No matter the concerns about trade impact on jobs in the US, tariffs are not the answer: Andrés Velasco of LSE
Dean of the School of Public Policy, London School of Economics, Andrés Velasco, says India can grow in a sustained manner, but services likely to remain the driver of growth.
- Oct 6, 2025,
- Updated Oct 6, 2025 11:50 AM IST
The tariffs imposed by the US under President Donald Trump on imports from other countries cannot be the solution to concerns over jobs and trade, said Andrés Velasco, Dean of the School of Public Policy, London School of Economics, while noting that the tariffs are unlikely to be rolled back by the next administration.
In an interaction with BT on the sidelines of the Kautilya Economic Conclave, Velasco, who is a former finance minister of Chile, noted that while trade is desirable overall the benefits and costs are distributed in different ways across countries. He said this was also emphasised in the London Consensus, that he along with 54 other economists drafted for a new economic consensus for the 21st century.
“For countries like India, integrating into the world economy has been a positive, and we should not get confused... The anti-trade movement is really in a handful of advanced countries,” he said.
He also underlined that the Trump tariffs are applied for political not economic reasons. “Second, no matter what concerns you may have about the impact of trade on jobs in the US, Trump tariffs are not the answer. They are applied for political, not economic reasons. They are volatile, unpredictable and quite likely, both illegal under American law and international law. And therefore, even if one has reasons to want to modify US trade policy, this is not the way to do it,” he said.
The US only accounts for about 14% of world trade and the tariffs imply that there will be more intensive trade across emerging and developing countries and the European Union, Velasco said, adding that “people who are saying that the era of global trade is over are exaggerating”.
International trade is unlikely to be rolled back as it benefits many people, especially those in low-income groups. However, the US tariffs are likely to say.
“…it is clear that once you have created tariffs, those are hard to roll back. I’m thinking, especially here of the US, for at least two reasons, one that they generate revenue, and in a country where debt is over 100% of GDP, additional revenue is important. Second, they have political implications, because once you’ve generated a tariff, you’ve created a vested interest at once to keep benefiting from that tariff,” he said, adding that even though many of these tariffs are very hard to justify on economic grounds, undoing them for the next administration in the US will not be easy, and that’s precisely why we ought to be worried.
On India’s future growth trajectory, he said much will depend on global circumstances but stressed that the world needs India to do well.
“The world needs India to do well. India is a democratic country. India is a country that upholds the values of freedom and respect, and therefore, India is a very valuable player in world affairs. India has done very well already, beginning with reforms of the early 90s. This is not something that began yesterday, but something that has been going on for several decades now, and I think there’s plenty of room for the country to build on that,” he said.
However, following the trajectory of East Asian countries that grew very fast by relying on labour intensive manufacturers may be a difficult model for India to follow and building on its services led growth may be easier.
“That model of very fast growth is very difficult to reinvent today, not only because the US and other countries are more closed, but simply because there’s not that much room to expand on low tech manufacturers, so India to grow on a sustained basis,” he noted.
India is particularly strong in services, and could become stronger in services, he further said, point out that there are various services from banking and professional to transport. They also have an advantage over manufacturing that they are very labour intensive. This is key in a country with a population as large as India's, he said, underlining that sustained growth is achievable for India but it will take not doing the same things as in the past, but doing new things in the future.
He further said that the potential to create manufacturing jobs where, whether in India or elsewhere, is much more limited than in the past. This is something that US President Trump has yet to understand, Velasco said, adding that no matter what tariff he applies, manufacturing employment in the United States is not going to go up.
The tariffs imposed by the US under President Donald Trump on imports from other countries cannot be the solution to concerns over jobs and trade, said Andrés Velasco, Dean of the School of Public Policy, London School of Economics, while noting that the tariffs are unlikely to be rolled back by the next administration.
In an interaction with BT on the sidelines of the Kautilya Economic Conclave, Velasco, who is a former finance minister of Chile, noted that while trade is desirable overall the benefits and costs are distributed in different ways across countries. He said this was also emphasised in the London Consensus, that he along with 54 other economists drafted for a new economic consensus for the 21st century.
“For countries like India, integrating into the world economy has been a positive, and we should not get confused... The anti-trade movement is really in a handful of advanced countries,” he said.
He also underlined that the Trump tariffs are applied for political not economic reasons. “Second, no matter what concerns you may have about the impact of trade on jobs in the US, Trump tariffs are not the answer. They are applied for political, not economic reasons. They are volatile, unpredictable and quite likely, both illegal under American law and international law. And therefore, even if one has reasons to want to modify US trade policy, this is not the way to do it,” he said.
The US only accounts for about 14% of world trade and the tariffs imply that there will be more intensive trade across emerging and developing countries and the European Union, Velasco said, adding that “people who are saying that the era of global trade is over are exaggerating”.
International trade is unlikely to be rolled back as it benefits many people, especially those in low-income groups. However, the US tariffs are likely to say.
“…it is clear that once you have created tariffs, those are hard to roll back. I’m thinking, especially here of the US, for at least two reasons, one that they generate revenue, and in a country where debt is over 100% of GDP, additional revenue is important. Second, they have political implications, because once you’ve generated a tariff, you’ve created a vested interest at once to keep benefiting from that tariff,” he said, adding that even though many of these tariffs are very hard to justify on economic grounds, undoing them for the next administration in the US will not be easy, and that’s precisely why we ought to be worried.
On India’s future growth trajectory, he said much will depend on global circumstances but stressed that the world needs India to do well.
“The world needs India to do well. India is a democratic country. India is a country that upholds the values of freedom and respect, and therefore, India is a very valuable player in world affairs. India has done very well already, beginning with reforms of the early 90s. This is not something that began yesterday, but something that has been going on for several decades now, and I think there’s plenty of room for the country to build on that,” he said.
However, following the trajectory of East Asian countries that grew very fast by relying on labour intensive manufacturers may be a difficult model for India to follow and building on its services led growth may be easier.
“That model of very fast growth is very difficult to reinvent today, not only because the US and other countries are more closed, but simply because there’s not that much room to expand on low tech manufacturers, so India to grow on a sustained basis,” he noted.
India is particularly strong in services, and could become stronger in services, he further said, point out that there are various services from banking and professional to transport. They also have an advantage over manufacturing that they are very labour intensive. This is key in a country with a population as large as India's, he said, underlining that sustained growth is achievable for India but it will take not doing the same things as in the past, but doing new things in the future.
He further said that the potential to create manufacturing jobs where, whether in India or elsewhere, is much more limited than in the past. This is something that US President Trump has yet to understand, Velasco said, adding that no matter what tariff he applies, manufacturing employment in the United States is not going to go up.