On Tariffs and Globalisation

I’ve been designing a breakout board for a Bluetooth 5.4 module (see FSC-BT1038B project). On the surface, it’s a straightforward PCB - a handful of components soldered onto a green slab of fibreglass (or black… I still haven’t settled on the silkscreen colour. But I digress). Yet its creation spans continents: KiCad, an open-source tool built by a global community; a PCB fabricated in China on (probably) German machinery; capacitors from South Korea; resistors from Taiwan; and a Bluetooth module designed and likely manufactured in China. Like most (I’d even wager to say all) modern electronics, this little side project is a testament to globalisation’s efficiency - and its fragility once you scratch the surface.

Tariffs are back in vogue, championed by policymakers nostalgic for America’s 19th-century industrial rise. From Alexander Hamilton’s Report on Manufactures to the 40% average tariffs of the 1800s, the U.S. wielded protectionism to shield trailing industries, fund government coffers, and avoid income taxes. By 1910, tariffs accounted for around 2.5% of the USA’s GDP. But this strategy had trade-offs: Southern agrarian states suffered under retaliatory European tariffs. Foreshadowing, anyone?

Fast-forward to 2025. The world has unimaginably changed. My $2 PCB relies on hyper-specialised global supply chains. A Chinese factory can produce it cheaper than a local shop, and a tariff on imported boards might push my project’s cost beyond feasibility on my hobbyist budget. Yet proponents argue tariffs could revive U.S. manufacturing (and I’m sure many people are vying to propose the same this side of the pond). The rhetorical question is: Can 19th-century logic work in a world of smartphones and always-on, cloud-shackled devices?*

Recent history offers clues. In 2018, the U.S. imposed a 20-50% tariff on washing machines. The result? Prices rose - not just for washers, but for dryers, too ¹. Consumers bore a $1.5 billion annual cost, while only 1,800 jobs were created - breaking it down, each new job ended up costing around $815,000. Similarly, steel tariffs in 2018 boosted domestic steel employment but cost more jobs in industries reliant on steel, like automotive and construction. Tariffs became a stealth tax, redistributing wealth from consumers to protected sectors, often failing to reshore production.

But not all tariffs fail. The 1964 Chicken Tax - a 25% tariff on light trucks - propelled Detroit’s dominance in SUVs and pickups. Foreign automakers like Toyota and BMW skirted the tariff by building U.S. plants and creating jobs. Yet this “success” came at a cost: less competition, higher prices, and slower innovation. Protectionism worked - but only because the government tolerated oligopolies².

Today’s policymakers face a paradox. Tariffs could, in theory, support strategic industries like semiconductors or green energy. Reliance on geopolitical rivals for critical goods is risky, as COVID-era chip shortages proved. But reshoring isn’t simple. My Bluetooth module depends on rare earth metals mined in China, refined in Malaysia, and assembled in Vietnam. A tariff here might not revive U.S. mining; it could just reroute supply chains through Mexico or India.

Moreover, modern products are too complex to untangle. A single iPhone contains parts from 43 countries as of 2018 - I couldn’t find more recent data. As the 2018 tariffs showed, companies often absorb costs or pivot to tariff-hopping workarounds (like Mercedes’ “flatpack” vans), rather than reshoring.

My $30 Bluetooth board exists because globalisation works. Yet I recognise the risks of overreliance - on foreign chips, on single suppliers, on politically (and morally) fragile chains. Tariffs can boost local growth, but only if applied with precision. Blanket tariffs, like those floated around these days, risk taxing innovation out of existence. The U.S. thrived in the 1800s by nurturing industries while investing in railroads, education, and R&D. Today, we need a similar vision: tariffs as a scalpel, not a sledgehammer.