A graphical summary of Trump tariffs

The much-dreaded “Liberation Day” and “reciprocal tariffs” are finally here. This is the Executive Order, this is the tariff calculation. It has a baseline tariff of 10% and a country-specific “individualised reciprocal higher tariff” on the 60 countries with the largest deficits, ranging from 10-50%. 

The tariffs were calculated by taking half the ratio of the US trade deficit in goods with each country in 2024 (a proxy for alleged unfair practices) and the amount of goods imported from that country. This is a good primer, this is a summary of the likely impact on various sectors, this looks at different scenarios of tariffs and retaliation and how they would impact trade partners, and this examines the rates under different circumstances. 

The reciprocal tariffs are proportional to the US goods trade deficit, with a baseline tariffs.

These are the rates on a few countries. 

The tariffs cover all except North America and (surprisingly) Russia. 

And unsurprisingly, Factory Asia is the worst impacted

It takes the world back to not only the pre-WTO era but much farther back to the Depression-era Smoot Hawley Tariff Act. The Yale Budget Lab has estimated that the effective US tariffs are now the highest since 1909. 

Many large companies from Asia-Pacific and Europe have large US market exposures.

With China facing new tariffs of 54%, there’s an imminent danger that the displaced Chinese imports could swamp Europe and other developing countries. EU is already considering raising tariffs on Chinese imports to stem any flood of displaced Chinese exports. 

The overall share of local content of imports in the U.S. is about 43%.

About 45% of U.S. imports reflect intermediate inputs to the production of American goods, while the remainder corresponds to imports of final consumption goods.

These percentages mean that the import content of domestically produced goods and services (about 45%) amounts to nearly as much as the local content of the amount spent on imported final goods (about 43%).

An illustration of the disruption associated with the Trump tariffs is the sneakers market. All three major brands - Addidas, Nike, and Puma - have several manufacturing facilities in countries hit by the tariffs. 

Vietnam has in recent years become the athletic shoe manufacturing centre of the world. Nike now has 130 supplier-factories in Vietnam producing shoes, clothing and equipment, and the country accounts for half of its footwear production. Addidas gets 39% of its shoes from Vietnam.

Vietnam is a good example of excessive trade dependence and the risks it entails. With exports to the US making up 30% of its GDP, the 46% tariff rate is expected to seriously contract output. It had the third biggest trade deficit for the US at $123.5 bn in 2024. 

Vietnam’s woes presents an opportunity for India

Industry executives said Chinese electronics contract manufacturers Luxshare and Goertek, which have invested heavily in Vietnam since the 2018 tariffs on China to manufacture for Apple and other multinational brands, would have to move or add capacity elsewhere yet again. Japan’s Nintendo has been shipping hundreds of thousands of its new Switch 2 games consoles from its Vietnamese facilities to the US, while South Korea’s Samsung, the second-largest mobile phone brand in the US after Apple, now has 45 per cent of its smartphones manufactured in Vietnam, according to Taipei-based electronics research firm TrendForce. Some observers see an opportunity for India, which got off comparatively lightly, with a 27 per cent tariff rate… Compared with the higher combined tariffs China and Vietnam are facing, India would enjoy a “valuable near-term window of export competitiveness”.

While it’s a window for sure, in the current circumstances, there are clear limits to how much Indian exports to the US can increase at the margins, given it already has a $37 bn trade surplus with the US and President Trump will be watching any rise. There are limits to how much petrol and gas India can buy to offset any further rise in exports. 

As to the end game for the tariffs, the one thing to watch is the trajectory of inflation which can trigger massive voter backlashes. 

Finally, the tariffs mark a decades old ideological belief that Donald Trump has entertained about others ripping off America by free-riding on its large domestic market and its security umbrella. It’s best captured in this advertisement that he took out in 1987 for $94,801 where he railed at the impact of strong dollar on US manudacturing, Japan’s large trade surplus and advocated that the US present a bill to Western Europe and Japan for America’s security umbrella. 

The world is laughing at America's politicians as we protect ships we don't own, carrying oil we don't need, destined for allies who won't help. Over the years, the Japanese… have brilliantly managed to maintain a weak yen against a strong dollar… It's time for us to end our vast deficits by making Japan, and others who can afford it, pay. Our world protection is worth hundreds of billions of dollars to these countries, and their stake in their protection is far greater than ours. Make Japan, Saudi Arabia, and others pay for the protection we extend as allies. Let's help our farmers, our sick, our homeless by taking from some of the greatest profit machines ever created — machines created and nurtured by us. "Tax" these wealthy nations, not America. End our huge deficits, reduce our taxes, and let America's economy grow unencumbered by the cost of defending those who can easily afford to pay us for the defense of their freedom.

A remarkable consistency in a radically different belief on trade for at least four decades!

Weekend reading links

1. The F-35, the Joint Strike Fighter, the backbone of the western air forces, and developed by Lockheed Martin in collaboration with several companies from the western alliance, is facing uncertainty arising from concerns that the Trump administration could kill the program. 

It's already deployed by several governments and has large order book.

2. The US statistical system faces uncertainties due to DOGE cuts.

3. Indians are second only to the Chinese in purchases of gold.

4. India IT services off-shoring facts of the day

As of 2024, there were about 1,800 offshore corporate offices in India, owned by hundreds of foreign-based multinational companies — most of them American. There are 1.9 million people in India working for foreign companies, with 600,000 to 900,000 more expected to join them by 2030. Together, the offshore business centers in India earned about $65 billion last year, more than the value of American imports to India. By 2030, they are expected to earn $100 billion or more... Across India, these foreign-owned offices are now the primary driver of commercial real estate. An estimated 50 new ones were established over the past year. The expectation is that 100 more will join them during 2025... these offshore subsidiaries are no longer providing only low-value services. They are full-fledged branches of American headquarters, not just outposts, let alone temporary offices that provide outsourcing for information technology services. In fact, that sector announced a reduction of 64,000 jobs in 2024... 

While salaries have gone up over the years, they are still about a quarter to a third of their dollar-adjusted equivalent in the United States. Managers of these offices, known as global capability centers, acknowledged the savings, but they said multinational companies were just as drawn to the quality and abundance of potential Indian workers. “Where else can you scale up with 2,000 engineers, or marketing professionals, within a year?” exclaimed one executive, who asked not to be named because he was not authorized to speak publicly.

5. Automobile trade with the US

For Japan and South Korea, automobiles are the top export to the United States. Mexico, in addition to cars, produces tens of billions of dollars worth of automobile parts each year that are exported to its northern neighbor. In Canada, auto manufacturing and auto parts are the country’s second-biggest export by value... In recent years, Japanese and South Korean automakers, as well as European brands — which account for 18 percent of U.S. car imports — have become increasingly reliant on the American market. That is in part because of stagnant demand in their home countries, but also because they are facing heightened competition from local competitors in the world’s biggest car market, China... Japanese brands shipped 1.37 million vehicles to the United States last year, while South Korean automakers exported 1.43 million. In addition, 821,000 light vehicles sold in the United States last year were assembled in the European Union, according to JATO, a research firm. Conversely, U.S. automakers have a minimal presence in Japan, South Korea and Germany — a reality that has vexed Mr. Trump since his first term as president.

6. In six years, China's trade surplus has nearly tripled!

President XI Jinping recently hosted 40 global business leaders in the Great Hall of People in Beijing and made an impassioned plea in defence of the global trading system. He decried some countries "weaponising" trade and "forcing companies to take sides and make choices that go against economic principles". He said, "We must jointly maintain the multilateral trading system, jointly maintain the stability of the global industrial chain."

China's defence of the world trading system is purely borne out of self-interest. It's acutely dependent on exports for growth.

As their consorting with President Xi shows, the Western business leaders have clearly not learnt anything from the countless recent incidents of high-handedness by Chinese authorities and experiences of difficulties of doing business in China.  

7. Grim assessment of the development aid scenario

Not only has the US shut down USAID and the UK slashed development aid, but there have also been cuts to the French, Belgian and Dutch budgets. The latest warnings come from Berlin, where the new coalition has put the development budget on the chopping block. In a worst-case scenario, global aid budgets could be slashed by a staggering $74bn in 2025 alone. That would be 30 per cent or so of total overseas development assistance, or ODA.

8. Gautam Mukunda makes a very good case for freedom on expression in academic campuses. 

But why can’t universities innovate while getting rid of that irritating tendency to annoy and even offend... They provide a home for people too contrarian, difficult or just downright odd to function in the rest of society. Colleges welcome people who reject the mainstream consensus. They’ve even created structures like tenure to protect and encourage those people. There’s good reason to do so. The most important discoveries are the ones that tell us that something important that we thought we knew is wrong. Most research is what the great philosopher of science Thomas Kuhn called “normal science.” It works within established paradigms. That’s valuable work. Doing it well is rewarded with the esteem of your peers. Revolutionary research, in contrast, overturns old paradigms. It destroys accepted consensus. That’s hard. People, even scientists, tend to react poorly when someone tells them they’re wrong, and they often reject the ones who do it.

9. The length of tasks AI is doing is doubling every seven months.

John Burn-Murdoch summarises the paper's findings

It finds that LLMs’ ability to perform a given task is a function not so much of how intellectually challenging the same job would be for you or me, nor of the level of specialist skill required, but of how long it would take a human and how “messy” or unstructured the workflow. So carrying out the duties of an executive assistant, travel agent or bookkeeping clerk — all computer-based jobs requiring entry-level skills — is still beyond the capabilities of even cutting-edge AIs. They struggle to keep track of multiple streams of information, respond to a dynamic environment, work with unclear or changing goals and multitask. These unstructured workflows are a far cry from coding tests and essay questions.

10. Amidst all the credentially and virtue signalling on climate change, America continues its commitment to fossil fuels. In the last few years, it has not only emerged as the largest oil producer, but now has become the largest LNG exporter. 

It's estimated that by the end of the decade, almost 1 in every three tankers carrying the super-chilled fuel will originate in the US. This is a good summary of the transformation of fortunes of the US gas industry.

Twenty years ago, the idea that natural gas would play an even more important role than crude oil in US diplomatic calculations would have been preposterous. At the turn of the millennium, the US was short of gas. It generated less than 15% of the country’s power, outflanked by nuclear and coal, and Federal Reserve Chairman Alan Greenspan called for a major expansion of imports to address the shortfall in domestic supply. Horizontal drilling and hydraulic fracturing, or fracking, which picked up in the early aughts, changed all that. The two techniques unlocked previously inaccessible oil and gas reserves from North Dakota to New Mexico. The US more than doubled its natural gas production, to more than 100 billion cubic feet per day, and it now fuels 41% of the country’s electricity... US natural gas prices have averaged $3.55 per million British thermal units over the past five years, about 70% lower than the European average, providing the economy with a major competitive advantage and helping to underpin both Biden and Trump’s policies to bring US manufacturing back from overseas.

11. Affordable housing crisis in Spain.

Since 2015, nearly one-tenth of the country’s housing stock has been plucked by investors or converted to tourist rentals. The scarcity has helped drive up prices much faster than wages, making affordable homes out of reach for many... The problem is complex, perhaps no more so than in Barcelona, which has become ground zero for Spain’s housing dilemma — and a crucible for the challenges of trying to fix it... Barcelona’s woes mirror the pain lashing European cities: Residential real estate has increasingly been turned into financial assets by investors. A surge in global tourism and workers crossing borders has landlords favoring short-term rentals over protected long-term tenants... 

The affordability problem has become one of the biggest drivers of inequality in Europe. Rents in the European Union rose 20 percent in 10 years, and house prices have surged by half, according to Eurostat. In 2023, one in 10 Europeans spent 40 percent or more of his or her income on housing... But rental prices have increased 57 percent in the country since 2015 and home prices 47 percent, while household income has grown just 33 percent, according to PwC. In Barcelona alone, rents surged 68 percent in a decade... Barcelona will become the first European city to end licenses for Airbnb homes, requiring owners by 2028 to offer them as long-term lodging at capped rents or put them up for sale.

12. India trade facts

India’s exports of merchandise and services from $465.9 billion in 2013-14... to be around $780 billion and their share in global exports around 2.8 per cent. In 11 years, that is a compounded aggregate growth rate of 4.79 per cent... The merchandise exports in 2019-20 were lower at $313.361 billion compared to $314.405 billion in 2013-14... This financial year merchandise exports are likely to be around $435 billion, which means a CAGR of 3.1 per cent in 11 years. Our share in global merchandise exports remains around 1.8 per cent... The services exports grew from $167 billion in 2013-14 to only around $206 billion in 2020-21, a CAGR of 3.04 per cent. Thereafter... the services exports have grown smartly and in FY25, it is expected to be around $380 billion, a CAGR of about 7.76 per cent over 11 years. Our share in global exports of services has also gone up to about 4.3 per cent. In 2013-14, our goods imports were about $450 billion. This financial year, total imports are likely to be around $855 billion, a CAGR of about 6.01 per cent over 11 years. Since 2014, our average industrial tariffs have gone up from about 13 per cent to about 18 per cent.

13. Long read on Tamil Nadu's success with attracting non-leather footwear contract manufacturers to invest in the state. Today all the major global contract manufacturers - Feng Tay, Pou Chan, Hong Fu, Shoe Town, and Dean Shoes (all Taiwanese) - have established factories in the state. 

Feng Tay Enterprises, one of the largest contract manufacturers for Nike, which had entered Tamil Nadu in 2006 with a factory at Cheyyar (northern Tamil Nadu), has recently expanded its operations by setting up factories at Bargur in Krishnagiri district and at Tindivanam (northern Tamil Nadu). Feng Tay employs over 37,000 workers and is estimated to produce about 25 million pairs of footwear annually.

Proactive engagement by the TN government in wooing these manufacturers, the state's track record in manufacturing, and the abundance of cheap and skilled labour have been important contributors. 

14. The supply-driven solar contracting by SECI is engendering perverse incentives.

India issued a record 73 GW of renewable energy (RE) tenders in 2024, far exceeding its annual target of 50 GW. But, 8.5 GW of capacity was under-subscribed, five times higher than the previous year, said a report from the Institute of Energy Economics and Financial Analysis (IEEFA), released earlier this month. Worryingly, the cumulative unsigned power sale agreement (PSA) capacity now exceeds 40 GW. This means while companies are willing to set up renewable energy (RE) projects, there aren’t enough buyers. Another report by the Delhi-based Centre for Science and Environment (CSE), released in January, underlined the sluggish pace of commissioning of RE projects. For 34.5 GW of solar, wind, and hybrid projects, power purchase agreements (PPA) have been signed but projects are yet to be commissioned. PPA’s are signed between project developers, or companies which produce solar power, and agencies which issue tenders like the Solar Energy Corporation of India (SECI). This implies a lack of interest from state-owned discoms to purchase renewable power. 

As I have written earlier, it may be time to wind down SECI, or at the least restrict it from solar and focus on green hydrogen and the likes.  

15. DMart is the most efficient grocery retailer in the world!

16. Finally, some facts on India's recent struggles with increasing its textile and apparel exports.

India’s textile and apparel (T&A) exports have grown steadily from $11.5 billion in FY2001 to $34.8 billion in FY24, accounting for only a 4 per cent share in global exports of $774.4 billion... The apparel segment (HSN codes 61 and 62) within overall T&A exports comprises about 42 per cent. It rose from $5.5 billion in FY2001 to $14.5 billion in FY24. Its share in global apparel exports has remained stubbornly around 3 per cent over this entire period. Meanwhile, competitors like Bangladesh and Vietnam have surged ahead. Bangladesh’s global share has grown from 2.2 per cent to 9.6 per cent, while Vietnam’s share jumped from 1 per cent to 5.8 per cent between 2000 and 2023 (see infographics). A significant portion of this shift occurred post-2010 when China’s global market share slipped from 34.8 per cent to 29.8 per cent, partly due to its trade war with the US.

Here are some striking facts about its declining cotton production and how India became a net cotton importer. 

Between 2002-03 and 2013-14, India’s cotton production almost trebled from 13.6 million to 39.8 million bales (mb; 1 bale=170 kg). During the three marketing years (October-September) ended 2002-03, its average imports of 2.2 mb exceeded exports of not even 0.1 mb. That completely changed in the three years ended 2013-14, with imports halving to 1.1 mb and exports surging well over hundredfold to 11.6 mb. Cut to 2024-25, when India’s output is projected at 29.5 mb, the lowest since the 29 mb of 2008-09. Also, imports at 3 mb would surpass exports of 1.7 mb. In short, we are back to being a net importer of the natural fibre. A country that had turned the world’s no 1 producer in 2015-16 and a close second biggest exporter to the US by 2011-12 has today been “inundated” by American, Australian, Egyptian and Brazilian cottons... India’s cotton production has been on a downward slope from the peaks scaled in 2013-14, falling to an average of 33.8 mb during the last five years and below 30 mb in 2024-25. National lint yields, too, have plunged to sub-450 kg per hectare.

The reason is the reluctance of successive governments to adopt genetically modified cotton.  

Assessing the health of school education systems in India

I have blogged on the issue of improving student learning outcomes numerous times. This post discusses a simple proposal for periodic measurement of learning outcomes and using it as a high-level decision support. 

Poor student learning outcomes should count as one of the biggest governance failures of India. An important contributor is the near complete absence of any institutional mechanism at higher levels to assess the quality of school education being delivered and the progress made in the achievement of basic literacy and numeracy or grade-appropriate learning outcomes. This diffuses accountability across the system at all levels. 

Any meaningful effort, therefore, to improve school education must start with a mechanism to continuously and credibly measure and track the aggregate learning outcome trends over time. This would serve as a health check on the general direction and magnitude of progress being made on improving student learning outcomes and also help compare across administrative units and geographies. It would strengthen accountability. 

A census in the form of standardised tests would be great but is impractical to do across grades and states. It’s for this reason that standardised tests globally are done at only a few checkpoints. 

Another option would be to undertake a rigorously sampled survey across grades and states. Surveys would be administered periodically to a cluster random sample of schools in each district. The baseline survey would be followed with an end-line recurring each year. This time series so generated would help assess subject-wise performance across districts and states. 

The National Assessment Survey (NAS) could be revised accordingly to serve this purpose. Alternatively, or perhaps more appropriately, the surveys could be administered by independent private assessment firms. The Government of India (GoI) could empanel a few testing firms for 3-5 years and allocate them across states. While the state governments would manage the contract, GoI would make payments to agencies. This would prevent conflicts of interest, align incentives, and maintain the rigour of the testing processes and the credibility of the outcomes. 

The firms would undertake evaluations based on some uniform and consistently applied set of principles issued by the Ministry of Education (MoE), GoI. The instruments, while different, must be standardised to test certain competencies. All data could be stored in a portal that would allow for easy longitudinal comparison of performance across administrative units and subjects. This data could also be analysed by independent researchers and provide actionable insights for policymakers and implementors than those generated by the countless randomised control trials done on this topic over the years. 

Any state government interested in expanding the scope of the survey would have the flexibility to do so. Some might want to compare across blocks or clusters or add a half-yearly midline. The expanded scope could be incorporated into the contract with the testing agency. 

The testing processes could be improved at the margins based on the emerging feedback from the first couple of tests, and the contracts could be revised accordingly. With time, over say, 2-3 years, the testing processes would have stabilised and the outcomes would provide a reliable assessment of the direction and magnitude of progress made by districts and states on different subjects. The important insights would be the trends in progress across the parameters and comparison across neighbouring or similarly placed geographies and administrative units. 

There are several areas where such information would be valuable decision support for policy making and program implementation. Some examples. 

Education Departments at all levels of government could use the survey trends to assess the direction and magnitude of progress on outcomes. Most importantly, it would allow for recognising failures and taking action to address them. Those lagging on trends would become aware of their lag and be forced to introspect on the reasons. Such introspection is critical to any meaningful effort to improve the quality of education. 

A bane of the education ecosystem is the absence of any credible system to reliably monitor outcomes. In its absence, questionable and bad ideas endure. The massive expenditures being incurred by state and central governments on Edtech despite very little evidence of its efficacy in improving learning outcomes is a case in point. More of the same without course corrections is most likely in the absence of any credible outcomes measurement system. A survey-based longitudinal learning outcomes tracking system would audit these interventions, help recognise failings, and allow officials to make the case to pull back on some of these questionable interventions. 

The MoE could consider incentivising states and districts by allocating a part of the Samagra Siksha Abhiyaan budget for the realisation of learning outcomes as measured from the aforementioned Survey. This would make outcomes-based financing of school education a reality. To make this sufficiently attractive, the allocations under this component can be made significantly large. This financing strategy could be complemented by competitions among districts and states on learning outcomes realisation.

This monitoring system should be supplemented with measures outlined here and elsewhere on interventions that are proximate to improving the quality of classroom instruction (as against those general inputs in the education objective function).

Weekend reading links

 1. Profile of Wang Chuangfu, founder of BYD

Born in 1966 in the eastern province of Anhui, Wang is part of a generation of Chinese entrepreneurs who escaped poverty to join the nation’s newly minted billionaire class... Wang’s obsession with batteries led to a pivot to vehicles in the early 2000s. Cracking the five-minute charge this week builds on his pioneering “cell-to-body” technology — sandwiching a battery cell inside a vehicle’s structure... The company’s stock rally has also taken Wang’s personal net worth, according to Bloomberg data, to just shy of $30bn, making him one of China’s richest men. Despite that he remains a workaholic who lives humbly. His house is walking distance from BYD’s main factories and he dispatches lieutenants to public-facing events unless his attendance is absolutely necessary. Underlings have long described Wang as a restrained, highly detail-orientated micromanager. His approval was once sought for a business unit to distribute fruit to team members. But his passion for batteries has revealed a performative flare. To demonstrate to an investor just how safe his battery cells are, he has drunk battery electrolyte fluid. He has reused cells after trucks drove over them and frequently shows visitors batteries being penetrated by nails.

BYD plans to manufacture in India with a JV partner.  

2. Interesting insights from a survey of over 30,000 GenZ professionals and 700 HR leaders. 

Unstop, the community engagement and hiring platform for students and graduates, said that 83% of engineering school (E-school) graduates and 46% of business school (B-school) graduates remain without a job or internship offer in its report ‘Unstop Talent Report 2025’. A significant 51% of GenZ professionals seek multiple income streams through freelancing and side hustle, with the number rising to 59% among B-school students. The report also delves into the glaring gender pay gaps. Two in three female arts & science graduates earn below ₹6 LPA, while their male counterparts largely surpass this mark. However, B-schools and E-schools demonstrate pay parity, ensuring fair compensation irrespective of gender.

3. Borders and proximity is what matters on defence spending in Europe.

There is an inverse relationship between the two, with the well-protected south of Europe skimping, and the exposed north-east spending well above the Nato mark of 2 per cent of GDP. What compounds this problem are the respective populations. Portugal, one of the lowest spenders, has more people than all three Baltic states combined. Spain is bigger than Poland.

4. Striking graphics on the rise of solar and wind generation globally since 2017.

China has built more than 120,000 wind turbines, nearly a third of the world total, and 1.5 million acres of utility-scale solar.

5. Africa's poor progress in electrification should count as one of the biggest failures of international development. 

Nearly half the continent's 1.2 billion people are without electricity.

6. The history of free speech shows that it's a more recent phenomenon.

For millennia, people thought differently about words, actions and liberty. Instead of valuing liberty of expression, their main preoccupation was to limit it. Because they were acutely aware of the power of words and the danger of lies, slanders and other kinds of harmful speech, the public policing of such things was a central feature of every premodern society across the globe. “Free” speech, by contrast, was an exceptional mode, which took different forms — divine prophecy, frank advice to a ruler, religious disputation or the exchange of ideas within the scholarly Republic of Letters. Only around 1700 did our modern notion of it, as a general right to speak out on matters of public concern, begin to emerge... 

In 1695, amid political and religious disagreements, the English parliament failed to renew a law mandating the pre-publication licensing of books. The result was an explosion of novel kinds of print, and a growing international fascination with “liberty of the press” as an engine of enlightenment. The two competing models of free speech that we’ve inherited were created in this new media world. The first approach contrasted press “liberty” (which was beneficial) with “licentiousness” (which was harmful) — responsible vs irresponsible speech, rights vs duties. That balancing attitude remains, globally, the norm... The alternative, absolutist model of free speech was invented in London in 1721 by two partisan journalists, John Trenchard and Thomas Gordon. As I discovered, they were mainly writing to defend their own corrupt practices, and their theory was full of holes. Nonetheless, the slogans of their hit column, “Cato’s Letters”, which proclaimed that free speech was the foundation of all liberty and should never be curtailed, were soon taken up across the world, including by the rebel colonists of North America, who enshrined its clumsy formulations in their First Amendment — “Congress shall make no law . . . abridging the freedom of speech, or of the press”. No ifs, buts or qualifications. 

In no other country have speech laws ever taken that absolutist form. The subsequent history of American attitudes is full of unappreciated ironies. Even before the First Amendment was ratified in 1791, Americans abandoned its approach in favour of the balancing model popularised by the 1789 French Declaration of the Rights of Man. Until the 1910s the First Amendment remained a dead letter; it was only the radical, now forgotten arguments of US socialists and communists that subsequently resurrected it. Early theorists of free speech mainly conceived of it in terms of public opinion, assuming that liberty of expression would eventually lead to consensus about everything...

But from the 1960s, as part of the cold war backlash against collectivist ideologies, interpretation of the First Amendment swung instead towards its current, libertarian outlook. This produced an American jurisprudence obsessed with clear and abstract rules — which was gradually achieved by ignoring libel, falsehood, civic harm, the responsibilities of the media and all the most difficult problems of how communication actually works in the world. Its simple, anti-governmental interpretation has also been increasingly hijacked to invalidate laws regulating businesses, restricting money in politics or otherwise attempting to uphold the common good. Legally, corporations are persons, and the First Amendment trumps everything.

The author makes an important distinction between free speech and its amplification.

It is a mistake, when grappling with freedom of expression, to focus too much on speakers. Especially in our age of 24/7 viral media, the critical issue is not speech per se but the responsibility for its amplification. It’s entirely reasonable to require the private media (whether printed, broadcast or online) through which most “public” speech is actually circulated and consumed to be transparent in their practices, and accountable to the society in which they operate. That means at a safe distance from direct governmental control, but more than just the fig leaf of “self-regulation”.

7. A frontline of the new Cold War, in central Africa.

Zambia and Tanzania are negotiating with a consortium led by the state-owned China Civil Engineering Construction Corporation for a $1bn concession to rehabilitate and run the iconic... Tazara railway that links copper-rich, landlocked Zambia to Tanzania on Africa’s east coast... reviving the strategic export route to Beijing... Tazara showcases an attempt to use more equity investment by Chinese state companies after Beijing’s Belt and Road Initiative was marred by defaults in borrower countries, including Zambia... Started in 1970, the Tazara railway was designed to help copper-rich Zambia access overseas markets after white-controlled neighbouring Rhodesia, today Zimbabwe, shut its borders in opposition to the country gaining independence from Britain... 

Under Mao, Beijing forked out Rmb1bn in interest-free loans to build the Tazara, with thousands of Chinese labourers working alongside locals. At its peak, it ferried more than 1mn tonnes of copper, consumer goods and passengers annually. “The Tazara to this day is still the biggest Chinese aid project implemented in Africa,” said Tim Zajontz, a lecturer at the University of Freiburg. “It continues to be a symbol of the Chinese-African all-weather friendship, as many officials on both sides often refer to  it”...A rival US-backed project is under way to upgrade the colonial-era Lobito Corridor and ferry Zambia’s resources westward through Angola instead. Agreed under former president Joe Biden through the US International Development Finance Corporation, Washington is lending $553mn to the railway in a model that brought in private investors such as Trafigura and Mota-Engil.

8. While the tech stocks and US stock markets appear to be in a bubble, there are historical precedents. The US has been the leader throughout most of the last century, except a brief interregnum when Japan took over.

Big Tech's 37.4% of the market capitalisation in 2025 pales before the 62.8% capitalisation of Railways in 1900. 

9. Starlink and Space X are now the most valuable assets for Musk.

Roughly half of Musk’s $314bn net worth is now tied to SpaceX — which was valued at $350bn in a recent private tender offer — while his 20 per cent stake in Tesla has dwindled to $100bn. Morgan Stanley estimates Starlink will generate $16.3bn in revenue this year, up 74 per cent from an estimated $9.3bn in 2024, with subscribers almost doubling to 7.8mn from 4.65mn, according to a January report. By comparison, SpaceX’s rocket launch business is forecast to make $5.8bn in 2025 revenue, up 20 per cent from $4.9bn last year... Starlink has said its more than 7,000 low-orbit satellites provide service to 118 countries and territories, with Niger the latest to be connected last week... It has won contracts with major airlines including state-backed carriers Qatar Airways and Air France, shipping groups including MSC and Maersk, and cruise operators Cunard and Carnival. About a quarter of the company’s revenues come from government contracts, however. According to US filings, SpaceX has already secured 39 different Starlink contracts across the US government worth around $3.5bn, including multiple military contracts with the Department of Defense.

10. Even as he takes the chainsaw to the US federal government, it emerges that Elon Musk's companies have received $38 bn in government contracts, loans, subsidies, and tax credits in the US over 20 years, with nearly two-thirds coming in the last five years. 

“Not every entrepreneur at this scale has been this dependent on federal money — certainly not Nvidia, not Microsoft, nor Amazon, nor Meta,” said Jeffrey Sonnenfeld, professor at the Yale School of Management, who noted that much of the funding has come during Democratic administrations. “With DOGE, there does seem to be a paradox there. He has been a big beneficiary of national industrial policy, especially Democrat industrial policy, through government funding.” Government funding also provided key early infusions to Musk’s ventures. NASA and the Defense Department nurtured SpaceX in its earliest years with contracts that helped it build infrastructure, while the agency tolerated the company’s failure to meet required milestones on time, according to congressional investigators. The $465 million Energy Department loan, which arrived in 2010, helped fuel Tesla’s meteoric rise: With that money, the company engineered and assembled its luxury electric sedan — the Model S — and bought a factory in Fremont, California, according to the agency. Tesla went public six months later... Since its 2003 Silicon Valley founding, Tesla has benefited from billions in rebates and tax credits from California. The state’s governor, Gavin Newsom (D), has claimed that “there was no Tesla without California’s regulatory bodies, and regulation.”... About a third of Tesla’s $35 billion in profits since 2014 has come from selling federal and state regulatory credits to other automakers... Tesla is the largest seller of these credits to automakers that don’t meet the standards and want to avoid paying a fine.

And that of Space X

11. Big Tech and job creation graphic of the day, Nvidia edition. (HT: Adam Tooze).

Even as its revenues doubled in 2024 from $61 bn to $130 bn, its headcount went up by just 20%!

12. The rise of Chinese e-commerce giants, Shein and Temu, has become a lightning rod for the backlash against cheap imports. President Trump ordered a halt in February to the so-called de minimis shipments, duty-free entry without inspections of parcels worth up to $800. 

The number of duty-free shipments to the United States has risen more than tenfold since 2016, to four million parcels per day last year. Similar shipments to the European Union have climbed even faster, reaching 12 million parcels a day last year. Duty-free shipments to developing countries like Thailand and South Africa have also surged… Last summer, South Africa imposed 45 percent tariffs on even the smallest imports of clothing. Thailand ended its exemption of low-value imported parcels from sales taxes, although it continues to allow tariff-free entry of parcels up to 1,500 Thai baht ($44). And the European Commission, the executive arm of the European Union, proposed this month to end the 27-nation bloc’s duty-free treatment of packages worth up to 150 euros ($156)…

Guangzhou has emerged as the global hub of de minimis shipments… Shein and Temu, competing Chinese e-commerce giants that together hold at least a third of the de minimis industry, coordinate much of their supply chains from large offices in Guangzhou… Yiwu, a city 600 miles northeast of Guangzhou with a vast wholesale market, has become another hub. It coordinates de minimis exports of toys, hats and other small items from towns scattered across the Yangtze River delta.

13. Mihir Sharma hits the nail on its head in his diagnosis of the ongoing trade wars

The fundamental flaw at the heart of how international trade in the era of the World Trade Organization (WTO) functions is the polite assumption that all economies are similarly structured. In other words, that costs, subsidies, and protections are transparent. Unfortunately, the biggest trading power in the world does not meet these criteria. If the People’s Republic of China violates this assumption, then the entire trading system is built on a lie. It is to this baseline problem that US actions, and those of others from the European Union to India, are responding. China’s accession to the WTO was premised on the assumption that its economy was, or eventually would be, comparable to the market economies that designed the system. The fact that it was not then; nor has it tried hard enough since to become one. As a consequence, it has built up imbalances domestically — and, thanks to its sheer size, those imbalances have expanded and mutated till they cover the entire world...

Hidden subsidies to power, land, and capital mean that competing with Chinese manufacturing has become very difficult for more transparently-run economies. By some estimates, China has the lowest average electricity price for industrial users among major economies. It is about 60 per cent of the equivalent in India, and about a quarter that of Germany’s. Meanwhile, it has increased and is still increasing the use of targeted tax subsidies in export-oriented sectors such as electric cars, batteries, and solar panels. There is no recourse within the WTO system for China’s trading partners if they want to correct this issue. It is not entirely surprising that both parties in the US have lost faith in WTO dispute settlement.

14. Africa's India rice dependency

Africa is typically a large market for broken rice — accounting for more than 80 per cent of India’s exports over 2018-20, according to data from the International Food Policy Research Institute. In 2022, Indian rice accounted for more than 60 per cent of rice imports for 17 African countries and more than 80 per cent in nine, including Somalia.

15. Trump bump has raised the flagging prospects of political leaders in many allied countries. 

16. In so far as it brought together the Bannonite nationalists, the MAGA populists, and plutocrats under one umbrella, the Trump coalition was one of opportunism. And its internal contradictions are now starting to show on the back of the DoGE cuts on welfare spending and associated departments. 

Over the next few months, he will have to find a way to balance the interests of both the fiscal hawks and billionaire allies, who want to radically downsize the federal government, and his working-class Maga base, which has become heavily reliant on government support... a growing section of voters has come to rely on government transfers, the result of an ageing society and rising inequality. These include Medicaid for poorer families and Medicare and Social Security for retirees. In 2000, according to the Economic Innovation Group, a think-tank, just 10.4 per cent of counties in the US derived a quarter or more of their total personal income from transfers. But by 2022, that had risen to 53 per cent of counties in the US. Many of those counties are in the sort of rural areas where Trump is hugely popular. 

“As much as Republicans like to rail against big government, [their voters are] often its biggest beneficiaries,” says John Mark Hansen, professor of political science at the University of Chicago. Or as Steve Bannon, one of the architects of Trump’s initial rise to power, put it in a recent podcast: “Medicaid’s going to be a complicated one . . . a lot of Maga’s on Medicaid.”... Income from government transfers was the fastest-growing major component of Americans’ personal income, according to the EIG report last year. It said they made up 18 per cent of all personal income in the US in 2022 — a total of $3.8tn — with the share more than doubling since 1970. Transfers, which include state pensions and state health insurance, as well as veterans’ benefits, food stamps, unemployment insurance and other benefits, were now the third largest source of Americans’ personal income, after income from work and investments, EIG said. The main driver of this trend, EIG said, was the ageing of the US population. Because the largest transfer programmes — Social Security and Medicare — are aimed at people of retirement age, transfer payments expand as the elderly population grows... 

The trend is not confined to a few poor pockets of the country. The report says that “most US counties depend on a level of government transfer income that was once reserved only for the most distressed places”. It said the transfer share runs highest in parts of the country that are “rural, old and poor”. Some of these, Appalachia and the rural South, are firmly Republican... A report by the Center for Children and Families at Georgetown University in January found that there are 15 states where at least one-fifth or more of non-elderly adults in small towns and rural areas are covered by Medicaid. Of these, eight voted for Trump in November.