With the Aug. 1 tariff deadline nearing, the U.S. is already seeing an effective tariff rate of over 18% according to the Yale Budget Lab, putting the rate at a 92-year high. In many ways, the first half of this year has been a case study in how to upend the global trade system, but what might it take to emerge from all of that?
One possibility: a kind of “Geneva Conventions” for economic statecraft. That’s the idea behind a recent article in Foreign Affairs by Daleep Singh, the chief global economist at PGIM Fixed Income and a former top economic security advisor within the Biden administration. “Marketplace” host Kai Ryssdal spoke to Singh about his proposal. The following is a transcript of their conversation.
Kai Ryssdal: We are, as we see in the headlines every day, in an era of economic warfare, and certainly it has been stepped up in the Trump administration, but it predates the Trump administration. Goes back decades and decades. And I guess the question is —
Daleep Singh: Kai, it goes back centuries and centuries.
Ryssdal: Centuries and centuries, right? Well, there you go, and you’re the expert in the conversation. So, here’s the gist of the first question, and it’s pretty basic, but is it different now somehow?
Singh: Yes, it’s being used more often and with more force than ever before. First, because we’re in the most intense period of geopolitical rivalry since at least the Cold War, and because today’s great powers are mostly nuclear powers. The logic of mutually assured destruction has pushed direct conflict away from the military battlefield and into the economic arena.
Ryssdal: So let’s talk about how we do that. And I want to get to the idea of economic tradecraft, which is sort of the thrust of your piece. There is, as everybody knows, diplomatic tradecraft, political tradecraft, military tradecraft, which the United States has demonstrably been pretty good at for the last 80ish years. I would submit, and I guess my question to you is, do you think the United States has been as good at economic tradecraft the past generations?
Singh: We’ve always been better at using economic tools to create and to innovate and to inspire and attract. That’s been our superpower. And you know, it’s still investments in research and development, infrastructure, workforce development, that’s what’s made America different over the past 80 years, and having grown up professionally in the private sector, I think those tools, the positive ones, are our most potent ones, because plenty of countries can punish but no other country can can inspire and create like the U.S. That’s who we are at our best.
Ryssdal: You know, there are going to be people listening to this who say, this guy just needs to read the newspaper, man, because what’s happening every single day in this and the global economy now is a disruption of what has been built over 80 years. And I guess the question that comes from this is, your entire argument assumes regular order, if I could speak in congressional terms, right? It assumes thoughtful consideration. It assumes the investigations that go along with tariffs and all of the rest of the things. It assumes normal diplomatic, economic tradecraft channels, which, as we all know, simply is not happening now. And I mean, did the United States break the global economy?
Singh: Look, I mean, I’m trying not to sound naive. We can act in a way that’s unpredictable. We can act in a way that maximizes our use of leverage. But if you ask me, trust is the currency of diplomacy. Diplomacy is ultimately how you settle conflicts. Unbridled chaos ultimately creates a vacuum and makes us weaker. So my ambition is modest, to start a conversation and to encourage people who are smarter and wiser than I am to improve on the ideas I put out there.
Ryssdal: So let’s talk about that. Let’s talk about that thing you want to do, which is the crux of your piece, which is building government capacity for economic tradecraft. Because just to allude to an earlier question, we have government capacity for military tradecraft and diplomatic tradecraft and all of those things. How do we build this economic tradecraft capacity that you seek?
Singh: So I’m calling for a doctrine of economic statecraft that would be announced at the highest levels of government. It would lay down guiding principles for why and when we use economic weapons, and it would set limits, you know, like not targeting food or medicine. I don’t think we have an institutional setup that’s fit for purpose, so I’m also calling for a cabinet-level ‘Department of Economic Security.’ We need a 21st century institution built for geo-economic competition.
Ryssdal: It’s going to take decades, right?
Singh: Yeah, it will, because right now our economic tools are scattered across [the Treasury Department], Commerce, State, [and the office of the U.S. Trade Representative]. We need a single agency that gives us coherence. We need to simulate conflict scenarios and stress test our tools, just like the Fed does. And the biggest, I think the biggest efficiency, is we need to recruit multidisciplinary talent, a SWAT team across economics and finance, because the right tools are not enough. We also need the right team.
Ryssdal: I’ll echo your earlier caveat here that you’re not naive, because there are challenges now, shall we say, with recruiting people to federal government and building that kind of bureaucracy back up. But the last thing I want to touch on this, and you know, I’m asking you, as a guy who spent his professional life in this: the United States is now in a place where we are the unreliable actor. What and how do we convince the allies—and our trading opponents, too—that we have steadfastness of purpose?
Singh: Well, look, that’s the right question. First, we have to convince ourselves that doctrine isn’t code for handcuffs. No president would agree to handcuffs, but what I would say to our allies and really to the powers that be in Washington, is that we know economic statecraft is here to stay, but doctrine is about improving its discipline and its legitimacy and ultimately its effectiveness. And the benefit is also will minimize the blowback, because if you exercise power without discipline, history teaches us eventually that backfires.