Protecting What?
In this column, Toro Hardy explains how although Trump isn’t the first President to call out tariffs or protect US citizens’ jobs, he is the first to do so without a coherent industrial policy. Meaning, action without thought.
For several decades after WWII, the U.S.’ economy was characterized by its industrial policies, its protectionism, and by the vertical integration of its corporations. The industrial policies carried out by the federal government in different areas and at different moments, were a major catalyst of the country’s development. This, by way of its direct engagement or by incentivizing the private sector to follow a certain course of action. The numerous products and services incorporated into the American technological repository, resulting from NASA’s R&D efforts within the space race were a good example of this kind of policies. These represent the broad shoulders on which the country’s private technological sector stands today. Protectionism, on its side, expressed itself through tariff and non-tariff barriers aimed at protecting domestic production from foreign competition. Vertical integration, finally, involved the direct control by U.S. corporations of their production and distribution channels. In other words, outsourcing didn’t figure among their strategies. (Foroohar, 2022).
Globalization
In the 1990’s economic globalization surged, being an offshoot of neoliberal ideology that took root a few years earlier. Its uppermost expressions were the Washington Consensus, the creation of the World Trade Organization in 1995, and China’s entry into this organization in 2001. The first resulted from the convergence of positions between the U.S. Treasury Department and the international financial organizations based in Washington. This translated into a 10 point recipe to set in motion the economic liberalization of distressed and closed economies. The second involved the global homogenization of rules in matters as diverse as manufacturing, services, agriculture, labor standards or intellectual property, as well as the abandonment of industrial policies and protectionism. The third represented the insertion of more than a billion human beings into the global labor market, whose working costs were but a fraction of those in developed countries. This was promoted by the U.S. under the assumption that a China economically open to the world, would eventually open itself to the values of liberal democracy as well.
For decades, globalization was an unchallenged paradigm. Under it, China reached the anteroom of world economic supremacy, numerous cheap labor economies emerged, particularly in Asia, and large corporations relying on the revolutions in information technology, communications and transports, outsourced and dispersed its production and services (again, mainly in Asia). As a matter of fact, in nine of every 10 cases the main beneficiaries of globalization were concentrated in Asia. (OCDE, 2010).
Called into question
Globalization, however, has been called into question for several years now. The chief reasons behind it have been the emergence of powerful Western populist movements, the impact of climate change and China’s political and economic nationalism. Populism, to a large extent, is directly linked to the social upheavals caused by the massive outsourcing of jobs to cheaper labor economies. While in 2000 President Clinton predicted that globalization would allow exporting products without exporting jobs, exactly the opposite happened. This seriously affected the social fabric of the United States and of its European counterparts. , Climate distortions, on its side, has been both the cause and effect of the erosion of faith in globalization. The massive mobilization of supertankers around the world generates up to 14% of the total greenhouse emissions affecting the planet. (Prestowitz, 2022). Conversely, hurricanes, floods and other climate disturbances, have brought with it an increasing risk to global supply chains, generating annual corporate revenue losses of up to 35%. (McKinsey & Company, 2020). Finally, and contrary to the rose-tinted assumption of what China’s emergence would represent in terms of democratic and market opening, its economic prosperity translated into an increasingly nationalistic and authoritarian model.
Covid and Russia’s invasion of Ukraine, however, were the two events that ended up by turning the tables against globalization. The vertiginous dissemination of productive processes, represented by supply chains, went into a sudden, unexpected, and massive disruption as a consequence of Covid. Twenty trillion U.S. dollars in goods, relying on global supply chains, were seriously affected as a result. (McKinsey & Company, 2020). This was compounded shortly after by the impact of Ukraine’s invasion, which not only disrupted vital energy and food supplies, but brought back geopolitics through the main door. As if the emerging Cold War between China and the U.S. was not enough to undermine globalization, events in Ukraine made of security the top international consideration. Under such circumstances, placing economic security in far away and potentially hostile hands, ceased to be a rational option.
Reverting
As a matter of fact, for several years now the United States have been reverting to the type of policies that preceded globalization. That is, to protectionism, industrial policies, and the vertical integration of its corporations. Indeed, before losing the House of Representatives to Republicans in November 2022, Biden’s Democrats passed several laws that embodied industrial policies. A perfect example of them was the so-called energy revolution, which aimed at guiding private investment towards the generation of clean energy sources. Collaterally, it also allowed the federal government to intervene in medicine prices through direct negotiations with the pharmaceutical industry. A group of laws that stimulated the superconductors industry, infrastructural development, and competitiveness and innovation went in the same direction. In parallel, the “Buy American” policy, subsidies for domestic industries, and the maintenance of many of the tariffs imposed by the first Trump administration, were clearly protectionist in nature. In tune with these policies, and in reaction to the risks involved by the global outsourcing of manufacturing and services, many American corporations began opting, once again, for vertical integration and the direct control of its activities. By their own nature, these translated in production processes more focused on the local and the regional.
As a matter of fact, of 709 large U.S. manufacturing corporations consulted in 2021, 83% responded that they would very likely or probably return their manufacturing operations to the United States. (Ma, 2021). Numerous leading American and foreign corporations were indeed opting for producing in the U.S. in order to benefit from Biden’s incentives. The amount of their planned investments, in the tens of billions of dollars in many cases, spoke by itself. The motivation therein involved was reflected in the words of Taiwan’s TSMC founder, Morris Chang: “Globalization and free trade are almost dead and unlikely to return”. (Cheng, 2022; Doherti and Yardeni, 2022).
What is there to criticize?
With all of the above in mind, what is there to criticize to Trump’s tariffs, or to the on-shoring of manufacturing processes that he proposes? Plenty. Strong criticism to Trump’s protectionism goes in several directions. First, his tariffs have been irrational, chaotically implemented, and utterly disconnected from an articulated and coherent industrial policy. Second, trashing neighbours and allies implies discarding near-shoring and friendly-shoring supply chains. Third, the kind of economy that Trump wants to protect behind his tariffs wall corresponds to the first half on the twentieth century, not to the second half of the twenty first.
Firstly, contrary to Biden’s carefully targeted protectionism, where industrial policies aimed at promoting strategic industries, Trump all-inclusive tariffs aim at everything: From bananas to shoe sewing, from air conditioners to papayas. As if this was not irrational enough, the volatility of his actions has not only translated into the volatility of financial markets, but into a serious erosion of investor confidence in America’s brand, formerly a beacon of economic and financial stability. Moreover, by escalating tariffs to China to astronomical levels, without an exit strategy and by ignoring that country’s long memory of past glory and deep wounds from foreign humiliation, Trump painted himself into a corner. However, if he backs down, as he had hinted, a dangerous sign of weakness would be sent to America’s main strategic rival. In any case, inflation and economic slowdown lie ahead.
Secondly, Trump’s tariffs not only aim at everything but also at everybody. The fact is that, together with the on-shoring move experienced by the U.S. these last few years, there was also a parallel move towards near-shoring or friendly-shoring. Meaning, towards supply chains that did not represent a security risk for the country. Being both unrealistic and undesirable that the U.S. manufactures everything home, reliable trade partners are needed. By trashing them with deeds, while boasting about their “kissing my ass”, Trump has seriously damaged relations with both neighbours and old-time friends. (Croucher and Palmer, 2025). By straining alliances, America loses in terms of reliable partnerships, in terms of joint leverage when dealing with China, and in terms of avoiding China’s penetration into the U.S.’ spheres of influence.
Thirdly, unlike the Biden administration’s plans, Trump’s tariff wall doesn’t aim at creating the basis for an American twenty first century industrial ecosystem, able to overcome China in areas such as superconductors, artificial intelligence, robots, electric vehicles (E.V.), autonomous cars, clean energy or electric batteries. Much to the contrary, the economy that Trump wants to protect represents a jump into the past: Digging coal and drilling oil, killing wind, solar panel, and E.V. businesses, while depriving of research funds top American universities, the National Institutes of Health, the Centers for Disease Control, the National Science Foundation, or NASA. (Klein, 2025).
In sum, while tariffs can be useful tools of economic policy, Trump’s tariffs serve no rational purpose.
Alfredo Toro Hardy, PhD, is a retired Venezuelan career diplomat, scholar and author. Former Ambassador to the U.S., U.K., Spain, Brazil, Ireland, Chile and Singapore. Author or co-author of thirty-six books on international affairs. Former Fulbright Scholar and Visiting Professor at Princeton and Brasilia universities. He is an Honorary Fellow of the Geneva School of Diplomacy and International Relations and a member of the Review Panel of the Rockefeller Foundation Bellagio Center.
Photo by Bingqian Li
References
Cheng, Ting Fang (2022). “TSMC founder Morris Chang says globalization is ‘almost dead’, Nikkei Asia, December 7.
Croucher Shane and Palmer Ewan (2025). “Donald Trump Says Countries ‘Kissing My Ass’ Over Tariffs’, Newsweek, April 9.
Doherty, J. and Yardeni, E. (2022). “Onshoring: Back to the USA”, Predicting the Markets, February 5.
Klein, Ezra (2025). “Why Trump Could Lose His Trade War With China”, The New York Times, April 15.
Foroohar, Rana (2022). Homecoming. New York: Crown.
Ma, Cathy (2021). “83% of North American Manufacturers are Likely to Reshore Their Supply Chains”, Thomas, June 30.
McKinsey & Company (2020). “Could climate change become the weak link in your supply chain”, August 6.
OCDE (2010). “The Emerging Middle Class in Developing Countries”, Working Paper Number 285, January 26.
Prestowitz, Clyde (2022). “Is the U.S. Moving Out from Free Trade? Industrial Policy Comes Full Circle”, Clyde’s Newsletter, December 12.
