THIS is with reference to the report `Trump remains defiant as world markets collapse on `Black Monday`` and the editorial `Meltdown` (April 8). United States President Donald Trump, with his sweeping imposition of tariffs on America`s main trading partners, has ignited a firestorm. It is too early to say whether he would achieve his stated objective of making America great again by the end of his tenure, or would he damage it beyond repair. But what is clear is that his actions have upended some 80 years of economic wisdom hard-learned after the end of World War II.

Tariffs are essentially import duties imposed on goods brought in from another country. The irony is that it was the US, along with its main trading partners, that was instrumental in establishing the General Agreement on Tariffs and Trade (GATT) whose primary purpose was to abolish tariffs. It led to the establishment of the World Trade Organisation (WTO) in 1995 which continued to focus on open markets by reducing or removing all trade barriers. Now that Trump has all but written the WTO`s epitaph, developing countries, like Pakistan, may have a window of opportunity.

Frankly, it was never in the interest of Pakistan to lower its trade barriers.

To understand the matter, let us turn to the experience curve, a concept used by business economists to analyse the competitive position of key players.

Simply put, it says that a company`s unit cost of producing a good declines steadily in direct proportion to the cumulative number of such goods produced by it.

At the same time, cumulative experience enables it to continue to improve the quality of the product.

As a consequence, a company that is the first to enter a certain business builds upan advantage through experience that others find difficult or impossible to overcome.

A real-life example would be in placeto assess the actual worth of the concept.

Toyota entered the automobile market much later than major American producers, like the General Motors and Ford. The logic of the experience curve would have it that Toyota should have never been able to compete with them on their home turf. Yet it did and continues to do so very successfully.

Thisisbecause the Japanese government, in the early stages of Japan`s industrial development, effectively closed its markets by imposing high tariffs on finished imported goods. This protected the local manufacturers from foreign competition in the domestic market where they could gain experience till they were ready to compete with their competitors in international market s.

The logic of the experience curve applies to countries just as it does to companies.

The early industrial economies have an inherentadvantage overthose thatgot there later. The only way to offset this advantage is through protections by way of tariff barriers. This is what has been historically proven at the global scale.

When Pakistan joined the WTO, it was forced to do the opposite; lower import duties. This opened the gates for experienced international manufacturers to flood our markets with low-cost products.

Our own hapless manufacturers, still in the early stages of the experience curve, were just not able to compete.

Trump`s actions have provided an opportunity for Pakistan to reinstate high import duties on everything except basic raw materials.

This will allow our manufacturers to build up the cumulative experience to compete with established competitors.

Nadeem Qureshi Karachi