Edgars Voļskis: What can we learn from the tariff wars initiated by Trump?

Author: Edgars Voļskis, Head of Management and Risk Consulting Department, BDO Latvia

U.S. Tariff Policy – A Path Toward Domestic Industry Revival

The United States’ aggressive tariff policy did not come as a surprise. It represents a strategic move by the presidential administration to restore the country’s dominance in global trade and strengthen domestic manufacturing. This approach is rooted in America’s historical technological advantage, particularly from the 1940s to the 1960s, when the foundations of the IT sector were laid and the U.S. became a global hub of innovation.

Opportunities for Latvia: Specialization and Strategic Support

The U.S. experience offers valuable lessons for Latvia. Targeted specialization and deliberate government support for selected industries are essential steps toward building a competitive and sustainable economy. Creating high value-added products is the only path to stable long-term growth.

Why Tariff Wars – And Why Now?

The Effects of Globalization

Since the 1990s, the U.S. has gradually lost its manufacturing dominance due to the offshoring of production to lower-cost Asian economies. While many product innovations were still developed in the U.S., the loss of production capabilities weakened the country's technological control and flexibility in managing supply chain disruptions.

An Attempt to Regain Control

The introduction of tariffs is an effort to bring technology manufacturing back to U.S. soil. The main objectives are to:

  • Attract investments,

  • Reduce external debt,

  • Protect the strategic military manufacturing sector.

In this context, the “infant industry theory” is being applied not just to developing countries, but also to advanced economies—protecting key sectors until they are strong enough to compete globally without state support.

What Can Latvia Learn From This?

The Need for Strategic Focus

Latvia still lacks a unified strategy to determine which industries to prioritize and protect. Decisions have often been fragmented and driven by short-term political interests, rather than long-term economic vision.

Key Sectors With Growth Potential

  • Scientific research – fostering participation in international cooperation and innovation projects.

  • Forestry – exporting high-quality pine saplings with significant added value.

  • Biotechnology – expanding commercial applications based on BIOR’s expertise in fish farming.

The Role of State-Owned Enterprises in Economic Growth

Latvia has yet to fully harness the economic potential of its state-owned enterprises. Slovenia serves as a strong example:

  • State enterprises are consolidated into professionally managed investment funds,

  • Actively engaged in international markets,

  • Pension fund assets are invested in domestic projects.

Recommendations for Latvia

  • Create a national investment holding to consolidate and list key enterprises on the stock exchange,

  • Strengthen the local capital market and enhance the link between pension funds and the domestic economy.

In Conclusion: Strategic Thinking as the Key to Growth

Latvia must adopt a macroeconomic mindset—focusing on strategic resource management, prioritizing key sectors, and committing to a long-term national development strategy. Only by doing so can we secure sustainable growth, stability, and global competitiveness in the years ahead.

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