Foreign Policy Live How to Navigate the Trade Wars
Aug 13, 2025
Dani Rodrik, a Harvard economist known for his critical views on globalization, dives into the complexities of current trade wars. He discusses the implications of Trump’s tariffs and the need for modern industrial policies to address economic nationalism. The conversation shifts to the role of AI in fostering economic equity and the changing landscape of global trade, emphasizing the diminishing influence of the U.S. Rodrik highlights the necessity for nations to evolve strategically to thrive amidst these turbulent trade dynamics.
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Episode notes
Globalization Reshuffles Domestic Income
- Global integration creates winners while domestic societies fragment and produce new cleavages.
- Trade gains inevitably require large internal income reshuffling within countries.
Populism Feeds On Policy Failures
- Trumpism exploits real discontent about elites' failure to address left-behind workers and regions.
- The authoritarian right exacerbates societal divisions rather than resolving root economic issues.
Use Targeted Industrial Policy, Not Broad Tariffs
- Avoid trying to rebuild mass manufacturing as the primary route to a broad middle class; technological change has altered labor's role.
- Pursue targeted industrial policies for strategic sectors instead of blanket tariffs, using conditional subsidies and firm dialogues.
