Boo Kok Chuon

When Donald Trump imposed new tariffs globally, it was marketed as a nationalistic, job-saving strategy. In reality, it is nothing more than a superficial economic intervention—a painkiller for an economy suffering from systemic infection.

To understand why, we must revisit the intellectual lineage of modern trade theory—beginning not with Ricardo, but with Adam Smith, the father of classical economics.

Adam Smith: The Division of Labour and the Birth of Trade Logic

I still have a copy of Adam Smith’s The Wealth of Nations, every economist’s bible that was written In 1776, sitting in my bookshelf. It was one of the many economics literature that I acquired back in the days where I was an economic student obsessed with anything related to economics. This book introduced the principle of the division of labour. Smith observed that productivity grows when tasks are specialised and workers focus on what they do best. This principle, when scaled to a national level, formed the earliest rationale for trade between nations.

Smith argued that countries should produce goods where they have an absolute advantage—where they can produce more with the same resources—and trade for others. It was a radical break from mercantilist thinking, which treated trade as zero-sum. Smith also championed the “invisible hand” of the market that lets efficiency and comparative costs guide the flow of resources, unimpeded by state intervention.

David Ricardo: The Evolution into Comparative Advantage

Building on Smith’s work, English economist David Ricardo introduced the theory of comparative advantage in 1817. Ricardo’s breakthrough was in showing that even if a country is less efficient in producing everything, it still benefits from specialising in goods where it is relatively more efficient while trading for the rest.

This simple but powerful insight forms the cornerstone of modern trade theory. It has powered prosperity, specialisation, and peace across borders for two centuries.

Trump’s tariffs turn this principle on its head. They seek to artificially shift production back to the U.S. forcefully, ignoring the fact that efficiency, not proximity, is what creates value. Forcing American industries to make what others can produce more competitively only leads to higher costs, lower productivity, and stunted innovation.

Painkillers for a Systemic Problem: The Medical Analogy

Tariffs may offer short-term relief that could only protect a few industries, while largely serving the superficial optics of rallying populist sentiment. They do nothing to address the core issue: the U.S. economy’s long-term productivity lag and domestic manufacturing decline.

It’s akin to taking painkillers (or placebo?) for sepsis. You may feel better briefly (if at all), but the infection spreads. By the time real symptoms show, it’s often too late.

What’s the economic infection?

• Lack of investment in advanced manufacturing
• Hollowed-out vocational training
• Outsized corporate focus on financial engineering over industrial development

Tariffs don’t cure any of these. They just raise consumer prices and invite retaliation.

When Models Are Misused: The Sala-i-Martin Irony

A recent revelation added a layer of irony to this conversation: economist Xavier Sala-i-Martin was reportedly shocked to learn the Trump administration had used one of his trade impact models to justify tariffs—misapplying it entirely. The model, which estimates the potential GDP shift from reduced imports, was taken out of context and politicised into a growth narrative. What was meant as a technical estimate became a rhetorical tool—ignoring price distortions, supply chain rigidity, and retaliation effects. It’s a reminder that even the right formulas can lead to the wrong outcomes when stripped from their economic architecture.

Tertiary Shockwaves: The Ripple Beyond Borders

Trump’s tariffs won’t just hurt China. They’ll slow global trade velocity. China will adjust by doubling down on ASEAN, EU, and Belt & Road markets. U.S. importers will pass costs to consumers. And economies like Singapore, integrated across supply chains, will feel the blowback.

This isn’t containment. It’s self-sabotage with global consequences.

A Better Approach: Incentivise, Don’t Penalise

Want to revive U.S. manufacturing? Don’t raise walls. Build bridges:

• Incentivise advanced production hubs domestically
• Rebuild STEM and vocational pipelines
• Offer tax benefits to firms that reshore with long-term commitments
• Create U.S.-based capital market mechanisms for high-tech startups.

But don’t stop there.

To truly future-proof American innovation, the U.S. should adopt a deliberate brain drain strategy—a calculated magnetism designed to attract China’s most creative and constrained tech entrepreneurs.

Through federal grants, startup visas, and relocation subsidies, offer them something Beijing won’t:
Capital freedom, IP protection, and a path to scale globally—via NASDAQ or OTC Markets.

Of course, this invitation should come with clear conditions:

• Global HQ must relocate to U.S. soil
• Capital flow must remain transparent and regulated
• Sensitive tech sectors must comply with national security protocols

Ironically, this is a mirror of Xi Jinping’s own strategy when launching China’s New Third Board—a capital market built to fund innovation and keep it loyal. The twist? We now reverse-engineer the formula, and apply it on China.

Trade is not the enemy. Misallocated priorities are.

Conclusion: A Misdiagnosed Illness Will Always Be Mistreated

Tariffs do not heal—they numb. And when nations chase populist optics over economic principles, they lose decades of compounding value.

Smith gave us the division of labour. Ricardo gave us the comparative advantage.
Together, they handed the world a model of prosperity through specialisation and cooperation.

The U.S. is choosing to scribble over it.

Whereas for us, we’re watching an empire take painkillers while ignoring the spreading infection.

This is not leadership. It’s malpractice.