Abstract

The essay points out that trade wars, particularly those stemming from the U.S.-China conflict, are key contributors to the global decline in innovation. Skyrocketing input prices, tariff-driven uncertainty, and supply chain fragmentation have caused major disruptions in capital-intensive industries such as automotive, aerospace, and consumer electronics. These disruptions have negatively affected innovation. Companies like GM and Airbus not only temporarily halted their R&D investments, but broader trends also show a slowdown in global innovation spending. Additionally, trade barriers have led to opportunity losses, as firms are now redirecting resources toward compliance and logistics instead of technological advancement. In sectors like agriculture and technology, tariff-related revenues declined significantly, while innovation capacity also weakened. The essay supports the idea that protectionist policies, although often promoted as a way to defend local interests, ultimately harm local competitiveness by damaging collaborative ecosystems. Policy recommendations include targeted tariff exemptions, bilateral R&D agreements, and multilateral frameworks that support a stable and transparent innovation environment. The essay concludes that restoring global cooperation would help build strong and forward-looking innovation systems capable of addressing the challenges of an increasingly interconnected world.

Keywords: Trade War, Tariff-Driven Uncertainty, Supply Chain Fragmentation

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