Trade and industrial policy will play a more prominent and potentially more destabilising role given that President-elect Donald Trump has signalled his intention to leverage tariffs as part of his broader ‘America First’ agenda.

Having described the tariff as the “most beautiful word in the dictionary”, Trump regularly links higher tariffs to saving US manufacturing industries and blue-collar jobs.

He also views tariffs as an instrument that can be deployed to punish or discipline countries he believes are undermining US interests or pose a threat to them.

His recent social media post warning countries in the Brics bloc that they will face 100% tariffs should they pursue an alternative currency to the US dollar represents a high-profile example of the latter.

Trump is not sailing against the wind, however, nor is he alone in his protectionist impulses.

His moves are in line with a broader reaction to the period of trade liberalisation and industrial policy scepticism that gained hegemony following the end of the Cold War.

That era, which was also associated with greater democratisation, has been steadily making way for one where protectionism and even authoritarianism are being embraced.

This, largely owing to a political environment that is characterised by anger over the inequalities and the real and perceived unfairness of the current order; a mood that is being skilfully exploited by leaders with autocratic traits.

Likewise, it is a reaction to a rebalancing of geopolitical power between the West and the East, as China edges towards superpower status and has emerged as the world’s main manufacturing hub, with major implications for industries and workers in other countries.

While several salvos in what looks more and more likely to become a hot trade war between the US and China were fired during Trump’s first term, the conflict continued and even escalated under President Joe Biden.

In May, Biden stole headlines with his decision to raise tariffs on Chinese electric vehicles from 25% to 100%, as well as on semiconductors from 25% to 50% from 2025.

Protection levels were also ramped up across a range of critical minerals, as well as the key industrial metals of steel and aluminium.

After Biden banned the export of advanced memory chips, chipmaking machinery, and other semiconductor technologies to 149 Chinese firms, China announced stringent restrictions in early December on the export of gallium, germanium, antimony and other key critical materials with military and high-tech applications.

Once Trump assumes office on January 20, this simmering war is likely to heat up further, with direct and indirect implications for other countries, with Mexico and Canada in the cross-hairs, alongside countries in the expanding Brics bloc.

Multilateral guardrails will likely be tested to their limits as countries move to safeguard their interests.

Such a piecemeal approach is inefficient and undesirable, and the potential for unintended consequences and manipulation is high.

Nevertheless, domestic policymakers had better be ready to trade blows, as well as to respond actively and proactively.