In the Shadow of a Tariff War – Will American Protectionism Upend the Global Economy?

By: Trademagazin Date: 2025. 04. 29. 12:27

The trade conflict between the United States and China, which has been going on for years, has entered a new phase, warned economist Attila Szalay-Berzeviczy, former president of the Budapest Stock Exchange, at a recent economic conference. According to the expert, the tariff war signals not only an economic but also a geostrategic turn that could fundamentally change the functioning of the world economy, writes Index.

Is history repeating itself?

Szalay-Berzeviczy reminded us that the US has already used similar tools in the past. The protectionist measures introduced during the Great Depression of 1929 – such as the Smoot–Hawley Tariff Act – deepened the crisis at that time, unemployment jumped to 25%, and export-import turnover fell by more than 60%.

“The current tariff war is fueled by the same thinking: in the short term it would improve the US trade balance, but in the long term it could even lead to a global recession,” the economist warned.

The deeper roots of the conflict: intellectual property and industrial dominance

The US goal – in Szalay-Berzeviczy’s interpretation – is no longer just to improve the trade balance. Part of the strategy is for American companies to bring their manufacturing capacities home from China, or for factories producing for the US market to relocate from China to the United States. Behind this effort lies one of the biggest debates of recent decades: China’s industrial-scale intellectual property copying and building its technological competitive advantage at the expense of the US.

Economic goal or military preparation?

According to the expert, US economic policy is increasingly moving towards “war preparation”. Last year, the US spent more on debt service ($880 billion) than on military development ($860 billion) for the first time. The increasing tension around Taiwan and the pursuit of complete economic self-sufficiency also indicate that the US is preparing for a possible military conflict with China.

“The aim of American self-isolation is for the country to maintain itself even in a war situation, which is not unrealistic, since they form an internal market of 500 million with the involvement of Canada and Mexico,” said Szalay-Berzeviczy.
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