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The tariffs strike back: Is this the end of globalization?
My political compass has been spinning lately, and not just because Robert F. Kennedy Jr. admitted to ditching a bear corpse in Central Park before finally endorsing Donald J. Trump (that one caused a bit of political vertigo). My deeper confusion stems from the political debate about protecting our jobs.
It used to be, reliably, that the conservative right supported free trade and globalization, while the progressive left wanted protectionism for local industries.
Elections were fought on this, libraries were filled with studies on it.
For Republicans, Ronald Reagan’s 1988 Thanksgiving address was considered economic theology. “One of the key factors behind our nation’s great prosperity is the open trade policy that allows the American people to freely exchange goods and services with free people around the world,” the Gipper said.
That era ended under Trump’s first administration when he used two tools to impose tariffs on a wide-ranging series of goods: Section 301 (tariffs that combat unfair trade practices) and Section 232 (tariffs that protect national security). These tariffs hit almost $280 billion of goods and, according to the American Action Forum, increased consumer costs by over $51 billion a year. By the way, Joe Biden kept most of these in place. Recently, Biden went even further, slapping $18 billion worth of tariffs on Chinese-produced EVs, semiconductors, and critical minerals, among other things. This is all part of the industrial policy he ushered in under the Inflation Reduction Act. So both sides love a good tariff.
But in this campaign cycle — it’s as if a sequel titled “The Tariffs Strike Back” has been released — we must wonder: Is this the beginning of the end of globalization and the rise of a new age of tariffs?
Both Republicans and Democrats are making tariff-happy promises. Trump has mused on the campaign trail that he would like to impose a 10% tariff on all goods coming into the US.
“When companies come in and they dump their products in the United States, they should pay automatically, let’s say, a 10% tax … I do like the 10% for everybody,” the former president explained.
And it is not just in the US. Tariffs are being used everywhere.This week, Canadian Prime Minister Justin Trudeau aligned with the US andannounced tariffs on Chinese-made EVs starting Oct. 1, and another 25% tariff on Chinese steel and aluminum.
“Actors like China have chosen to give themselves an unfair advantage in the global marketplace,” Trudeau said, “compromising the security of our critical industries and displacing dedicated Canadian auto and metal workers.”
He’s not wrong. China does have widespread, unfair trading practices. Using tariffs to rebalance against factors like low-wage workers or weak environmental standards is useful, as they can be to deal with trade imbalances. But it’s a slippery slope. Tariffs beget tariffs, and that starts a trade war where everyone loses.
Tariffs were critical to Trump’s first administration, especially as he renegotiated the NAFTA agreement with Mexico and Canada. But economists at places like the CATO Institute concluded that tariffs cost taxpayers anywhere from $50 to $80 billion in higher prices. “American consumers (both firms and individuals), not foreigners, paid for — and continue to pay for — the tariffs,” the experts wrote.
So why are they back? If Trump 1.0 taught politicians across the spectrum anything, it's that there are no votes in supporting globalization. Most states and provinces have lost jobs and plants to cheap labor in places like China and Mexico, and protecting jobs wins elections today, even if it means higher prices tomorrow.
And that’s exactly what it means. According to the Center for American Progress Action Fund, if Trump were to impose the across-the-board 10% tariff, it “would amount to a roughly $1,500 annual tax increase for the typical household, including a $90 tax increase on food, a $90 tax increase on prescription drugs, and a $120 tax increase on oil and petroleum products.” And there is a real debate as to whether higher tariffs, which aim to create jobs, actually do so.
A study from the US Department of Agriculture revealed that Trump’s 2018 tariffs on major trading partners like China, Canada, and Mexico cost billions due to retaliation. “From mid-2018 to the end of 2019, this study estimates that retaliatory tariffs caused a reduction of more than $27 billion (or annualized losses of $13.2 billion) in US agricultural exports,” the study said.
This is a case of Hobson’s choice: Keep some manufacturing jobs in your community, but face higher prices, lower productivity, and retaliation from other countries. After all, one tariff begets another, and the costs pile up. But the political gains are real, so protectionism is on the march again.
Trump’s VP running mate, Sen. JD Vance, recently defended tariffs and, to be fair, many countries have massive exceptions to free trade that include cutouts to protect certain industries with subsidies and quotas. In the US, national security is used extensively as a form of industrial policy — Trump, for example, imposed tariffs on steel and aluminum imports, citing national security concerns. And in Canada, banks and milk and cheese farmers in Quebec are protected.
But Vance has gone further, arguing that tariffs in principle are a net economic gain. A tariff “causes this dynamic effect where more jobs come into the country,” Vance recently said on “Meet the Press.” “Anything that you lose on the tariff from the perspective of the consumer, you gain in higher wages, so you’re ultimately much better off. You have more take-home pay, you have better jobs,” he added.
By that logic, more tariffs would keep growing the economy, so where will they stop? That is the road to end any form of free trade and globalization.
Strangely, Vance’s argument not only flies against the conventional wisdom of his own party — the GOP has long advocated for free trade and open markets — but it also parrots what the left argued for decades as they fought free trade and globalization even as they were ridiculed by people like Reagan.
During Trump’s first term, the Ronald Reagan Presidential Foundation published a piece called “Is the GOP Still the Party of Free Trade?” and concluded that they are not, especially after Trump took the US out of the Trans-Pacific Partnership. That was a multilateral trade agreement with Asian countries meant to keep a strong US presence in Asia as a hedge against China. While 191 Republicans originally voted for it, that Republican Party no longer exists. “The effective abandonment of its free trade credentials sets the Republican Party on a perilous path,” wrote Phil Levy of the Reagan Foundation.
Democrats must be delighted that an argument they once lost so publicly is being relitigated. Now, both sides are arguing for the same thing and trying to outdo each other. It will be interesting to hear what Kamala Harris says about this as she finally reveals some policy.
We have now gone from embracing concepts like “nearshoring” and “friendshoring” for critical supply chain products like medicine and AI chips to picking winners and losers across the economy. This is 1970s industrial policy, and the distinction between the left and the right on this has become minimal.
Is this how globalization dies, one tariff at a time, in a series of trade wars and spats, Brexits and exits, until finally, the trade walls are back up, productivity plummets, and prices rise? Or is there a happy medium, where these global fights lead to a rise in both labor and environmental standards in places like China and Mexico and the cliched expression “fair trade, not free trade” actually becomes a reality?
Either way, it won’t be quick and, in the meantime, brace yourself for higher prices as your political compass keeps spinning wildly out of control.
Ian Explains: What is Kamala Harris' foreign policy?
How would a Harris-Walz administration differ from a Biden-Harris White House? While the Vice President has had an integral role in policy decisions and high-level meetings and led many foreign delegations, there are more differences between the two than you might think, especially when it comes to foreign policy. On Ian Explains, Ian Bremmer breaks down Kamala Harris’ foreign policy experience, how her worldview differs from Biden’s, and what her administration might do differently in addressing some of the world’s most urgent crises. Harris’ approach to Russia’s invasion of Ukraine, China, and Israel-Palestine is informed by her experience as an attorney general. She emphasizes rule of law issues like ‘sovereignty’ over Biden’s ‘good vs evil’ framing of global politics. Harris could be vulnerable when it comes to immigration on the US southern border, a top concern for voters ahead of the US election. But polls show Harris virtually tied with Donald Trump, and four in 10 Americans say they’d trust either candidate to handle a crisis or stand up to an adversary. It’s a marked increase for Democrats since Biden dropped out of the race and a sign voters already see Kamala as a distinct candidate from her predecessor.
Watch Ian's interview with former Congresswoman Donna Edwards, Maryland's first Black woman in Congress, and Presidential Historian Douglas Brinkley on the full episode of GZERO World with Ian Bremmer, the award-winning weekly global affairs series, airing nationwide on US public television stations (check local listings).
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Jousef Shkoukani and his wife, Yara Rashad, join other protesters in Chicago's Union Park on Monday, Aug. 19.
DNC protesters urge Harris to stop sending arms to Israel
Protesters incensed over US support for Israel amid the war in Gaza gathered in Chicago’s Union Park on Monday as the Democratic National Convention kicked off just blocks away in the United Center. They accused the Biden administration of enabling “genocide” in the enclave by continuing to provide Israel with arms amid a devastating war that’s killed over 40,000 Palestinians.
The protesters carried signs that said both Democrats and Republicans have “blood on their hands” and called for an end to US aid to Israel. Some sold t-shirts with pro-Palestinian slogans for $25, pledging to donate the money toward relief in Gaza.
“It’s incredibly important that we get a cease-fire, at the very least,” protester Jousef Shkoukani, 29, told GZERO Media.
“For Palestinians, it’s incredibly important that people start to recognize that we’re not just numbers and that we’re dying in large quantities based on Israel’s indiscriminate bombing,” added Shkoukani, a Chicagoan whose father immigrated to the US from Palestine.
Shkoukani, one of thousands who protested on Monday, said that he previously knocked on doors for President Joe Biden but now identifies as an independent. He said the Democratic Party has “talked the talk but never walked the walk with respect to its policies on Middle Eastern affairs,” adding that what the protesters are looking for from Vice President Kamala Harris and Democrats is “a commitment to a permanent cease-fire if elected.”
Chicago has been bracing for major protests surrounding the DNC for months amid the continued fighting in Gaza, particularly after divisive demonstrations at US college campuses earlier this year. There’s a heavy, palpable police presence in the city. And while Monday’s protests were largely peaceful, a small group of demonstrators broke through a barrier near the convention, and several were reportedly detained by police.
Though the mood inside the United Center was far more celebratory, the war was also an inescapable topic. Democratic Rep. Alexandria Ocasio-Cortez of New York praised Harris’ support for a cease-fire in Gaza in her remarks to the convention and was met with loud applause. Later on, Biden said his administration was working around the clock to bring the hostages home from Gaza and secure a cease-fire to end the war. He went on to say that the protesters out on the streets of Chicago had “a point,” adding that “a lot of innocent people are being killed, on both sides.” But most of the prominent Democrats who took to the convention stage largely used their time to tout Harris’ qualifications for president while blasting former President Donald Trump as a convicted felon and danger to democracy.
More Gaza-related protests are planned for this week, and the beginnings of an encampment could be spotted in Union Park — next to a sign that read “PIG FREE ZONE.” We’ll be watching to see how the demonstrations play out, and whether they influence the tone and direction of the convention in the days ahead.
All antitrust eyes are on Nvidia
The artificial intelligence boom has been transformative for Nvidia, which has become the third-most-valuable company in the world just behind Apple and Microsoft. That’s a bronze-medal performance. (We can make Olympics references for another week, folks.)
Nvidia’s chipmaker’s graphics processors and data centers are integral for anyone and everyone who wants to train or run a generative AI model. That’s true for teams at Silicon Valley giants and upstarts alike. And Nvidia is the clear market leader: By one estimate, Nvidia now controls 80% of the market for AI-grade chips and data centers, far ahead of rivals AMD and Intel.
Naturally, Nvidia’s market dominance has begun to attract scrutiny from antitrust authorities in the US, its home country, and around the world. The semiconductor giant now faces multiple antitrust probes, raising questions about whether its acquisitions and competitive practices have been fair.
The US Department of Justice is reportedly investigating the company in two separate probes: First, it’s looking into whether Nvidia’s $700 million attempted acquisition of Run:ai, an Israeli AI startup, would be anticompetitive. Second, it’s investigating complaints from competitors that Nvidia is abusing its market power. If the government sues, it could seek to block the acquisition, or demand changes to how Nvidia conducts its business.
Diana Moss, vice president and director of competition policy at the Progressive Policy Institute, says that while these investigations are significant, it’s hard to discern whether charges will be filed since such decisions are dependent on what investigators learn. She said success in business alone isn’t enough to be dinged by antitrust regulators. “The key question is about the pathway to success,” she wrote in an email. “Commercial success on the merits, i.e., by being lower cost or more innovative, draws less antitrust attention than success based on squeezing out rivals and raising prices. Antitrust enforcement targets the latter.” (For example, just yesterday, a federal judge found Google liable for abusing its own monopoly power in the online search business by cutting deals with phone suppliers like Apple and Samsung to make the Google search engine the default experience.)
The investigations into Nvidia come at a time when the US government has been actively supporting the domestic semiconductor industry through initiatives like the CHIPS Act and boxing out China through stringent export controls. But boosting the chip industry and scrutinizing one of its leaders aren’t necessarily at odds.
“The CHIPS Act is focused on the manufacturing segment of the supply chain, not necessarily designers like Nvidia,” said Xiaomeng Lu of Eurasia Group. Lu views both the support for the chip industry and the antitrust probes as “moves designed to shape the industrial landscape in a way favorable to [the] government’s strategic goals.”
Moss adds that antitrust enforcement operates somewhat independently of these other economic and national security policy priorities. “I don’t see the current administration pressuring enforcers to exercise prosecutorial discretion to stand down on enforcement regarding large US national champions,” she said.
Even if the US decides to bring a case against Nvidia, its leading chip designer, that doesn’t mean it’s going to go easy on China. “The possibility of being held liable for antitrust violations doesn’t mean ceding the field to China, any more than Microsoft being ordered to level the playing field for rival browsers and other third-party software was a fatal blow to that company,” said Mitch Stoltz, head of the antitrust working group at the Electronic Frontier Foundation.
Lu suggests that from the DOJ’s perspective, “limiting the dominant player’s power will foster more innovation and allow the emergence of a host of AI chip companies who can outperform their Chinese counterparts.”
Scott Bade of Eurasia Group points out that this dilemma is not unique to the chip industry. “It’s worth noting that this is also a common refrain with almost all tech-focused antitrust. If you want a national champion, don’t go after your leading contenders,” he said. “But the FTC has different priorities than Commerce and an independent mandate.” (The Commerce Department handles export controls as one of its many duties.)
Stoltz strongly argues against the idea of protecting “national champions” from antitrust scrutiny. “Monopolists are prone to mistreating consumers, mishandling people’s private information, and working closely with authoritarian governments no matter what country they’re located in,” he asserts.
“Building homegrown monopolists that are too big to regulate effectively isn’t ultimately any better for consumers and society than ceding the field to foreign companies with close ties to authoritarian regimes,” Stolz adds.
The decision to focus on Nvidia isn’t that of the United States alone. The French government is expected to charge the company with antitrust violations, while it’s disclosed that the UK, Europe, and China are also examining its practices.
Nvidia’s ability to weather these storms could determine how much of a foothold direct competitors can gain in the AI chip industry. Nvidia feels its market dominance has been earned and deserved, but one abuse of that monopoly power and regulators will look to take it down a peg — no matter what that means for the global chip race.
People carry Venezuela's national flag to protest the election results that awarded Venezuela's President Nicolas Maduro a third term, in Maracaibo, Venezuela, on July 30, 2024.
US declares Edmundo González rightful winner of Venezuela election
Based on exit polls from around 90% of the votes from last Sunday's election, opposition leaders say González beat Maduro by a large margin, and international pressure is building against Maduro. On Thursday, Brazil, Mexico, and Colombia called on Caracas to release detailed tallies of the vote, and the European Union has said it would not recognize Maduro’s claimed victory without independent certification of the election results.
Still, the US announcement is unlikely to change anything on the streets of Venezuela, where protesters have been demanding Maduro to accept defeat. Demonstrations, which have led to violent clashes with authorities and hundreds of arrests this week, are ongoing.
But Washington's move is likely to spur on the protesters. President Joe Biden, meanwhile, is mulling whether to reintroduce sanctions against Venezuela, despite it being a critical source of oil.
Joe Biden's next chapter
Joe Biden suddenly has a lot more free time on the calendar. How has he been spending it?
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Biden's Supreme Court reform has zero chance of becoming law
Ian Bremmer shares his insights on global politics this week on World In :60.
Is Israel and Hezbollah on the brink of all-out war?
Certainly hope not. You made me bet I'd say no. Keep in mind, oil prices haven't moved despite the fact that everyone's talking about all-out war. Certainly the Israeli government and the Israeli defense forces are talking about all-out war after Hezbollah, rocket strikes, which they denied, but clearly did come from them and killed some 11 children in the Israeli-occupied Golan Heights. Having said that, Netanyahu, the Israeli Prime Minister, who is very, very strident in wanting to ensure that the Gaza war continues until Hamas is fully destroyed, has been very cautious about starting a war with a Hezbollah that is far better armed and trained than Hamas is. So on the one hand, they do want to brush Hezbollah back. They want to cause more damage to them. They want to get the Hezbollah forces away from the Israeli border so the Israelis can come back to their homes, to their schools. On the other hand, I think the likelihood of all-out war is actually pretty low. And I think that's why oil prices are haven't moved since all this, because markets also don't believe this is coming.
How will the new US military aid pledge to the Philippines affect relations with China?
I think this is an area where both sides, like with Hezbollah, do not want conflict to get worse. Most important to me was the fact that the Philippines and China, behind the scenes broken by the United States, agreed to a mechanism where they would both regularly talk military to military, and where China would not try to stop the Philippines from just getting food and normal supplies to the Scuppered ship on the Scarborough Shoal, the contested Scarborough Shoal. That isn't just a matter of talking about it. There now has been a Philippine military vessel that's gotten through with those supplies, and they were not harassed by the Chinese military. That's a really good step, especially in a context of relationship that has been very tense for quite a long time.
What is the likelihood that Biden's call for Supreme Court reform will lead to any change?
Zero. Literally zero, unless the Democrats, Kamala Harris wins the presidency, the Democrats take the Senate and they take the House, and the filibuster in the Senate is gone. Very low chance of that happening. If that were to happen, then I think you absolutely would see Supreme Court reform. And that would change the nature of the checks and balances in the US political system.
By the way, I think the filibuster would also be gone if Republicans ran the slate and take the Senate, which is much more likely than the Democrats doing so. Either way, what we're seeing are political norms and institutions continuing to erode. But what Biden is doing right now with the Supreme Court reform is understood to be purely for campaign purposes and has zero chance of coming into law.
An Apple logo is pictured in an Apple store in Paris, France.
Apple signs Joe Biden’s pledge
Apple signed on to the Biden administration’s voluntary pledge for artificial intelligence companies on July 26.
President Joe Biden and Vice President Kamala Harrisfirst announced that they secured commitments from seven major AI developers — Amazon, Anthropic, Google, Inflection, Meta, Microsoft, and OpenAI — a year ago in what the administration says laid the groundwork for its executive order on AI adopted in October. The voluntary commitments included safety testing, information sharing on safety risks (with government, academia, and civil society groups), cybersecurity investments, watermarking systems AI-generated content, and a general agreement to “develop and deploy advanced AI systems to help address society’s greatest challenges.”
Until now, Apple wasn’t on the list. Now, as Apple prepares to release new AI-enabled iPhones (powered by OpenAI’s systems as well as its own), the Cupertino-based tech giant is playing nice with the Biden administration, signaling that they’ll be a responsible actor, even without formal legislation on the books.