply interconnected. A product may involve assembling components from a dozen countries, moving back and forth across borders. Tariffs hurt foreign suppliers and American manufacturers, workers and consumers. More strategically damaging, they erode U.S. influence. Allies grow weary of unpredictable trade moves, and rivals, including China and Russia, step in to forge deeper partnerships. Countries may reduce their exposure to the U.S. dollar, sell off Treasury bonds or align with regional blocs like the BRICS group -- led by Brazil, Russia, India, China and South Africa -- not out of ideology, but necessity. In short, the United States weakens its own strategic hand. The long-term cost isn't just economic -- it's geopolitical. Rather than resorting to beggar-thy-neighbor tactics, the United States could secure its future by investing in what truly drives long-term strength: smart workforce development, breakthrough innovation and savvy partnerships with allies. This approach would tackle trade imbalances through skillful diplomacy instead of brute force, while building resilience at home by equipping American workers and companies to thrive -- not by scapegoating others. History makes a clear case: Ditching the obsession with bilateral trade deficits and focusing instead on value creation pays off. The United States can source components from around the world and elevate them through unmatched design, innovation and manufacturing excellence. That's the heartbeat of real economic might. Bedassa Tadesse is a professor of economics at the University of Minnesota Duluth. This article is republished from The Conversation under a Creative Commons license. Read the original article. The views and opinions expressed in this commentary are solely those of the author.
Miami Herald
15-04-2025
- Business
- Miami Herald
History shows tariffs like Trump's come with painful pitfalls
Feeling tariff whiplash? You're not alone. On April 2, President Donald Trump announced sweeping new tariffs -- a 10% levy on nearly all U.S. imports, along with targeted duties aimed at punishing countries he accuses of exploiting American markets. Just a week later, on Wednesday, his administration abruptly paused much of the plan for 90 days, leaving markets and allies scrambling for clarity. The proposed tariffs were pitched as a way to revive U.S. manufacturing, reclaim jobs and counter what Trump considers unfair trade practices. But they immediately rattled the financial markets and raised alarms among economists and America's global partners. Critics across the political spectrum revived a familiar warning: "beggar-thy-neighbor." History shows that such policies rarely succeed. In today's interconnected world, they're more likely to provoke swift, precise and painful retaliation. What is the 'beggar-thy-neighbor' strategy? The phrase comes from economic history and refers to protectionist measures -- tariffs, import restrictions or currency manipulation -- designed to boost one country's economy at the expense of its trading partners. Think of it like cleaning your yard by dumping the trash into your neighbor's property: It looks tidy on your side until they respond. This approach starkly contrasts with the principles laid out by Adam Smith. In The Wealth of Nations, he argued that trade is not a zero-sum game. Specialization and open markets, he observed, create mutual benefit -- a rising tide that lifts all boats. Trump's tariffs disregard this logic. And history backs Smith. In the 1930s, the U.S. adopted a similar strategy to the one Trump is experimenting with through the Smoot-Hawley Tariff Act, raising duties to protect domestic jobs. The result was a wave of global retaliation that choked international trade and worsened the Great Depression. A case in point: Lesotho As an example, consider the 50% tariff the United States imposed on imports from Lesotho, a small landlocked African nation. The measure took effect at midnight on April 3, but was reportedly subject to the 90-day pause starting midday April 4. The tariff rate was calculated by taking the U.S. trade deficit with Lesotho -- $234.5 million in 2024 -- and dividing that by the total value of Lesotho's exports to the United States, or $237.3 million, and dividing that by two. The 50% tariff would have a negligible effect on the U.S. economy. After all, out of the $3.3 trillion the United States imported in 2024, only a tiny fraction came from Lesotho. But for Lesotho, a nation that relies heavily on garment exports and preferential U.S. market access, the consequences would be severe. Using the same tariff logic across all partners, big or small, overlooks basic economic realities: differences in scale, trade capacity and vulnerability. It epitomizes beggar-thy-neighbor thinking: offloading domestic frustrations onto weaker economies for short-term political optics. Lesotho is just one example. Even countries that import more from the U.S. than they export, such as Australia and the United Kingdom, haven't been spared. This "scoreboard" mentality -- treating trade deficits as losses and surpluses as wins -- risks reducing the complexity of global commerce to a tit-for-tat game. The return of a familiar -- and risky -- playbook Such thinking has consequences. During Trump's first term, China retaliated against U.S. tariffs by slashing imports of American soybeans and pork. As a result, those exports plummeted from $14 billion in 2017 to just $3 billion in 2018, hitting politically sensitive states like Iowa hard. The European Union responded to U.S. steel and aluminum tariffs by threatening to target bourbon from Kentucky and motorcycles from Wisconsin -- iconic products from the home states of former GOP leaders Mitch McConnell and Paul Ryan. Canada and the European Union have shown a willingness to use similar tactics this time around. This isn't new. In 2002, President George W. Bush imposed tariffs of up to 30% on imported steel, prompting the European Union to threaten retaliatory tariffs targeting products such as Florida citrus and Carolina textiles made in key swing states. Facing domestic political pressure and a World Trade Organization ruling against the measure, Bush reversed course within 21 months. A decade earlier, the Clinton administration endured a long-running trade dispute with the EU known as the "banana wars," in which European regulators structured import rules that disadvantaged U.S.-backed Latin American banana exporters in favor of former European colonies. During the Obama years, the United States increased visa fees that disproportionately impacted India's technology services sector. India responded by delaying approvals for American drugmakers and large retail investments. Not all forms of trade retaliation grab headlines. Many are subtle, slow and bureaucratic -- but no less damaging. Customs officials can delay paperwork or may impose arbitrary inspection or labeling requirements. Approval for U.S. pharmaceuticals, tech products or chemicals can be stalled for vague procedural reasons. Public procurement rules can be quietly rewritten to exclude U.S. companies. While these tactics rarely draw public attention, their cumulative cost is real: missed delivery deadlines, lost contracts and rising operational costs. Over time, American businesses may shift operations abroad -- not because of labor costs or regulation at home, but to escape the slow drip of bureaucratic punishment they experience elsewhere. Tariffs in a connected economy Supporters of tariffs often argue that they protect domestic industries and create jobs. In theory, they might. But in practice, recent history shows they are more likely to invite retaliation, raise prices and disrupt supply chains. Modern manufacturing is deeply interconnected. A product may involve assembling components from a dozen countries, moving back and forth across borders. Tariffs hurt foreign suppliers and American manufacturers, workers and consumers. More strategically damaging, they erode U.S. influence. Allies grow weary of unpredictable trade moves, and rivals, including China and Russia, step in to forge deeper partnerships. Countries may reduce their exposure to the U.S. dollar, sell off Treasury bonds or align with regional blocs like the BRICS group -- led by Brazil, Russia, India, China and South Africa -- not out of ideology, but necessity. In short, the United States weakens its own strategic hand. The long-term cost isn't just economic -- it's geopolitical. Rather than resorting to beggar-thy-neighbor tactics, the United States could secure its future by investing in what truly drives long-term strength: smart workforce development, breakthrough innovation and savvy partnerships with allies. This approach would tackle trade imbalances through skillful diplomacy instead of brute force, while building resilience at home by equipping American workers and companies to thrive -- not by scapegoating others. History makes a clear case: Ditching the obsession with bilateral trade deficits and focusing instead on value creation pays off. The United States can source components from around the world and elevate them through unmatched design, innovation and manufacturing excellence. That's the heartbeat of real economic might. Bedassa Tadesse is a professor of economics at the University of Minnesota Duluth. This article is republished from The Conversation under a Creative Commons license. Read the original article. The views and opinions expressed in this commentary are solely those of the author. Copyright 2025 UPI News Corporation. All Rights Reserved.
