Tariffs have long served as crucial instruments of industrial policy, influencing the landscape of global trade. In the past, countries in East Asia utilized these tariffs to nurture fledgling industries; similarly, the EU applies them today to accelerate its energy transition. Yet, with Donald Trump’s proposed sweeping 25% tariffs on Canadian and Mexican imports, alongside a 10% surge on all Chinese goods, one must ponder whether there is any coherent strategy underpinning his actions or if other nations should retaliate in kind.
To unpack this economic conundrum, Martin Sandbu, the Financial Times’ European economics commentator, engages in a dialogue with Dani Rodrik, a leading authority on international political economy and industrial policy. Having first crossed paths with Rodrik during his PhD years in the 1990s, Sandbu seeks insight into the motivations behind Trump’s tariff policies and their broader implications for world trade.
This article delves into the significance of tariffs as tools of industrial policy, tracing their historical usage in East Asia and current application by the EU. It questions Donald Trump’s tariffs on imports from Canada, Mexico, and China, exploring whether they are based on sound policy. Martin Sandbu converses with Dani Rodrik, a prominent expert, to unravel the economic reasoning behind these actions.
In conclusion, the examination of Trump’s tariffs opens a window into the complexities of industrial policy and global trade dynamics. As countries navigate their economic strategies, understanding the rationale behind these tariffs and contemplating appropriate responses becomes crucial. Rodrik’s expertise sheds light on the multifaceted impacts of such decisions, urging a reevaluation of traditional tariff use in modern markets.
Original Source: www.ft.com
