President Donald Trump is overhauling economic policies that could cost America its high-stakes artificial intelligence (AI) race against China, industry experts say. The tariffs announced last week to reinvigorate US manufacturing are counterproductive and may sabotage the country’s momentum in AI development.
Experts warn that stiff tariffs won’t usher in economic success, but rather lead to a recession and higher prices. Meanwhile, the competition in the AI race is heating up, with Chinese startup DeepSeek unveiling a powerful model in January.
Manufacturing is not the ticket to success in the modern economy, researchers say. The US services industry, including finance, software engineering, and more, has grown rapidly, accounting for about four in five jobs. According to the World Economic Forum, the future of work will be driven by technological advancements like AI.
However, Trump’s tariffs have plunged America into a global trade war, mirroring the Smoot-Hawley Act of 1930, which worsened the Great Depression. Business leaders are concerned about the uncertainty and extreme market volatility caused by the tariffs.
Trump’s AI strategy is also unclear, with his administration putting on hold billions in grants and contracts for major universities due to antisemitism concerns. The administration has revoked visas of hundreds of foreign students, cutting off a vital supply of human talent needed for AI development.
If the US wants to stay ahead in the AI race, it must rethink its policies that hinder progress. Trump’s current approach may be hindering America’s chances, and experts urge him to reassess his strategy.
Source: https://edition.cnn.com/2025/04/08/business/manufacturing-jobs-tariffs-ai-tech/index.html