In a significant speech that signals further tectonic shifts in US policy, Vice President J D Vance has rubbished globalisation and attacked the system that enabled US companies to profit from immigrants and cheap labour in outsourced facilities. The focus of the speech was the negative impacts on Americans when US companies divorce product design (done in the US) from manufacturing (done elsewhere to save costs). Vance named China thrice but not India. Yet, the thrust on the ills of offshoring left no doubt that India’s software and related services (exports of over USD 200bln for 2023-24, more than half to the US) were not excluded from the broad theme of the argument. 

In the past, Trump has mocked Indian call centres, the bulk of whom serve US-based clients but are already under a different threat from the increased deployment of AI-powered solutions. Vance was speaking on March 18 at the American Dynamism Summit, a tech event hosted by venture capital firm Andreessen Horowitz. The summit works for what it calls the “national interest”, and promoted the 2025 meet with the message: “It’s time to build for America”.

While it is difficult to say how Vance’s narrative might play out in the immediate and if unravelling a complex and well-oiled global value chain is a realistic venture, several interesting strands stand out from an Indian context.

India way behind China in innovation

The first is that India can no longer hope to build or become a manufacturing hub by copying the Chinese model, getting companies like Foxconn to bring their factories to Indian sites and manufacture for American giants. The game of building that kind of a manufacturing base is past its expiry date.  Even if India persists, it will remain confined to the lower end of the game, a place that China left behind to capture some value up the chain. 

For example, 2009 data for the iPhone 3G showed that the total value added for assembly in China was merely 6.5 USD, or 3.6% of the bill of materials for that model, attributable only to assembly by Foxconn. A decade later, for iPhone X in 2018, this jumped to USD 104, or 25.4% of the bill of materials as China very slowly integrated into the supply chain and supplied many (non-core) parts like the battery, frame and camera module. The data is from a well-cited study published by Yuqing Xing of the National Graduate Institute for Policy Studies, Tokyo.

China’s move up the value chain is also a cause for Vance’s protest. While the US is understandably unhappy that globalisation has taken jobs away from America, it is also uncomfortable that the process has benefited the countries where the products or services get built, which in other words is admitting that globalisation was meant to serve only the US interests and not work for the manufacturing hubs. Vance said it in as many words: “… we assumed that other nations would always trail us in the value chain, but it turns out that as they got better at the low end of the value chain, they also started catching up on the higher end. We were squeezed from both ends. Now, that was the first conceit of globalization.”

The fact that India is less or not mentioned as a threat is also an indicator that the country for all its claimed tech prowess remains trapped in low-end labour arbitrage, with limited aspirations seen in prescriptions like Narayana Murthy’s 70-hour work week for the youth. India should have been ahead with exciting and innovative software solutions, but its businesses are stuck pushing the bullock cart while missing the huge strides that the Chinese have made, an example of which are Chinese AI models like DeepSeek, Manus or Alibaba's QwQ-32B.

Significant shifts in American thinking

The second conceit of globalisation, according to Vance, was that cheap labour became a crutch, even a drug, that has stifled American innovation. If this “drug supply” is cut off, in Vance’s scheme, companies will be forced to pay more for the same work, which will propel them to innovate to keep up productivity and margins.  In the past, many have called outsourcing an innovation. Now, we have reached a stage where outsourcing is being seen as the death knell of innovation, a dramatic reversal that might indicate how deep is the angst and anger of everyday American workers being left behind.

The other point that stands out is that consumerism has left America empty in the soul. What greater proof of this than Vance pointing out that “alienation of workers from their jobs, from their communities, from their sense of solidarity” has harmed America. The Vice President was crystal clear, with a deep anti-consumerist flavour, when he said: “You see the alienation of people from their sense of purpose. And importantly, they see a leadership class that believes welfare can replace a job and an application on a phone can replace a sense of purpose.” Vance indeed went on to argue that money even if it’s available “can’t replace something that was dignified and purposeful about work itself”.

These are significant shifts that will bring their impacts in many corners of the world as America’s might and the power and reach of its large businesses realign to suit the new political climate. For America, here is without doubt a complex and troubled time as it twists and turns amid a cacophony of voices and multiple cross currents emerging from those who have the ear of the powers that be.

A rude awakening in order?

Forget Q-Anon and its far-right fabricated claims and conspiracy theories. We are in new territory, with influential behind-the-scenes players like Curtis Yarwin, a tech leader who is a founder of the neo-reactionary movement called “Dark Enlightenment”, which wants American democracy to be turned into a monarchy. The rise of techno-libertarianism opens its case with less government and more freedom for individuals but is ready to use government to silence the opposition with extreme measures. There is, of course, Elon Musk who holds that the government is a violent monopoly and needs to be demolished, and Peter Thiel, the PayPal co-founder who believes death is not inevitable. Then there is Trump who is happy to be the King forever. 

As for the hope of some well-connected in India that Trump was the partner of choice for a right-wing government, well, a rude awakening may be in order.

(The writer is a journalist and faculty member at SPJIMR, Mumbai. Views expressed are personal. By special arrangement with The Billion Press)