«China Shock 1.0 was bound to ebb when China ran out of low-cost labor, as it now has. Its growth is already falling behind Vietnam’s in industries such as clothing and commodity furniture. But unlike the United States, China is not looking back and mourning its lost manufacturing prowess. It is focusing instead on the key technologies of the 21st century. Contrary to a strategy built on cheap labor, China Shock 2.0 will last for as long as China has the resources, patience and discipline to compete fiercely.
And if you doubt China’s capability or determination, the evidence is not on your side. According to the Australian Strategic Policy Institute, an independent think tank funded by the Australian Department of Defense, the United States led China in 60 of 64 frontier technologies, such as A.I. and cryptography, between 2003 and 2007, while China led the United States in just three. In the most recent report, covering 2019 through 2023, the rankings were flipped on their head. China led in 57 of 64 key technologies, and the United States held the lead in only seven.…
One thing that tariffs alone will never do is make the United States an attractive place to innovate. Yes, tariffs belong in our trade arsenal — but as precision munitions, not as land mines that maim foes, friends and noncombatants equally.
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There is no economic policy that can make job loss painless — especially when it cuts the heart out of your industry or hometown. But when industries collapse, our best response is getting displaced workers into new jobs quickly and making sure the young, small businesses that are responsible for most net U.S. job growth are poised to do their thing. Tariffs, which narrowly protect old-line manufacturing, are terribly suited for this task.»
As long as our electoral process rewards a cri de coeur for lost jobs and a desire to go backwards, this essay will be useless.
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