For Trump, to condemn tariffs solely as the raison d’être for US’ manufacturing woes without addressing deeper imbalances of currency manipulation & monetary privilege & unleashing a retaliatory “Tariff Tsunami” would be to misread the moment.

For decades the United States has enjoyed a silent monetary advantage being the de facto global currency hegemon. As custodian of the worlds reserve currency together with its ability to inflate & overvalue the dollar at will, the United States has had disproportionate influence in shaping rules of trade in its favour while insulating itself from the vulnerabilities others must bear. Not only has it tilted global trade in its favour distorting competitiveness & suppressing equitable exchange but has also used the dollar to develop economic, political & even military muscle which it has not even shied away from using.

Free & fair trade with the US is a myth in the face of its unparalleled currency advantage. True free trade assumes a level playing field where currencies reflect economic fundamentals & trade flows respond to comparative advantage, not self-incentivising monetary structures. Today none of the western currencies, including the dollar reflects the strength of their respective economies. Yet the US & the West are able enforce their currency dominance over others.

In this light, tariffs may not be unfair trade barriers, but rather attempts at restoring balance by others to offset this unfair currency advantage that the US enjoys. A mechanism of equity rather than protectionism. Imposition of tariffs by these nations is not a declaration of hostility but a defensive correction. A response to decades of monetary asymmetry & a desperate effort to level the playing field of global trade.

Through historical serendipity born out of post war monetary mechanism created at Bretton Woods, the US emerged as the custodian of the worlds reserve currency in the US Dollar. As a global custodian it was incumbent upon the US to use this monetary privilege in a fair & just manner for the benefit of all without parochial self-interest. But did it? Nixon shock, Plaza accord, weaponizing the dollar, printing at will, sanctions, creating debt to subsidise inefficiency, running persistent trade deficits yet maintaining its purchasing power do not assure us that they did. It has in fact often used its privilege to use the dollar less as a medium of exchange & more as an instrument of economic pressure. Often a silent weapon wielded without declaration.

Much of the western world too has benefited from its umbilical association with the US gaining a currency advantage over others. & remember this advantage was on top of the colonial advantage these countries had for at least two centuries before that !

Nowhere is the burden of this currency imbalance felt more acutely than in emerging economies. These nations, reliant on exports & foreign capital, find themselves trapped in a game where rules are dictated by currency values beyond their control. Their industries struggle to compete, their intellectual power is bought out cheap, their natural resources are exploited & their monetary policies are constrained by the need to maintain currency stability. Tariffs, in this context, become a tool of survival, not protectionism.

But being in a comfort zone & privilege of buying cheap from whoever & wherever you desire can be a twin edged sword. It corrodes your own ability to manufacture & sell to the world. & this really is the problem the West & the US faces. To then blame tariffs or China or India for its manufacturing woes would be missing the woods for the trees really.

A misplaced persecution complex that the world has been unfair to the US & that retaliatory tariffs are justified may be short sighted & not yield the desired result to kickstart domestic industry inside the United States. Because tariffs after all mere tactical & even temporary trade related tools. It is the currency & exchange rate that are more fundamental in impacting a country’s ability to manufacture & sell globally.

The US may even succeed through its Geopolitical muscle to arm-twist everyone to fall in line on tariffs but it would take some political gut to tweak its own currency downward to get manufacturing back on its feet again. The latter will mean facing the risk of inflation & rising prices of essentials in the short run. Will the average American accustomed to cheap holidays in Asia, cheap gas, inexpensive maple syrup & eggs have the patience to bear the consequence? And will even the American corporations who enjoy the dollar advantage like welcome a devalued dollar?

But one thing is certain. The time for rebalancing exchange rate discrepancies & by incidence asymmetries of global trade is on us. & this rebalancing will require a sober reassessment of both tariff policy & currency frameworks. Focusing on the former & brushing the latter under the carpet will not do. And it will call for mature accountability from the US & its currency allies in the West. Exchange rates will have to reflect realistic relative strength of countries that promote genuine competitiveness.

This rebalancing will in fact benefit the US & West in the long run. But the process may be a bitter pill to swallow. What could be the options ? Go back to gold standard ? May not be practical. Accounting for 8000 tonnes of gold that the US is rumoured to hold barely translates to a Trillion USD at the current gold price of 3000 USD per ounce. Not enough to justify the status of a global reserve currency. Or Crypto perhaps? But then regulation & blockchain will necessitate a democratic & equitable monetary structure. Will the US be ready to give us its currency sceptre & crown easily?

Tariffs after all are not the disease but a symptom of a deeper malaise. If the world is to move toward a fairer, more inclusive trade system, it must first confront the hidden hierarchies embedded in its monetary architecture. The primary responsibility for this lies with the incumbent currency hegemon, the US. Condemning just tariffs would be misreading the entire moment.