Trump's 'Made in America'. Will it work?

Privileged Discussions is now Global Trade Deciphered, a sharper reflection of our focus on global trade and business. Same expert insights, new name. Global Trade Deciphered is a Privileged Discussions Productions podcast. Thanks for joining us!

Episode Description

Justin Hayden Miller is a Global Trade lawyer (with 25 years' experience) formerly at the Big 4 and now partner in one of Europe's largest commercial law firms. 

In this episode, we dive into President Trump’s ambitious “Made in America” policy, exploring whether his push to bring manufacturing back to American soil will succeed—or falter. 

Trade Policy 2025

**Call to Action**

- Subscribe: Don’t miss an episode—subscribe on Buzzsprout, Spotify, Apple Podcasts, or your favorite platform!  

- Share: Loved this episode? Share it with friends, family, or colleagues to spark a conversation about America’s economic future.  

- Feedback**: Tell me what you think. Drop a review or comment on Buzzsprout or reach out on social media to share your thoughts.  

- Follow me: Stay updated on new episodes by following me on X @JustinHaydenM

Don’t forget to rate and review to help us grow!  

**Resources & References**

- IBISWorld Report: [Canada’s Shrinking Auto Industry](https://www.ibisworld.com/canada/industry-trends/biggest-exporting-industries/)  

- BBC Article: [Challenges of Relocating North American Auto Industry](https://www.bbc.com/news/articles/cn7vjlv7pzdo)  

- David Ricardo’s *Comparative Advantage* (1817): Learn more about this foundational economic theory. 

- Adam Smith’s *The Wealth of Nations* (1776): The roots of *Absolute Advantage*.  

Tags: #TrumpPolicies #MadeInUSA #ComparativeAdvantage #EconomicsPodcast #Tariffs #GlobalTrade #PersonalProductivity  

**Next Episode Teaser**

Brexit!

If you like the podcast, please subscribe so you don't miss any episodes and leave a rating. Also tell friends and colleagues about it so the podcast can grow.

*Follow Justin on X: @JustinHaydenM

or contact us by email at GlobalTradeDeciphered@gmail.com

Sign up to our newsletter. (We won't spam you and will remove your email on your request.) https://bit.ly/PrivilegedDiscussions

*Disclaimer: This podcast is simply for informational and entertainment purposes only and does not in way constitute legal, business, financial or other advice whatsoever. Should you require advice then please seek such from an appropriately qualified professional, explaining your specific circumstances.

Chapters

• 0:00 Trump's Manufacturing Repatriation Policy
• 1:40 Fifth Avenue and Mercedes-Benz Dilemma
• 4:30 Ricardo's Theory of Comparative Advantage
• 9:08 Criticisms of Pure Economic Theory
• 14:35 Transplant Shock: Economic Parallels
• 20:32 Conclusion and Moderate Approach Needed

Transcript

Speaker 1: 0:00

In this episode, we'll be analysing whether Trump's policies to bring industries back to the United States will succeed or fail. Welcome to Privileged Discussions offering fresh perspectives on current affairs shaping global trade. I'm Justin Hayden-Miller, global trade lawyer and partner at a leading European law firm, decoding the latest global trends. What is the underlying root cause for current US policy to return manufacturing to the US? And this, in my opinion, concerns the economic theory of comparative advantage, which I'll explain, because understanding this theory will help us to understand and predict whether President Trump's policy of bringing US companies back to shore on the US can possibly work or not. But first I want to tell you what I think is the initial spark or trigger for all this, and that is Fifth Avenue yeah, the avenue in New York. I remember very well Trump's second presidential candidacy yes, his second in 2016, because he'd already run to become president in 2000. I followed his economic policies in his second race in 2016 quite closely.

Speaker 1: 1:36

Four days before his inauguration in January 2017, trump was interviewed by a German tabloid newspaper. Trump was interviewed by a German tabloid newspaper, bild, and in the interview he said when you walk down Fifth Avenue, everyone has a Mercedes-Benz in front of their house. Right. Fact is, you were very unfair to the US. There is no reciprocity. How many Chevrolets do you see in Germany? Not too many, maybe not at all. You see nothing over there. It's a one-way street. It must go both ways. Unquote. The article was eventually titled why Trump Hates Mercedes, which I personally feel is a little unfair. As you heard, trump was complaining about the over-prevalence of Mercedes-Benz on Fifth Avenue and he framed it as evidence of an obvious trade imbalance. But in April 2018, trump made a statement during his state visit to France when he went to see Macron, and multiple sources reported that Trump told French President Emmanuel Macron that he would maintain his trade policies until no Mercedes models were seen on Fifth Avenue Not a single one. That was part of a broader threat to impose tariffs with the goal of reducing foreign car presence in the US, and that's what we're seeing today. This allows me to get on to discussing why there have been so many Mercedes in the US and why there are so many McDonald's and Mac stores in other countries. And the reason, ladies and gentlemen, largely is because of comparative advantage.

Speaker 1: 3:30

The theory of comparative advantage. It's an economic theory which considers that countries benefit from specializing in goods that they can produce most efficiently. This idea and theory was developed by David Ricardo, in my opinion one of the most influential economists of all time, who has shaped global trade understanding since the early 19th century. David Ricardo was British. Born in London, he became a wealthy stockbroker and then went on to become a self-made economist. Influenced by Adam Smith and the economic turmoil of the Napoleonic Wars, he published his theory in 1817. His theory of comparative advantage, a cornerstone of economic theory, explains why countries engage in international trade and manufacture goods even when one country is more efficient at producing all goods.

Speaker 1: 4:30

Let me explain. First of all, we have absolute advantage, which was described by Adam Smith in 1776 in his work the Wealth of Nations. In it Smith wrote If a foreign country can supply us with a commodity cheaper than we ourselves can make it better buy it off them. So this is the notion that the country that can produce a good most cheaply and efficiently should be the country that should produce and sell that good Because, as Smith said, better buy it off them. Broadly, with this idea that the time and effort that a country has should be employed producing goods that itself can produce more cheaply and efficiently than the others. But this means that, supposing Germany creates quality cars, such as Mercedes-Benz, in the cheapest and most efficient manner, then better for the US to buy quality cars from Germany. The US can concentrate and sell things to Germany that it is best making itself most cheaply and efficiently.

Speaker 1: 5:43

But let's take it a stage further, in fact, let's take that theory to an extreme. Suppose that Germany not only manufactured quality cars in the cheapest and most efficient manner, but manufactured all other goods, including fridges, screws, children's toys and toothbrushes as well, in the most efficient, cheap manner. Then, according to the theory, everyone in the world should only buy German manufactured goods and no one would produce anything anywhere else. A little extreme and pure fantasy, you might say. Until we replace Germany as the example country with China, because this seems close to me to the position that Trump is talking about. Okay, at present it might be able to produce a large proportion of goods, even the majority of goods, more cheaply and efficiently than anywhere else. But what's the consequence? To close down factories in every country and to simply accept it? Not on your life, says Trump. So that's absolute advantage.

Speaker 1: 6:52

Now let's move on to comparative advantage, which was established some years later, somewhat by Robert Torrance and then by Ricardo. I don't want the episode to get too techie, so let's jump straight to Ricardo Now. Ricardo, in his writing, gave the example of cloth produced in England and port wine produced in Portugal. But to make it more topical, let me explain Ricardo's theory by giving the example of Germany manufacturing cars and the US fracking and extracting and exporting fracking gas. Let's suppose that the US is better at making both more cheaply and efficiently. It can produce fracking gas more cheaply and efficiently than Germany thanks to its vast shale reserves and advanced technology, and, as Simon Ward told us in episode six, the US is already the biggest exporter of gas into Europe. So there's some truth in this. But let's suppose that the US is also better at building cars. With a strong auto industry, which is what President Trump wants, let's suppose that he makes vast investments into the US car industry to allow it to be able to become the most efficient and to build cars in the US more cheaply and efficiently than anywhere else, including Germany. Economist Randall Bartlett points out, incidentally, that the highly integrated North American auto industry would require tens of hundreds of billions of dollars in investment to get here Silly amounts of money. But anyway, let's imagine that Germany, though, is less efficient at producing both fracking gas and cars.

Speaker 1: 8:40

You might think that the US should make fracking gas and cars and not bother trading with Germany, because it's better at producing both, but Ricardo's theory of comparative advantage says that's not the best thing at all. Here's the key Even if the US is better at everything, it should focus on what it's relatively best at what it can produce with the least sacrifice. So the US has a comparative advantage in fracking gas because that's what it produces best, and Germany has a comparative advantage in cars because that's what it can produce best. In these circumstances, ricardo's theory of comparative advantage, which remains widely accepted by the vast majority of economists today, the US should focus on producing fracking gas and Germany should focus on making cars. The US should extract fracking gas and sell it to Europe, and Germany should manufacture cars and sell them to the US. Why does this work? By specialising at what each country is best at, both countries get more overall.

Speaker 1: 10:05

I see Ricardo as saying that if you don't use this approach, then 2 plus 2 equals 4, but when you apply comparative advantage, in a sense, 2 plus 2 equals 5, or even 1 plus 1 equals 5. Anyway, let me explain this a different way. If the US was the most efficient country at manufacturing everything, then it would still make better economic sense that countries other than the US produce goods and sell them to the US. Trade makes both countries better off. But you know, my own constructive criticism of comparative advantage is that it does not always take into account the underlying desires of the actors and players, even countries. Were I to interview Trump, I believe he would say yeah, I believe in comparative advantage. Sure, I believe that countries should engage in international trade. But you know what? China is producing nearly all the goods and the US is almost not producing anything. I've been saying that for a long, long time. That's not comparative advantage, that's the opposite of comparative advantage. That's called fraudulent advantage. You know what I'd call that screwing the United States.

Speaker 1: 11:31

And concerning my hypothetical Trump reply, do you know what? Trump is potentially right to make us reconsider comparative advantage to some extent? Ricardo gave the example in his writings of England specialising in cloth production and Portugal in port wine. But in real life, the English signed the Methuen Treaty with Portugal and didn't apply free trade entirely at all. The arrangement clearly, overwhelmingly, favoured England. So in real life, countries don't necessarily apply pure economic theory because they think it's advantageous for them to do differently and sometimes it can be. And so Trump is no idiot or fool, and his economic ambitions and strategies should not be discarded out of hand, as some commentators do.

Speaker 1: 12:28

It seems to me that Trump sees the consequences of applying comparative advantage too idealistically as the beginnings of a decline or of the decline of the United States, irrespective of whether it might be advantageous to the world economy as a whole or not. He's playing the personal card. He's playing the personal card, and Trump's decision to delay the implementation of certain tariffs, especially in the face of stock market reactions, displays a willingness to accept a slower time frame in the hope that it will ultimately be tolerated by the markets. I have my doubts, but at least it shows a degree of ductility, and listen to my previous episode to find out what I mean by that. But there are other forms of criticisms of comparative advantage as well. Firstly, that it assumes static, persistent advantages of countries and they don't change. Well, that's not the case of countries and they don't change. Well, that's not the case. In episode three on Trump and tariffs and mercantilism, I mentioned that I believe that Trump probably wants to secure greater advantage for the US by disrupting the status quo. Secondly, comparative advantage is criticised because it overlooks power imbalances in trade, which clearly exist. Indeed, it is said that Trump wants to capitalize on the US's economic and political strength by playing on power imbalances. So will President Trump's policies of bringing industries back to the US succeed or fail? His policies are most likely to succeed if toned down somewhat substantially. Overzealousness is most likely to lead to President Trump's objectives not being met, whereas his underlying reasoning may be correct and could be successful if implemented on a much smaller scale over an extended time frame.

Speaker 1: 14:35

Any economy, and especially the world economy, is an ecosystem, but the economy of a single country, and especially individual policies of a country, including the United States and its policy on tariffs, for example, can resemble a plant, and the similarities are far greater than you might imagine. When I was a child, I would watch my grandmother, who we called Nana, and almost every other day she would wipe and clean the large green leaves of all her plants For hours. She said they breathed better that way. I later discovered that the plant in question, the one with the big leaves that she tended to so meticulously, is called an asperdistra. It is native to China and was imported by the British into England in the 19th century, and, like the US economy, it's seemingly indestructible. So it's a plant ideal for me, because it's basically impossible to kill off, and this is why I bought one over 20 years ago and it's still going strong in my living room.

Speaker 1: 15:49

Some time ago, though, I thought I'd better change the soil, so I took it to the local plant shop and asked them to repot it. It looked just great when I collected it, and the soil looked so beautiful and dark and rich and I put it back in its dark corner where it had been for years and years. But after a week I noticed it was looking a bit poorly. A few days later it looked even worse. So I quickly took it back to the shop and asked for their advice. Your plant is in shock, said the head plant guy behind the counter and said it's been in old soil far too long and, having been put into much richer soil, better soil with proper nutrients, it's not used to it.

Speaker 1: 16:34

Transplant shock is apparently when you change the soil of a plant or you move the plant to a new location too suddenly and the change is too violent for it. It needs time to adjust to its new surroundings and, if not done correctly, it can certainly damage the plant or even kill it completely. Even an almost indestructible asperdistra even an almost indestructible asperdistra Transplant shock refers to the stress and temporary setback that plants can experience when they are uprooted and replanted into a new environment. You see, the United States' current economic policies, initiated by President Trump, seek to encourage companies to transplant their manufacturing, principally from Asia China back to the US. On-shoring moving factories that have left the US or have been exported from the US to Asia, and particularly China, back to US shores to uproot them from, for example, china and replant them into richer US soil. And the plunging of the New York Stock Exchange in response to US tariff announcements with this objective in mind represents a symptom of shock to this change, just like my Asperdistra experienced.

Speaker 1: 18:03

And what is another name for factories, plants? The plant struggles to adapt to different conditions and climatic factors. No coincidence that economists talk of an economic climate. Like economies, plants that grow leaves, as well as the factory variety in China, for example, making lots of products. Neither like abrupt changes either, and this boils down to my current opinion concerning US economic policy. The objective and aim may be entirely sensible and correct, but care needs to be taken where necessary, ensuring that changes are smooth and more gradual. Let's face it in life, the most stressful experience is said to be bereavement. Stressful experience is said to be bereavement, followed by divorce, and moving home is third. So it should be no less the case for plants or factories.

Speaker 1: 19:11

Make no bones about it, this is a critical moment for Canada and China as well, and other countries. Trump's new tariffs on Canadian imports, for example, are indeed pushing both Canadian and US companies with manufacturing operations in Canada to consider relocating their production to the US to avoid tariff costs and other costs. But moving industry to the US was trending even before Trump's latest policies. Ibis World Report indicated Canada's car and automobile manufacturing industry has already been shrinking, with automakers shifting investments to the US and Mexico already due to high costs in Canada. Trump's tariffs have simply amplified this trend. Admittedly, trump has reversed certain tariffs, but at the same time, politicians are all too frequently criticised for not having been prepared to change their minds. So we can't criticise, we can't have it both ways. My conclusion, therefore, is that it can only work if President Trump reduces substantially his proposed tariff levels Tariffs in the order of 50% plus, which he is intending, is counterproductive. It will lead to transplant shock. Substantially lower tariffs, however, could work.

Speaker 1: 20:43

Coming back to my nana, what's the best way to ensure your plants of the green leafy, but also of the real estate manufacturing variety survive, especially when moving them? Moderate, incremental changes, nothing brutal and TLC, tender, loving care. If you're listening to this, then thank you for having listened to the podcast from beginning to end. If you like it, do subscribe so you don't miss any episodes, and feel free to leave a rating. This will help others find it.

Speaker 1: 21:30

You can find me on X at Justin Hayden, followed by the letter M, or send me an email at privilegeddiscussions at gmailcom. And if I didn't mention a legal caveat then I wouldn't be worth tuppence as a lawyer. So here goes. The content of this podcast is intended only to provide an information resource of interest and does not constitute legal, tax, business or financial advice of any kind. Should you require advice, then you should engage an appropriately qualified person to provide you specific advisory services in the field. The views, thoughts and opinions expressed in this podcast are my own and do not necessarily represent the views, thoughts or opinions of any law firm, nor that of any third party, other person, company or organisation. Stay tuned for the next episode.