Tariffs, protection and pipe dreams

This article is available for reading in Trade magazin 2025/12-2026.01

No balance anymore

In the first part of his presentation György Jaksity showed how the structure of trade has become distorted. For decades now, the United States has been accumulating a huge foreign trade deficit, while China has been generating a significant surplus. This creates a systemic tension that is redrawing the geopolitical landscape. At the same time, in the US productivity has grown rapidly since the 1970s, but real wages haven’t kept pace. In recent decades the middle class has gradually lost the experience that work automatically means prosperity and advancement.

China has a new growth strategy

It was in this environment that Donald Trump appeared on the scene, recognising that trade policy isn’t just about numbers, but also about identity. He didn’t justify the introduction of tariffs with technical jargon, but with the promise of “taking back what is ours”. According to György Jaksity, the trade war is actually a class struggle. Moreover, tariffs aren’t temporary: once they are included in the budget, they become a permanent source of revenue and the system adapts to this. Meanwhile, defence spending has skyrocketed worldwide. For a long time China has based its economic growth on urbanisation, infrastructure and real estate development. However, this model has reached its limits and the response wasn’t to slow down, but to strategically shift towards manufacturing dominance and export-driven capacity expansion. The most visible examples of this are the electric car industry and battery technology: China is now the world’s largest car exporter and is exercising increasing control over the entire value chain.

Hungary as a connector country

Hungary isn’t a minor player in this changing landscape. In recent years there have been significant investments related to electromobility and battery production, including the BYD factory in Szeged. György Jaksity described this situation as being a “connector country”. Major geopolitical and economic systems get connected in Hungary; networks, supply chains and capital flows all converge here. This offers both strategic advantages and vulnerabilities. The volume of investment is historic, but this isn’t clearly reflected in the growth figures. As for the wave of investment driven by AI, the development of data centres and computing capacity is seemingly a software issue, but in reality it is based on physical conditions. The energy hunger of modern AI systems is unprecedented. In the economic competition of the next decade countries that can provide stable, expandable energy infrastructure, fast networks, predictable licensing, and large geographical and logistical capacity will have an advantage. //