When The World Stops Syncing

When you pop your wireless earbuds in before a jog, there’s little chance you’re thinking about the technology behind them, or the international consortium that spent more than a decade making Bluetooth the ubiquitous media tool it is today.

But we shouldn’t take for granted our ability to sync Apple airpods to a Lenovo tablet or a Google mobile phone to a Bose speaker. Given the direction of global trade, Americans may not have access to the Bluetooths of the future.

One year after Trump declared “Liberation Day” from the post-World War II consensus on global trade, that may stand as the most lasting consequence of the tariff regime he is now scrambling to rebuild after much of it was invalidated by the U.S. Supreme Court.

Even if the next president rolls back any remaining duties — which he or she could do, given Trump’s reliance on executive authority rather than congressional approval — the convulsions of Trump’s trade war have already had a durable impact. His policies have accelerated an ongoing pivot away from the free-trade principles that have governed international commerce for nearly 80 years, which is beginning to splinter the global market that multinational corporations covet. Trade flows are being re-routed, new regional trade blocs emerging.

This will add up to far-reaching impacts across the technological landscape, where cross-border collaboration has given breakthrough inventions greater reach and made them far more useful to consumers (and marketable for companies). It’s why we have international bodies that set standards for things like Internet domains, driver navigation systems and even cell phone emojis. It’s not clear a similar technological advance could engender the same collaboration, or achieve the same global reach, in the current climate.

“If, as we work towards the next versions of Bluetooth and 6G and all these things, that tent gets smaller,” in terms of global cooperation, “our stuff doesn’t have to be the best,” warned Phillip Luck, who served as deputy chief economist at the U.S. Department of State during Joe Biden’s presidency. “We can just be left with worse and worse technology.”

The Viking king’s earphones

In the early 1990s, engineers around the world were looking for ways to connect a computer to a cell phone. But it was the Stockholm-based telecoms provider Ericsson that devised the first viable solution: a low-power, shortwave network connection that allowed different types of digital devices to communicate without wires.

Ericsson joined forces with some of the leading also-rans — American computer behemoth IBM, Japanese conglomerate Toshiba, Finnish phonemaker Nokia, Silicon Valley hardware producer Intel — to form the Bluetooth Special Interest Group. By syncing their efforts, the world’s leading tech companies could ensure that the products they developed would be permanently interchangeable.

“The idea was that we would have six major companies” work together on a common technology, said Jim Kardach, an Intel engineer who helped launch the consortium in 1998. “And then everyone would use the same radio instead of having this fragmentation.”

Even the project’s name was the product of international collaboration. According to Kardach, he suggested the moniker for the new group to Ericsson's Sven Mathesson as an homage to Viking King Harald Blåtand, who united Denmark and Norway in the 10th century. Blåtand translated into English is, you guessed it, Blue-Tooth.

Today, the Bluetooth SIG includes more than 40,000 member companies worldwide who help refine and update the technology while controlling access to the patents. In 2024, nearly 5 billion Bluetooth-enabled devices shipped around the world, a figure that is projected to grow to 7.7 billion by 2029, the group forecasts. Virtually all smartphones now have Bluetooth capabilities, as do many animal collars, point-of-sale terminals and carbon-monoxide detectors.

The widespread uptake, in turn, is what makes Bluetooth’s technology so valuable for companies. Effectively, that technology makes “your device much more universal and useful to the user,” as Kardach put it. That makes those products easier to sell to markets around the world — and recoup more of companies’ upfront investment required to develop them in the first place.

Geopolitics, however, could threaten Bluetooth’s dominance. The first Trump administration’s 2019 decision to add Huawei to a U.S. Commerce Department list restricting access to American technology prompted multiple international bodies to temporarily suspend the company, including the Bluetooth SIG.

That set off alarms in Beijing. In response, Huawei began work on their own rival wireless technology, called NearLink, that could come to replace Bluetooth as well as WiFi in the country. NearLink launched in 2023, and the Chinese government is now racing to develop a national standard to sync its use across the country. According to Huawei, it offers significant competitive advantages over Bluetooth, including lower power consumption and wider coverage.

“What is currently a potential backup could gain steam if Huawei is further isolated or if there is broader technological fragmentation in other areas that then makes NearLink a more viable (and necessary) alternative,” Center for Strategic and International Studies China scholar Scott Kennedy wrote in a recent paper on Chinese innovation.

It’s just one example of Beijing’s decade-long push for technological independence. In 2015, President Xi Jinping launched a “Made in China 2025” initiative to reduce international reliance across 10 cutting-edge industrial sectors including robotics, aerospace and biopharmaceuticals. While the results have been mixed, the initiative has succeeded in vaulting Chinese industry ahead in some key sectors, including green energy and artificial intelligence, while shrinking China’s dependence on the West.

Trump’s rise to the White House in 2016 — and his fixation on reducing America’s trade reliance on China — made Xi look prescient.

Liberation Day and the day after

The president was full of his typical hyperbole when he came to a Rose Garden on a sunny day last April 2nd, just months into his triumphant return to the White House. “Liberation Day,” he called it — “one of the most important days, in my opinion, in American history. It's our declaration of economic independence.”

History buffs might dispute that, but the top-to-bottom rewrite of the U.S. tariff schedule Trump announced that day reverberated around world capitals and financial markets. The United States imposed double-digit hikes on import taxes for goods coming from virtually every country around the world, with especially steep rates on goods from what Trump characterized as “nations that treat us badly.” In doing so, Trump brushed aside one of the key principles underpinning global trade for decades: that countries would apply the same “most-favored nation” tariff rate to all foreign partners.

By raising trade barriers to heights not seen since the Great Depression, and thus making those goods more expensive relative to U.S.-made equivalents, Trump vowed, “we will supercharge our domestic industrial base.”

To American critics of free trade, the benefits of such a protectionist policy are clear: more domestic manufacturing jobs, higher wages, stronger national security. “An open, balanced trading system that benefits all participants would be the ideal for innovation, but we don’t live in that world and cannot force it into being,” Oren Cass, founder of American Compass, a conservative economic think tank, said via e-mail.

Trade between the United States and China, the world’s two largest economies, plummeted sharply in the months after Trump launched the Liberation Day tariffs, prompting a tit-for-tat trade war with Beijing that briefly saw duties soar over 100 percent in both directions. Although the two countries later reached a détente, lowering U.S. tariffs to roughly 40 percent, U.S. exports of goods to China were down 26 percent last year, compared to 2024, according to an analysis from the Peterson Institute for International Economics, a D.C.-based free market think tank.

Trump’s tariffs have had some success in “bounding the U.S. market to keep China’s distortions out,” as Cass put it — an ambition that both U.S. parties and many economists share. But Trump has managed to upturn trade ties with most of the world’s other major economies, as well.

Trump pulled back on the steep duties he had threatened to impose on other top trading partners, including Europe, Japan and South Korea, instead using the tariffs as leverage in a frantic set of trade negotiations that played out over the summer. That comedown has not stopped Trump from using trade policy as a cudgel on everything from the acquisition of Greenland to countries’ domestic digital policies.

His actions have triggered soul-searching among those traditional allies about their dependence on the American economy and trade relationship. European policymakers are racing to forge new trade ties with emerging economic giants like India and a bloc of Latin American countries. Last week, European Commission President Ursula von der Leyen shook hands on a trade pact with Australia.

In Canada, Prime Minister Mark Carney launched a “Buy Canadian” defense strategy in February aimed at reducing Canada’s reliance on the U.S. military-industrial complex. In recent months, Carney has also made efforts to unite the European Union and the members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership — a nascent Asia-Pacific trade zone — to create “a rules-based trading bloc” that would cover about a third of the global economy.

Those moves, and millions of smaller ones made by corporate CEOs around the world to shift supply chains and “nearshore” operations closer to home to avoid the tariffs’ bite, are accelerating a shift in the trading system that has been underway since the early 2000s — not a wholesale crack-up, exactly, but a growing number of parallel systems, operating in parallel markets, shrinking the commercial pie for every economy.

That could bring significant costs for American businesses and consumers down the line — which policymakers and voters have yet to acknowledge or reckon with. While much harder to quantify than one-off tariff fees (and thus harder to distill into political talking points), these costs are poised to have longstanding impacts on the shape of the U.S. economy and the array of goods it produces.

The White House disputes that. “American companies are set to have access to more and bigger markets than ever before thanks to President Trump’s trade agenda, which has already secured over 20 trade deals that reduce unfair trade barriers by some of our largest trading partners,” spokesman Kush Desai said in a statement.

But Trump, himself, has hinted at the trade-offs, telling supporters at a rally in Pennsylvania in December, “You don’t need 37 dolls for your daughter. Two or three is nice.”

That’s just scratching the surface, caution some experts. “The doll example is right but it’s just a sliver of the fuller story,” said Steven Davis, an economist and director of research at the right-of-center Hoover Institution at Stanford University. “It’s really about: what does this do to the innovation incentives” for U.S. companies?

The single standard

For much of the 20th century, the U.S. government and American universities together subsidized the vast majority of research and development work done in the country, fueling everything from the rise of the Internet to the development of satellite-navigation systems and countless medical breakthroughs. But the government’s share began to decline in the mid-1960s, replaced by private-sector spending.

In 2020, nearly three-quarters of American innovation was funded by businesses and less than 20 percent by the federal government, according to the Congressional Research Service. Today, the “most exciting R&D is happening inside companies,” said Bilal Zuberi, founder and managing partner of early-stage Silicon Valley venture capital firm Red Glass Ventures.

That research and development is expensive, however, requiring huge amounts of specialized infrastructure and expertise, especially in some of the most cutting-edge tech industries. While the United States is the world’s largest consumer market, accounting for 30 percent of global household spending, American companies still look for sales abroad to finance their innovation agenda.

Companies like Qualcomm and Nvidia draw anywhere from a third to half their revenue, approximately, from overseas sales, particularly China but also other parts of Asia and the West. “This is a massive oversimplification but your average semiconductor firm, 20 cents of every dollar earned goes into R&D,” said Luck. “You cut out a billion dollars worth of sales to China, that’s $200 million of R&D that you won’t be able to do.”

Desai, the White House spokesperson, challenged the idea that higher corporate revenue necessarily translates into more spending on research. “For decades, companies have leaned on arbitraging cheaper labor markets to juice their bottom lines instead of investing in R&D to boost productivity and product quality,” he said in a statement. “Bringing more factory floors back to the United States goes hand-in-hand with more, not less, innovation.”

Political decisions on both sides of the Pacific are shrinking the available Chinese market. Beijing’s “protectionist stance in the past to software and internet” has left major U.S. companies with “minor to no share there,” notes Elad Gil of Silicon Valley venture capital firm Gil Capital. Due to rising security concerns, both Biden and Trump approved restrictions on sales of the most cutting-edge semiconductor chips to China, forcing Nvidia last year to take a $5.5 billion write-down.

For companies like Microsoft, Amazon and Google, losing market share in the European Union, the United Kingdom and Canada would be a bigger threat. Google parent company Alphabet, for example, reported to the SEC last year that nearly one-third of its revenue came from the region of Europe, the Middle East and Africa.

But in Europe, fears of the continent’s near-total reliance on American digital platforms and cloud services — and the control that could give a U.S. leader like Trump — have pushed governments to consider alternatives. Amid competing visions for what this “digital sovereignty” would look like, some in Brussels are calling for the creation of a so-called EuroStack of digital infrastructure entirely reliant on homegrown technology.

So far, most of the efforts have been at the local or national level. The French government, for example, revealed in January that it plans to begin banning public officials from using American videoconferencing platforms including Google Meet, Zoom and Microsoft Teams. The plan is to replace those tools with Visio, a videoconferencing software designed by the country’s Interministerial Digital Authority and operated on infrastructure provided by a French company. Thecity of Amsterdam in February announced a plan to phase down its use of American cloud storage and applications by 2035.

The presidents of France and Germany also joined forces late last year to announce a series of steps to advance the continent’s digital sovereignty, including backing a call from Brussels to bring cloud providers like Amazon Web Services and Microsoft within the scope of its landmark antitrust regulation.

The AI conundrum

Those efforts could curb America’s ambitions of driving the next industrial revolution, as just four U.S. tech giants project they will spend $670 billion in 2026 alone to build the data centers and other infrastructure needed to power their AI ambitions.

“I think people are more willing to underwrite these areas that have been considered very hard — harder than software — in the past,” said Sarah Guo, founder of AI-focused venture capital firm Conviction, who credited the “push for reindustrialization in the United States” as “a massive catalyst for domestic investment.”

But companies “make investment decisions based on how much they expect to be able to sell,” pointed out J. Bradford Jensen, an economics and international business professor at Georgetown University's business school. “The more a company thinks it can sell, the more it can justify investing in R&D and the facilities needed to make money off the results.”

Right now, a significant chunk of the revenue “that’s powering the [AI] buildout” in the U.S. “is revenue from Europe — Meta and Google and others earning revenue in other countries and reinvesting that,” noted Luck.

Gil, the venture capitalist, said he does not believe access to the Chinese market will affect the long-term value of major AI firms. He name-checked OpenAI, Anthropic and Google as well as Harvey, a generative AI service for legal professionals, and Abridge, which tailors generative AI to the medical field. “I think demand is big enough elsewhere,” he said

But Trump’s presidency is shaking the foundations across international markets that are “very important” for the future of AI and other emerging American technology, according to Zuberi. For much of the last half century, the U.S. and its companies have been able to capitalize on being “seen as sort of, the technology provider to the world, that could be trusted to bring technology,” he said.

But a year into Trump 2.0, the world is asking, “‘Can they be trusted?’, which is going to lead to a fragmentation of resources, whether we can call it balkanization of AI, or doing some level of sovereign control on AI, people will want to build their own to the extent they can.”

“I'm not suggesting [other countries] can start OpenAI-type companies entirely on their own, but they will try and their resources are going to go there,” added Zuberi. That’s “the much bigger question that I don't see enough people asking, for some reason.”

What happens next

The Supreme Court in February wiped out a sizable chunk of Trump’s tariffs, but not all of them.

The court ruled that the president did not have authority for his “Liberation Day” duties and others he levied on China, Canada, Mexico and Brazil under a 1977 emergency law. The decision, however, did not touch tariffs the president imposed on more than $300 billion worth of Chinese goods in his first term, nor the double-digit duties he set last year on key categories like automotives and industrial metals like steel, aluminum and copper.

The White House has made clear that it plans to rebuild much of the president’s tariff wall through other legal authorities. Since the Supreme Court decision, the administration has launched new trade investigations on other countries — including the EU, the UK, Canada and much of Asia — that could eventually justify future tariffs.

Even if the 2028 U.S. elections usher in a more internationalist president and Congress, it will be virtually impossible to revert back to pre-Liberation Day conditions.

It may be decades before the full extent of fragmentation is evident, said Luck, who now heads the economics program at the Center for Strategic and International Studies, a Washington, D.C. think tank.. “Changes in trade flows are going to be a really late, lagging indicator” of the current geopolitical moment, he cautioned. “Contracts exist. You have to find other producers. Factories are going to have to be built in different places. Countries are going to have to make massive investments to diversify.”

After Trump ripped up decades-old trade agreements and tossed aside countless other economic policy and diplomatic norms, “it’s going to be super hard for any next administration to convince partners and allies to trust the U.S. again,” argued Bown. And “it’s up in the air right now” how other countries will ultimately respond.

Canada is starting to gain traction in its effort to form an alternative to the open world trading system that used to be led by the U.S., helming a meeting of Indo-Pacific and EU countries on the sidelines of the World Trade Organization’s annual summit last week.

Some are skeptical that “the rest of the world will figure out a way to recreate what we had,” as Davis describes the structure created by the World Trade Organization and its predecessor, the General Agreement on Tariffs and Trade, first signed in 1947. “The U.S. played a huge role” after World War II “because it was so large and powerful,” said the Hoover Institution economist. “It brought along the rest of the world. There is no replacement on the horizon.”

For all Trump’s vitriol against international organizations, from the World Health Organization to myriad United Nations affiliates, his administration seems likely to keep “showing up at standards-setting bodies,” according to Arielle Roth, head of the National Telecommunications and Information Administration.

Those bodies include the International Telecommunication Union and 3rd Generation Partnership Project, designed to play the same role in universalizing 6G wireless technology that the Bluetooth SIG did for its wireless networking technology.

“The telecom market is really global in nature and in order for our domestic innovators to achieve scale, it’s important to really rally our allies around where America shines,” Roth, whose office advises the president on telecommunications technology, said at a POLITICO event in March.

“It’s really just critical to be having those conversations, because if we’re not at the table,” said Roth, “then that just gives a runway to our adversaries to gain leverage and control.”

Yasmin Khorram contributed to this article.