16/04/2025

The War Isn’t About Tariffs—It’s About Innovation. What Can We Do?

The global tariff war that has shaken the world is just the tip of the iceberg. It reveals a deeper conflict that’s been brewing for over a decade and may ultimately shape a new geopolitical order: the race for innovation. Argentina must decide where it stands in this scenario.

The disruptive event is well known: China has long moved past producing cheap goods. It now competes with its own technology—electric vehicles (BYD), solar panels (JinkoSolar), and even its own AI chatbot, Deep Seek, among many other sectors. The transformation has been so rapid and profound that it has triggered spasmodic reactions from the former “winners” of the previous era: the United States, Europe, and Japan.

The most recent—and defensive—reaction has been Donald Trump’s tariff war. But governments have also tried more constructive approaches. Even before Trump, Biden devised the Chips and Science Act to bring semiconductor manufacturing back to the U.S. Europe commissioned Mario Draghi (former Italian Prime Minister) to produce a report and launched an action plan focused on closing the innovation gap and becoming more resilient. In our region, Lula’s Brazil launched the Nova Indústria program. All of these initiatives share a common goal: to jump aboard the tech train before China leaves them behind.

Our country must decide how it wants to play in this game. Over 130 years ago, Carlos Pellegrini was a visionary for insisting Argentina needed industry. Today, the new frontier is innovation, because it defines the technologies that determine our economic productivity. To innovate is to think and act differently to add value, create and apply new ideas, new technologies, or improved processes.

Argentina can join this race in two ways. We have the capacity to create part of tomorrow’s technology. But we must also aim to apply, better than anyone else, the technologies developed by others.

For the first, we already have examples of public and private innovation worth preserving. On the public side: CAREM and INVAP. On the private side, 20% of Latin America’s unicorns are Argentine—like Globant and Satellogic.

For the second, applying existing technologies across our processes could give us the productivity boost we need to be competitive. It sounds simple—but it’s not. It requires strong commitment from all sectors.

In our auto parts company, we’ve been working for years toward the dream of having a smart factory. The reality is that many complex steps must come before installing the first robot: standardizing operations, ensuring clear and accessible visual management, securing safe operations, maintaining properly identified inventories, and more. Only once “lean manufacturing” is achieved can we take the next step: automation and digitalization. And at that point, things become even more complex.

Moving from a manual to an automated process adds new technologies—sensors, communication switches, PLCs (Programmable Logic Controllers), robotic arms, and more—integrated into a system. If one component fails, the whole machine or cell fails. This level of integration demands 100% functional connectivity infrastructure.

The point I want to emphasize is this: it’s not about going on a global Industry 4.0 shopping spree and buying a magical machine that automates our work. It’s about first understanding which technologies are appropriate and what kind of talent we need to manage them. The technological leap must go hand-in-hand with a knowledge leap—in engineering, maintenance, quality, and safety.

In our organization, we started the journey toward Industry 4.0 years ago: we incorporated welding robots, cobots, transfer presses, robotic presses, AI-driven vision cameras, and more. Large companies like Toyota—our main client—and Ternium—our main supplier—supported us with technology transfers and training. But we still have a long way to go to reach the smart factory we envision. And the next step—integrating artificial intelligence—is even more complex.

Most Argentine companies haven’t yet started this journey of technological modernization. To do so, they’ll need their own ingenuity and a shift in the State’s role: promoting the training of technologists, offering better digitalization services, creating financing tools and research centers, among others. For the State to fulfill this role, it must itself adopt an innovation mindset—not necessarily smaller or bigger, but better, more creative, and constructive.

The future of our economy—in this world at war—will be decided on this playing field. Hard as it may be to believe, it lies more on a factory floor than on the whiteboards of Wall Street.

The author is a political scientist and industrial entrepreneur. This article was originally published in the newspaper Perfil.