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U.S. Preemptive Concessions Gain Nothing From Russia in Ukraine Ceasefire Talks - Part 1
WASHINGTON, March 29 -- The Jamestown Foundation issued the following news:
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U.S. Preemptive Concessions Gain Nothing From Russia in Ukraine Ceasefire Talks (Part One)
By Vladimir Socor
Executive Summary:
* Consultations among the United States, Russia, and Ukraine are dealing piecemeal with narrow aspects of a putative ceasefire. Moscow stonewalls the quick, comprehensive ceasefire that the Trump administration pursues.
* A maritime ceasefire (moratorium on firing at sea) could result in banning Ukrainian naval drone actions and allow Russia's remaining Black Sea Fleet to return undisturbed
... Show Full Article
WASHINGTON, March 29 -- The Jamestown Foundation issued the following news:
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U.S. Preemptive Concessions Gain Nothing From Russia in Ukraine Ceasefire Talks (Part One)
By Vladimir Socor
Executive Summary:
* Consultations among the United States, Russia, and Ukraine are dealing piecemeal with narrow aspects of a putative ceasefire. Moscow stonewalls the quick, comprehensive ceasefire that the Trump administration pursues.
* A maritime ceasefire (moratorium on firing at sea) could result in banning Ukrainian naval drone actions and allow Russia's remaining Black Sea Fleet to return undisturbedto Sevastopol, potentially interfering with commercial shipping again in that case.
* The Kremlin appears pleased with the White House's purported offer to renew parts of the 2022-2023 Black Sea Grain Initiative. Moscow, nevertheless, seeks to reinstate its earlier, self-assigned right to inspect vessels in the Black Sea under that defunct scheme.
Russian and Ukrainian delegations held technical-level consultations separately with U.S. representatives from the Trump Administration on March 23-25 in Riyadh, Saudi Arabia. U.S. President Donald Trump and Russian President Vladimir Putin had outlined the agenda for this consultation in their March 18 telephone call, following Putin's rejection of Trump's proposal for a comprehensive, unconditional ceasefire in Russia's war against Ukraine (see EDM, March 21).
The White House is keen to broker a ceasefire and political-diplomatic settlement. As speed remains a priority, the Kremlin has added preconditions for a ceasefire and any eventual settlement. This time the agenda focused on a maritime and aerial ceasefire and commercial navigation in the Black Sea basin. Although the U.S. delegation offered several preemptive concessions, Moscow's representatives demanded more. Both sides released separate statements on the outcome of the talks, along with the Ukrainians' own interpretive comments (President of Russia; The White House, March 25). Meanwhile, Russian offensive ground and air operations have continued at high rates (Ukrinform, March 23-26).
The Black Sea is the quietest theater in the ongoing war. Ukrainian naval drone warfare has, since autumn 2023, broken Russia's blockade of Greater Odesa's ports, opened a safe and stable corridor for Ukrainian and international shipping, decimated the Russian fleet, and confined the fleet's remainder to the easternmost Black Sea (see EDM, November 15, 2023, March 26, August 13, 2024). At the same time, Ukrainian drone operations have carefully avoided interfering with the oil tanker traffic on the Novorossiisk-Istanbul shipping lane (see EDM, November 8, 2022, November 15, 2023, August 13, 2024 [1], [2]). Given this combination of Ukrainian strength and restraint in the Black Sea, the recent U.S. initiative for a "moratorium on firing" or "maritime ceasefire" would be reaching for "low-hanging fruit," as Trump administration senior officials admit (Fox News, March 26). That move could, however, ban Ukrainian drone warfare, allowing the still-powerful remainder of the Russian fleet to return to Sevastopol undisturbed and threaten the shipping corridor in the westernmost Black Sea. Unsurprisingly, Kyiv opposes this proposal (Facebook/Rustem Umerov, March 25).
According to parallel statements from the United States and Russia in Riyadh, "the U.S. and Russia have agreed to ensure safe navigation, eliminate the use of force, and prevent the use of commercial vessels for military purposes in the Black Sea" (President of Russia; The White House, March 25). Their wording is almost identical, except that Russia adds a right to inspect other countries' vessels on the basis of the Black Sea Grain Initiative (July 2022-July 2023), which the U.S. statement omits (United Nations, July 22, 2022).
All those measures ("ensure ... eliminate ... prevent ... inspect") are carryovers from the Black Sea Grain Initiative, which empowered Russia to regulate and supervise Ukrainian and foreign commercial shipping in the Black Sea until Ukrainian drone warfare forced the Russian fleet to relocate from Sevastopol to the remote eastern Black Sea (see EDM, July 26, 27, 2023).
The U.S. and Russian parallel statements from Riyadh do not specify who is intended to be the enforcer of these measures, nor do they stipulate which party is the object of the enforcement. Under the Montreux Convention, the United States and other non-riparian navies may not enter the Black Sea for an indeterminate period (United Nations (original version, League of Nations), 1936). Ukraine has no surface navy to enforce any Black Sea measures and is not a party to this U.S.-Russia agreement. Furthermore, Turkiye has not been invited to these talks at all (Ukraine has an interest in Turkiye's participation as a third party with legal agency in the Black Sea).
It is apparent that Russia aims to return its remaining, still-powerful fleet to Sevastopol undisturbed in the event of a maritime ceasefire and once again regulate other countries' activities as it did in 2022-2023. According to Kremlin spokesman Dmitry Peskov, Trump had suggested renewing parts of the Black Sea Grain Initiative and Putin "consented to the renewal" (TASS, March 23, 24). This time, however, no roles seem to be envisaged for Turkiye and the United Nations Secretariat.
Washington's apparent agnosticism toward this possibility adds to Kyiv's concerns. The Ukrainian delegation in Riyadh declined to issue a joint statement with its U.S. counterparts, lest it be construed as progress in the talks. The Ukrainian chief delegate, Defense Minister Rustem Umerov, issued a separate statement on President Volodymyr Zelenskyy's instructions:
The Ukrainian side emphasizes that any movement by Russia of its warships outside the eastern part of the Black Sea will be regarded as a violation of commitments to ensure safe navigation in the Black Sea and a threat to Ukraine's national security. Ukraine will, in this case, be fully entitled to exercise its right of self-defense (Facebook/Rustem Umerov, March 25).
Kyiv had offered to refrain from attacking Russian military targets at sea in return for Russia not striking Ukrainian maritime and riverine ports from the air (Ukrayinska Pravda, March 24). Lifting the Russian blockade of the port of Mykolaiv (Ukrainian-held on land but blocked by Russian forces from the Kinburn Spit) is a top priority for Ukraine's agricultural export business and the government (Kyiv Independent, March 25).
In stark contrast to the White House, the Kremlin is in no hurry. Its chief delegates to the Riyadh consultations, former Deputy Foreign Minister Grigory Karasin and three-star General Sergei Beseda of the Russian Federal Security Service (FSB), each possess decades of experience dealing with the Russian-instigated "frozen conflicts" and with Ukraine (Kyiv Indepedent, March 24; Russian International Affairs Council, accessed March 28). This again starkly contrasts with the U.S. negotiating team led by U.S. Secretary of State Marco Rubio and National Security Advisor Mike Waltz, who are engaged in their first major geopolitical negotiation (U.S. Department of State, Green Beret PAC, accessed March 28). Returning to Moscow, Karasin commented that a lengthy and complex negotiation process will follow (TASS, March 25). As Trump claimed to distinguish the "contours of the deal," Peskov replied, "a great many aspects need to be worked out" with a "huge amount of nuances" (TASS, March 23). The Kremlin is prepared to negotiate for "as long as it takes."
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Original text here: https://jamestown.org/program/u-s-preemptive-concessions-gain-nothing-from-russia-in-ukraine-ceasefire-talks-part-one/
[Category: ThinkTank]
Rising Core Inflation, Plummeting Consumer Confidence Suggest Worsening Economic Instability Under Trump
WASHINGTON, March 29 -- Groundwork Collaborative, a think tank and progressive advocacy group, issued the following news release:
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Rising Core Inflation, Plummeting Consumer Confidence Suggest Worsening Economic Instability Under Trump
Sweeping tariffs and chaotic policymaking are eroding working families' pocketbooks and failing to bring costs down
As consumer confidence falls for the second month in a row, reaching its lowest level since early 2021, February's Personal Consumption Expenditures Price (PCE) Index showed that President Trump has failed to lower the cost-of-living for working
... Show Full Article
WASHINGTON, March 29 -- Groundwork Collaborative, a think tank and progressive advocacy group, issued the following news release:
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Rising Core Inflation, Plummeting Consumer Confidence Suggest Worsening Economic Instability Under Trump
Sweeping tariffs and chaotic policymaking are eroding working families' pocketbooks and failing to bring costs down
As consumer confidence falls for the second month in a row, reaching its lowest level since early 2021, February's Personal Consumption Expenditures Price (PCE) Index showed that President Trump has failed to lower the cost-of-living for workingfamilies.
Core PCE, the Federal Reserve's preferred measure of inflation, came in higher than expected, rising 0.38% in February and lifting the year-over-year figure to 2.8% from 2.6% in January. Additionally, real personal spending barely rebounded from a pullback in February, indicating that consumers are wary of spending in Trump's chaotic economy.
Groundwork Collaborative's Chief of Policy and Advocacy Alex Jacquez reacted with the following statement:
"Once again, this week's economic data show that Trump is steering the country toward a recession. Americans have already lost faith in the Trump Administration's lack of focus on lowering prices as inflation on everyday goods continues to climb.
"Starting erratic trade wars with allies and cutting Social Security and other vital safety net programs doesn't make rent or groceries more affordable."
Instead of lowering costs, President Trump is more interested in greasing the skids for his billionaire donors and advisors. The Washington Post reported this week that the Trump Administration's "demolition" of the IRS would put billions back into the pockets of ultra-wealthy tax cheats this year and defund taxpayer services, as Republicans in the Senate prepare to pass a budget resolution that would give the wealthiest Americans a massive tax giveaway while gutting vital programs like Medicaid and food assistance.
THIS WEEK IN THE TRUMP SLUMP: New polling and economic indicators continue to show that the Trump economy is heading for disaster.
Economic Indicators:
* Consumer confidence, as measured by the Conference Board, is at its lowest level since early 2021 - falling more than expected in March. This follows February's drop, which was the largest since August 2021. The Expectations Index for the future is at its lowest level in 12 years and meets the threshold that typically signals an upcoming recession.
* Real estate company Redfin's tracking of monthly housing payment found that homebuyers now have the highest payments on record - up 5.3% from a year ago to an all-time high.
* The manufacturing boom is looking more like the opposite. The S&P Global flash March factory index entered contraction territory. Sentiment about prospects over the coming year fell to the second-lowest level since 2022.
* U.S. businesses are pulling back on hiring, according to an analysis of the U.S. Census Bureau's Business Trends and Outlook Survey. Contrary to the Trump Administration's claims that their policies will benefit U.S. manufacturers, the change in employment plans for manufacturers has been particularly severe.
* Year-over-year and month-over-month core PCE, the Federal Reserve's preferred measure of inflation, came in higher than expected. Core PCE prices rose 0.38% in February, lifting the year-over-year figure to 2.8% from 2.6% in January. Additionally, real personal spending barely rebounded from a pullback in February, indicating that consumers are wary of spending in Trump's chaotic economy.
Polling
* Polling from Gallup shows that 59% of Americans disapprove of the president's handling of the economy - the highest disapproval rating of the issues polled by Gallup.
* Navigator Research found that a plurality of Americans believe the economy will be worse off a year from now.
- Navigator also found that the majority of battleground residents negatively rate Trump's economy.
Expert Commentary
* Mark Zandi, Chief Economist for Moody's Analytics, said this week that the chances for a recession are 35% and rising. He wrote in the Philadelphia Inquirer, "The odds of the economy suffering a recession in the coming year are uncomfortably high. I would put them at over one-third and rising. At the start of the year, there was little chance the economy would falter."
* Alan Blinder, former vice chairman of the Federal Reserve, authored a piece for the Wall Street Journal on Trump's "Russian Roulette" handling of the economy. "Mr. Trump's actions seem designed to drive the U.S. economy into the ground. This would truly be a Trumpcession," wrote Blinder.
* A former International Monetary Fund official warned that under Trump, the U.S. is looking more and more like "an emerging-market economy in trouble" due to Trump's erratic policymaking, the increasing power of oligarchs, and waning confidence in the rule of law.
* A new Deutsche Bank survey of 400 financial professionals put the odds of a recession next year above 40 percent.
Email press@groundworkcollaborative.org to speak with a Groundwork expert about President Trump's handling of the economy.
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Original text here: https://groundworkcollaborative.org/news/rising-core-inflation-plummeting-consumer-confidence-suggest-worsening-economic-instability-under-trump/
[Category: ThinkTank]
Manhattan Institute Issues Testimony to New York Post: Wisconsin Supreme Court Race Is a Union Money Grab Versus Sanity
NEW YORK, March 29 -- The Manhattan Institute issued the following excerpts of a commentary on March 27, 2025, to the New York Post:
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Wisconsin Supreme Court Race Is a Union Money Grab Versus Sanity
By Ken Girardin
Wisconsin's early spring elections for its Supreme Court were historically sleepy affairs, with minimal implications outside the Badger State.
Not this year.
While the state's abortion law and its congressional redistricting process are getting attention, next Tuesday's ostensibly nonpartisan election between Democrat Susan Crawford and Republican Brad Schimel is shaping up
... Show Full Article
NEW YORK, March 29 -- The Manhattan Institute issued the following excerpts of a commentary on March 27, 2025, to the New York Post:
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Wisconsin Supreme Court Race Is a Union Money Grab Versus Sanity
By Ken Girardin
Wisconsin's early spring elections for its Supreme Court were historically sleepy affairs, with minimal implications outside the Badger State.
Not this year.
While the state's abortion law and its congressional redistricting process are getting attention, next Tuesday's ostensibly nonpartisan election between Democrat Susan Crawford and Republican Brad Schimel is shaping upto be a belated referendum on Act 10, the sweeping cost-saving reforms enacted under Gov. Scott Walker in 2011.
A socialist hotbed in the early 20th century, Wisconsin in 1959 was the first state to pass a law allowing public-sector collective bargaining -- that is, the unionization of government employees.
In the private sector, a labor union can only demand what a company is able to pay. Insist on too much, and prices risk going higher than customers are willing to spend. But that normal balance doesn't exist in government, where officials almost reflexively pass these costs on to taxpayers.
Continue reading the entire piece here at the New York Post (https://nypost.com/2025/03/27/opinion/wisconsin-supreme-court-race-is-a-union-money-grab-versus-sanity)
Ken Girardin is a fellow at the Manhattan Institute
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Original text here: https://manhattan.institute/article/wisconsin-supreme-court-race-is-a-union-money-grab-versus-sanity
[Category: ThinkTank]
Manhattan Institute Issues Commentary to FoxNews.com: Why Are We Still Giving Federal Money to DEI-Peddling Consultants?
NEW YORK, March 29 -- The Manhattan Institute issued the following excerpts of a commentary on March 28, 2025, to FoxNews.com:
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Why Are We Still Giving Federal Money to DEI-Peddling Consultants?
By Ilya Shapiro
The government is still spending taxpayer dollars on consulting firms ignoring Trump's DEI executive orders
President Trump has made laudable gains against the diversity-industrial complex, but marquee consulting firms continue to rake in billions in federal contracts despite running discriminatory programs. Even after the president signed two executive orders aimed at eliminating
... Show Full Article
NEW YORK, March 29 -- The Manhattan Institute issued the following excerpts of a commentary on March 28, 2025, to FoxNews.com:
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Why Are We Still Giving Federal Money to DEI-Peddling Consultants?
By Ilya Shapiro
The government is still spending taxpayer dollars on consulting firms ignoring Trump's DEI executive orders
President Trump has made laudable gains against the diversity-industrial complex, but marquee consulting firms continue to rake in billions in federal contracts despite running discriminatory programs. Even after the president signed two executive orders aimed at eliminatingDEI requirements in federal contracting, the government will still fork over taxpayer dollars to consultants who thumb their noses at the White House.
That's because racialist programming, which had been promoted in professional-service firms for decades, found a fellow traveler in President Biden, who signed an executive order that required federal contractors to institute and expand DEI programs. President Trump's executive orders have reversed this and other Biden actions that insinuated DEI commissars throughout federal agencies, directing Attorney General Pam Bondi to identify private-sector companies with "egregious and discriminatory" programs.
Continue reading the entire piece here at FoxNews.com (https://www.foxnews.com/opinion/why-we-still-giving-federal-money-dei-peddling-consultants)
Ilya Shapiro is a senior fellow and director of Constitutional Studies at the Manhattan Institute.
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Original text here: https://manhattan.institute/article/why-are-we-still-giving-federal-money-to-dei-peddling-consultants
[Category: ThinkTank]
Goldwater Institute: Landmark Victory! Kentucky Eliminates DEI From Public Universities
PHOENIX, Arizona, March 29 -- The Goldwater Institute issued the following commentary on March 28, 2025:
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Landmark Victory! Kentucky Eliminates DEI from Public Universities
By Tim Minella
"Diversity, equity, and inclusion" (DEI) is going down across the country as Americans reject the hatred and discrimination that hides behind feel-good buzzwords.
Kentucky is the latest state to eliminate DEI from public colleges and universities. Overriding the veto of Governor Andy Beshear, the Kentucky legislature recently passed House Bill 4 into law. This legislation, based on Goldwater Institute
... Show Full Article
PHOENIX, Arizona, March 29 -- The Goldwater Institute issued the following commentary on March 28, 2025:
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Landmark Victory! Kentucky Eliminates DEI from Public Universities
By Tim Minella
"Diversity, equity, and inclusion" (DEI) is going down across the country as Americans reject the hatred and discrimination that hides behind feel-good buzzwords.
Kentucky is the latest state to eliminate DEI from public colleges and universities. Overriding the veto of Governor Andy Beshear, the Kentucky legislature recently passed House Bill 4 into law. This legislation, based on Goldwater Institutereforms, eliminates a broad range of discriminatory DEI policies that waste taxpayer money and transform college campuses into centers of ideological activism.
This victory over DEI follows a Goldwater report revealing the corruption of the Kentucky Council on Postsecondary Education (CPE), a powerful bureaucracy that sets policies for all public institutions in the Bluegrass State. CPE forced schools to adopt targets for the racial makeup of students and staff and to implement other discriminatory DEI policies. HB 4 removes this power from CPE, eliminating the top-down implementation of DEI in Kentucky.
With this landmark legislation, Kentucky is joining states across the nation that are recognizing the incompatibility of DEI with the purposes of public universities: the pursuit of knowledge and the education of citizens. Goldwater will continue to advocate for our reforms that will eliminate the DEI scourge for good.
Find out more about Goldwater's work to defeat DEI here.
Timothy K. Minella is a Senior Fellow at the Goldwater Institute's Van Sittert Center for Constitutional Advocacy.
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Original text here: https://www.goldwaterinstitute.org/landmark-victory-kentucky-eliminates-dei-from-public-universities/
[Category: ThinkTank]
Center on Budget & Policy Priorities: Congress Should End Pass-Through Tax Break for Millionaire Business Owners, Extend Tax Credit That Helps Small Business Owners Buy Health Coverage
WASHINGTON, March 29 -- The Center on Budget and Policy Priorities issued the following commentary on March 28, 2025:
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Congress Should End Pass-Through Tax Break for Millionaire Business Owners, Extend Tax Credit That Helps Small Business Owners Buy Health Coverage
By Samantha Jacoby, Deputy Director of Federal Tax Policy
Republicans want to extend a 2017 tax cut in their upcoming reconciliation legislation that primarily benefits 200,000 millionaire owners of very profitable, privately-held companies. This deeply unequal tax cut gives a 20 percent deduction to owners of "pass-through"
... Show Full Article
WASHINGTON, March 29 -- The Center on Budget and Policy Priorities issued the following commentary on March 28, 2025:
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Congress Should End Pass-Through Tax Break for Millionaire Business Owners, Extend Tax Credit That Helps Small Business Owners Buy Health Coverage
By Samantha Jacoby, Deputy Director of Federal Tax Policy
Republicans want to extend a 2017 tax cut in their upcoming reconciliation legislation that primarily benefits 200,000 millionaire owners of very profitable, privately-held companies. This deeply unequal tax cut gives a 20 percent deduction to owners of "pass-through"businesses, companies organized so that business income is taxed as the owners' personal income. The pass-through tax cut has not "trickled down" to boost worker wages or business investments, as the Republican authors of the 2017 law had claimed, and it costs the U.S. government significant revenue; the deduction cost more than $400 billion in its first eight years, according to the Joint Committee on Taxation (JCT), and extending it would add another $700 billion in cost through 2034.
As a result of the deduction, the millionaire owner of a business faces a lower top tax rate (29.6 percent) than the business's employees (37 percent). If Congress wants to support actual small business owners, members should focus their efforts on extending the enhanced premium tax credit, which helps 3 million business owners (and 20 million people in total) buy health insurance in the Affordable Care Act (ACA) marketplace. Enhanced premium tax credits are scheduled to expire at the end of this year -- and unless Congress takes urgent action, health insurance costs will skyrocket for millions of low- and moderate-income workers, entrepreneurs, and business owners. Ending the pass-through deduction for millionaires would save around $350 billion in revenue from 2025-2034, which would more than pay for extending the enhanced premium tax credits (see chart).
How did millionaire business owners come to get a special tax cut in the 2017 tax law? More than half of business income in the United States flows to businesses organized as pass-through entities (such as partnerships, S corporations, and sole proprietorships), which are not subject to the corporate tax. Instead, their income "passes through" the business and is reported on owners' individual tax returns. Before the 2017 tax law, this pass-through business income was generally taxed at the same rates as wage and salary income. (Under the 2017 tax law, the top rate for wage and salary income was reduced from 39.6 percent to 37 percent.)
The 2017 tax law made a steep, permanent cut in the corporate tax rate from 35 percent to 21 percent, at a cost of $1.3 trillion to national revenue over a decade. Lobbyists for pass-through business owners argued that their clients needed a special tax break to pay a similarly low tax rate as corporations. In reality, pass-through business owners had a large tax advantage relative to corporations before the 2017 law, and though the reduction in the corporate rate may have shrunk this tax advantage, it did not eliminate it. In short, the corporate rate cut did not place pass-through businesses at a tax disadvantage that required a special tax break to address. Regardless, as a result of these lobbying efforts, Congress passed the 20 percent deduction that reduced the top tax rate (37 percent) on qualifying pass-through income to 29.6 percent.
The pass-through tax break gives a significant advantage to owners of many very large, profitable businesses. For example, ProPublica reported in 2021 that Michael Bloomberg, who owns the Bloomberg media company, claimed a $68 million tax cut that year from the deduction. An owner of the Bechtel engineering conglomerate, which lobbied heavily for engineering companies to qualify for the deduction, received a $24 million tax cut from the deduction in 2018. IRS data show that the 1,000 tax filers with incomes over $85 million who claimed the pass-through deduction in 2022 (the latest year data are available) received an average tax cut of more than $3.5 million from the deduction that year.
Millionaire business owners don't need another tax break. But millions of middle-income small business owners, self-employed workers, and people who don't get health coverage through their work need help affording health insurance. That is what enhanced premium tax credits do: additional help paying for premiums has spurred record enrollment in ACA marketplace insurance and contributed to record high rates of health insurance coverage. But these enhanced tax credits are set to expire at the end of this year.
Absent an extension, more than 3 million small business owners will face a steep hike in health coverage costs. Consider a small business owner with $50,000 in income who is eligible for the pass-through deduction and who currently purchases health insurance through ACA marketplaces. They would receive a tax benefit of about $800 from extending the pass-through deduction (assuming a single filer with no dependents), but if the enhanced premium tax credits expire, they would face a $925 annual increase in the cost of health insurance, wiping out the deduction's benefit. Policymakers who want to help small businesses manage rising costs should focus on making permanent the premium tax credit enhancements, and let a costly, unequal deduction that primarily benefits the wealthiest business owners expire.
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Original text here: https://www.cbpp.org/blog/congress-should-end-pass-through-tax-break-for-millionaire-business-owners-extend-tax-credit
[Category: ThinkTank]
Center for Strategic & International Studies: Fighting a Trade War Could Mean Losing the Tech War
WASHINGTON, March 29 -- The Center for Strategic and International Studies issued the following commentary on March 28, 2025:
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Fighting a Trade War Could Mean Losing the Tech War
By Navin Girishankar
President Trump's ambitious attempt to rapidly reorder U.S. economic relations in the early months of his administration centers on the expansive, if chaotic, use of tariffs on adversaries and allies alike. With a new round of reciprocal tariffs set to go into effect on April 2, what some senior officials have called "Liberation Day," much of the current discussion is overlooking the biggest
... Show Full Article
WASHINGTON, March 29 -- The Center for Strategic and International Studies issued the following commentary on March 28, 2025:
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Fighting a Trade War Could Mean Losing the Tech War
By Navin Girishankar
President Trump's ambitious attempt to rapidly reorder U.S. economic relations in the early months of his administration centers on the expansive, if chaotic, use of tariffs on adversaries and allies alike. With a new round of reciprocal tariffs set to go into effect on April 2, what some senior officials have called "Liberation Day," much of the current discussion is overlooking the biggestrisk of these measures: A multifront trade war will weaken the United States' ability to compete on the critical and emerging technologies that will be essential to the administration's economic growth and national security goals.
Indeed, the enduring test of the America First Trade Policy is not its short-term effect on the merchandise trade deficit or fentanyl interdiction by neighbors, but its impact on the United States' ability to innovate and scale critical and emerging technologies. And China is ready to pounce on strategic missteps by the United States to lock in decisive technological advantages. The risk has never been higher.
Countries that establish and sustain advantages across these technologies will shape the coming economic order. They will be positioned to set technology standards in global markets. They will control technology supply chains and choke points. They will be able to shape the future of work and jobs. And they are more likely to have the first-mover advantage in gaining market share for tech-enabled goods and services. Those countries that cannot do these things will fall behind.
By most assessments, the United States currently maintains an edge in a number of critical and emerging technologies such as artificial intelligence, leading-edge semiconductor design, biotechnologies, pharmaceuticals, supercomputing, and quantum computing, but China is catching up. In other technologies, however, China already leads--for instance, in cryptocurrency, small drones, e-commerce, electric vehicles, facial recognition, mobile device manufacturing, high speed rail, hypersonics, solar and wind energy, and telecommunications.
It is true that China has long engaged in unfair trade practices, intellectual property theft, and outright sabotage of assets (and these must be addressed, including with tariffs). But it would be wrong to conclude that mercantilist and malign actions alone have led to China's technological rise. Let's acknowledge China's strengths: quality scientific research, prodigious STEM talent, an ability to move rapidly from "lab to market," dominance in processed critical minerals, a capacity to scale commercial production, and access to markets worldwide, especially in the Global South. Notably, China is well-integrated into most major technology value chains.
That is the essential point: Technology value chains are global in nature. They comprise complex research, trade, commercial, and investment ties that crisscross the world, from advanced economies in Asia and Europe to middle-income countries in Latin America and developing countries in Africa and South Asia. To compete, U.S. companies, big and small, need reliable access to critical and cost-competitive inputs, stable ties with suppliers of those inputs (Figure 1), and strong protections from intellectual property (IP) theft and industrial espionage. They also need foreign direct investment and access to export markets. The volatility of tariffs and retaliations, at a minimum, cuts against a stable technology environment. More likely than not, a multifront trade war would pose major obstacles to U.S. industry, universities, and workers seeking to compete on advanced technologies.
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Figure 1: U.S. Reliance on Inputs to Critical and Technology Supply Chains, by Country
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Take the case of the semiconductor industry, which includes chip designers, foundries, equipment providers, and material suppliers across the world. U.S. companies such as NVIDIA, Qualcomm, and Intel lead in the design of advanced chips, but they depend on chip makers in Taiwan and South Korea. They in turn depend on equipment providers in Japan and the Netherlands, and processed materials from China. Tariffs on imports from China, Mexico, and Canada; tariffs on steel and aluminum; and reciprocal tariffs on other countries add uncertainty and costs to U.S. chipmaking prospects. They may alter investor expectations and provoke retaliatory measures akin to China's tit-for-tat tariffs and export controls on critical minerals.
Efforts to attract investment in U.S. chipmaking to Arizona, New York, Ohio, and other states (under the CHIPS and Science Act and via Trump announcements of massive investments from Taiwan and the United Arab Emirates) are laudable. Tariff threats may have induced these moves, but whether real investments materialize primarily depends not on tariffs but on other factors such as tax incentives, talent, and regulations. On the contrary, tariffs on chip inputs render U.S. chipmaking more expensive in the short run, while shielding U.S. domiciled companies from market pressures essential to their competitiveness and innovation over time. That's bad for the AI revolution, which will depend on access to leading-edge chips.
Similar issues will play out in the U.S. biotechnology and life sciences sector in the U.S. Northeast and on the West Coast, as well as increasingly in the heartland and the South. This sector thrives on international collaboration, sourcing raw materials, specialized equipment, and active pharmaceutical ingredients from global partners, including China and Canada. Imposing tariffs on these imports inflates research and production costs, stifling innovation in drug development and medical technologies.
The nascent quantum industry in states such as Illinois and Colorado is no different. Quantum networks rely on more than 15 hardware components such as random number generators, detectors, quantum chips, and polarization equipment, variously supplied by companies in China, France, Germany, India, Japan, New Zealand, and the United Kingdom. If tariffs raise the cost of these inputs or if retaliatory measures limit U.S. companies' access to key components, the United States risks losing the first-mover advantage in this pivotal technology.
The administration would do well to orient its trade strategy to the technology leadership vision that Vice President Vance laid out at the Paris AI Action Summit in February. While he affirmed the United States' intention to ensure that "American AI technology continues to be the gold standard worldwide," he added, "just because we're the leader doesn't mean we want to or need to go it alone."
To that end, the administration should issue an updated America First Trade and Technology Policy focused on U.S. technology leadership at all costs. With allies, the United States should seek reliable access to low-cost inputs to U.S. technology products and services (even if it means a bilateral goods deficit with some countries), deep and secure R&D partnerships, greater coordination on focused export and investment controls, and the removal of tariff and nontariff barriers to U.S. exporters. With China, any technology-friendly deal should include uninterrupted U.S. access to processed critical minerals, a ratcheting down of heavy subsidies on Chinese products, and verifiable measures to stop IP theft and cyberattacks.
Navin Girishankar is president of the Economic Security and Technology Department at the Center for Strategic and International Studies (CSIS) in Washington, D.C.
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Original text here: https://www.csis.org/analysis/fighting-trade-war-could-mean-losing-tech-war
[Category: ThinkTank]
