The battle lines of global economics rarely shift overnight, but the ground is shaking beneath the world’s trade architecture—and Jayati Ghosh is among those calling it out plainly. A development economist with over three decades of teaching at Jawaharlal Nehru University and currently based at the University of Massachusetts Amherst, Professor Ghosh sees the current tariff wars and monetary instability as symptoms of a deeper fracture in the global order.
Appearing on the podcast India and the Global Left, Ghosh dismantled the idea that the US-China “trade war” was ever really about trade. “It was mostly a technology war,” she explained, pointing to the continuation of Trump-era policies by the Biden administration. The US, she argues, was attempting to curtail China’s rise by attacking its tech sector under the guise of tariffs—a move that ultimately backfired on multiple fronts.
The idea of tariffs as industrial policy is not without precedent. Ghosh acknowledges their use in the 19th and early 20th centuries by nations seeking to protect budding industries. But what’s happening now, she says, “is not coherent policy.” The Trump administration, followed by Biden’s continuity, implemented tariffs seemingly devoid of strategy—slapping high levies on nations with low barriers to US imports, like Vietnam, while letting others like Brazil off the hook. “This was clearly not about promoting viable domestic sectors,” she said. “There was no consistency, no industrial rationale, no reciprocity.”
The broader damage, she warns, is geopolitical. In attempting to isolate China, the US managed to alienate many of its allies. “You need friends to contain China. What they’ve done is create more enemies,” she said. Countries like India, Vietnam and Sri Lanka—economically dependent on US markets—have already been pressured into making concessions. She cites India’s quiet approval of Starlink’s entry as one such example of behind-the-scenes capitulation.
But the most damning impact, according to Ghosh, is on the very countries being courted or coerced. The global South, she argues, is the real loser in this reshuffling. Not because they’re always directly targeted by tariffs, but because of the uncertainty that paralyses investment and trade flows. “Even countries with only 10% tariffs will be badly hit. The world is entering a phase of slowdown, and developing economies will bear the brunt.”
The problem is layered. As capital flees to “safer” destinations and currencies fluctuate, countries at the bottom of the financial hierarchy face the double whammy of depreciating currencies and increasing repayment costs—most of which are denominated in US dollars. “Devaluation no longer boosts exports,” she argues. “When currency volatility is high, no producer wants to commit resources to uncertain returns.”
It’s not just about macroeconomics. Agriculture, which remains the backbone of employment and food security in many developing nations, is under threat. Ghosh sees a disturbing trend where trade deals are being used to pry open vulnerable sectors in the name of efficiency. “Food is a weapon,” she said. “A country like India cannot afford to lose control over its essential food supplies.” With over half of India’s workforce dependent on farming, even marginal trade liberalisation in agriculture could devastate rural livelihoods.
She advocates a return to variable tariffs and buffer stock policies—mechanisms to stabilise domestic prices and protect both farmers and consumers from market swings. “We need procurement prices that reward green farming practices and sustainable crop choices. These aren’t just economic decisions; they are political and ecological necessities.”
This thinking extends to the wider trade system. Ghosh rejects the idea that countries should chase export surpluses at all costs. “Exports are only desirable because they let you import. Export-led growth is not a viable model for everyone.” China may have succeeded with it, she concedes, but trying to universalise that strategy is both environmentally and socially reckless. “If every country tried to do what China did, we’d be consuming twenty times the laptops, cars and air conditioners—and the planet can’t take that.”
The problem, she points out, is that the West is rediscovering “managed trade” for its own ends—yet remains hostile when developing nations propose the same. “It’s no longer heresy to suggest protection. The rich countries are doing it openly. But when India does it for its farmers, or when developing nations want flexibility, suddenly it becomes a problem.”
On the monetary front, she is deeply sceptical about the long-term sustainability of US debt. While the US has long enjoyed the “exorbitant privilege” of borrowing cheaply thanks to the dollar’s reserve currency status, she argues that this is beginning to erode. The freeze on Russian dollar assets spooked central banks across the globe. China has halved its US Treasury holdings over the past decade. Even Japan and South Korea have started to pull back.
The US’s weaponisation of the dollar, she suggests, may have permanently undermined trust. “If they can freeze Russian reserves today, what’s to stop them from targeting someone else tomorrow?” she asked. “And the financial policy is increasingly erratic. It’s no longer a safe harbour.”
So who blinks first in this US-China confrontation? Ghosh believes Washington already has. After a sharp decline in the bond market, the US quietly walked back some tariffs. China, meanwhile, is better prepared. Exports to the US now make up only 13% of its total, down from 26% a decade ago. Domestic demand, coupled with surging nationalism, is fuelling resilience. “This has given Xi Jinping a much-needed political boost. The country sees this as an attack on their future—and they’ve rallied around.”
Ghosh closes with a sobering reminder. “The next couple of years are going to be extremely traumatic for much of the developing world unless we have more far-sighted governments.” What’s needed, she says, is managed trade—not for profit margins or superpower bravado, but for jobs, food, and climate survival. It is a message that resists easy categorisation, and that is precisely why it deserves to be heard.
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🇺🇸💸 “This isn’t industrial policy—it’s chaos in slow motion.”@Jayati1609 says the US-China tariff war has hurt the Global South most—capital flight, inflation, and silent concessions.
China has a plan. The US, she says, already blinked.https://t.co/joPwkz8wR5 pic.twitter.com/sxHSrgxRRC
— The Indian Sun (@The_Indian_Sun) May 15, 2025
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