“War in the age of AI demands new weaponry”, the opinion piece by Eric Schmidt, former chief executive of Google and founding partner of Innovation Endeavors, was certainly an eye-opener (Opinion, FT Weekend, September 21).

“The defence industry is having a moment,” is his opening sentence. Schmidt is clearly of the opinion that providing weaponry for war is a good thing. It definitely is profitable. He talks of “weapon systems that are affordable, attritable and abundant” and says that “many more opportunities are coming for start-ups and defence unicorns.”

Affordable for whom? And at what cost to human life in numerous parts of the world? I was reminded of the Bob Dylan song “Masters of War” from 1963:

You hide in your mansion

While the young people’s blood

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Flows out of their bodies

And is buried in the mud

Ciarán Folan
An Spidéal, County Galway, Ireland

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A strike that closed US east and Gulf coast ports will be suspended after the dockworkers’ union and the group representing ocean carriers reached an agreement on Thursday, averting for now a costly blow to the economy ahead of the presidential election.

The agreement extends the International Longshoremen’s Association’s employment contract, which had expired, until January 15. It will allow them to return to work for the first time in three days, the union and the shipping lines’ group said in a joint statement.

Negotiations, which had been at an “impasse” over wages and automation for months, would now continue, the statement said.

The work stoppage, which started on Tuesday, had threatened to upend the US economy by snarling global supply chains and halting imports of fresh foods, pharmaceuticals and other consumer goods. JPMorgan analysts estimated that it could cost the US economy as much as $4.5bn a day.

The three dozen affected ports span from Maine to Texas and together handle one-quarter of the country’s annual international trade, worth $3tn, per a Conference Board analysis.

US President Joe Biden congratulated the union and the United States Maritime Alliance (USMX), which represents the carriers, on the deal, saying in a statement that it “represents critical progress towards a strong contract”.

Frustration over the economic fallout of the strike, compounded by fears over how product shortages could delay relief efforts for states devastated by Hurricane Helene, had opened up a new line of attack on Biden and vice-president Kamala Harris, the Democratic candidate, ahead of the November 5 election.

Donald Trump, the former president and Republican nominee, claimed earlier this week the work stoppage “would never have happened” had he been in the White House.

Business leaders had also criticised Biden’s approach to the strike, repeatedly asking him to invoke a federal law that would temporarily force the longshoremen to resume loading and unloading container ships. Biden said he wanted the groups to come to an agreement on their own.

A coalition of 272 trade groups representing retailers, farmers, restaurants, meat processors, truckers and other industries had called the work stoppage a “dire situation” on Wednesday, with “massive negative ramifications for our industries and the economy”.

It threatened the import of consumer items from bananas to coffee to clothing. Some Americans even began panic buying and hoarding toilet paper, prompting a trade group that represents paper manufacturers to issue a statement saying it did not expect the strike to have an impact on supply. An estimated 85 per cent of such products are manufactured in the US, the American Forest and Paper Association says.

ILA leaders told picketing workers the deal that included a 62 per cent raise over the six-year term of the contract. ILA members earned between $20-$39 an hour under the old contract — with overtime pay that pushed a third of New York-based workers’ annual earnings above $200,000 during fiscal year 2019-2020.

They are also fighting the adoption of port robotics that they say could eliminate jobs. Ports in the Netherlands and Australia are already primarily operated by remote-controlled cranes, employing few human workers.

Your editorial “Trump’s miracle cure for America” (FT View, September 28) rightly calls out the Republican presidential candidate Donald Trump for his tariff zeal as a cure-all for America’s economic ailments: fixing the trade deficit, strengthening national security, reducing the fiscal imbalance, raising the standard of living, rejuvenating US manufacturing, among other things. It’s way too much to expect from a largely obsolete, ineffective and blunt policy instrument.

Trump’s tariff fetish has intensified. It is driven primarily by a narrow-minded obsession with America’s merchandise trade deficit and manufacturing employment. The elimination of the deficit via tariffs — as high as needed to do the job — has become an overarching policy goal.

Unfortunately Trump fails to understand a basic macroeconomic principle: as long as the US invests more than it saves, the trade deficit is inevitable. (By the same token, excess savings are the primary underlying driver of China’s persistent trade surpluses.)

Given this hard reality, even if Washington were to succeed in slashing the trade deficit via new “killer” tariffs (60 per cent or higher) against China, other exporters (India, Mexico, Vietnam etc) would fill the gap. This happened when Trump was president: the overall trade deficit kept widening and manufacturing employment deteriorated after the tariff war began in 2018. Undersaving is the main structural cause behind the large US trade deficit, which cannot be corrected by any amount of “smart tariffs”.

However, the national savings rate can be increased by reducing America’s unsustainable fiscal deficit. There is considerable empirical evidence for the existence of an American “twin deficit”: the fiscal and trade deficits moving largely in tandem.

Trump’s proposed high tariffs would be a huge negative shock to world trade, probably triggering a global trade war, producing far more losers than winners. Instead of acting as a chief disrupter in world commerce, the new president — whoever is elected — should reestablish Washington as the global champion of rules-based free and fair trade and a credible leader to fight the rapidly growing protectionism worldwide.

Given these risks, and Trump’s demonstrated abuse of tariffs as president (applied on phoney national security grounds, even against close allies), it may be high time for Congress to consider reclaiming its constitutional responsibility under Article 1, Section 8, to regulate commerce with foreign nations.

Istvan Dobozi
Former Lead Economist, World Bank, Sarasota, FL, US