Recently, the EU and the US slapped import tariffs on Chinese electric vehicles (EVs). In my circles, the reaction has been one of outrage, with many accusing the governments of undermining climate efforts and harming consumers. But let’s take a step back and look at the bigger picture.
While these tariffs may seem counterproductive at first glance, they are, in fact, a prudent hedge against over-reliance on China for critical goods and technology. The COVID-19 pandemic taught us a valuable lesson about the power of distributed systems. These systems, which Nassim Taleb describes as 'antifragile,' actually grow stronger under stress.
If you do not want to put all of your eggs in one basket, then you need to buy a second, and maybe a third basket. Three baskets are more expensive than one, but then, it may let you bake your cake.
A system that may look good and work best during normal times (like cheap Chinese EVs), may, and most likely will, shatter in crisis. A system that is a bit more expensive, and slow. and a little inefficient, can be the only one you can rely on in your time of need.
Consider this: a system that functions perfectly under normal conditions, like the availability of cheap Chinese EVs, might crumble when a crisis hits. On the other hand, a slightly more expensive and slower system, though less efficient, can be your lifeline when things go south. It’s like having a sturdy backup generator or battery when the main power grid fails.
The Russian invasion of Ukraine starkly reminds us that global stability is never guaranteed. Russia isn't the only player—China has made its intentions towards Taiwan clear. What seemed unthinkable is now within the realm of possibility. So, why continue as if it’s still the calm of 1999? We are all in it for the long haul, and the more we become antifragile - the better. It’s past the time to prepare for a more unpredictable future.