Commentary Type

Trump's Assault on the Global Trading System and Why Decoupling From China Will Change Everything

Chad P. Bown (PIIE) and Douglas A. Irwin (PIIE)


Donald Trump has been true to his word. After excoriating free trade while campaigning for the US presidency, he has made economic nationalism a centerpiece of his agenda in office. His administration has pulled out of some trade deals, including the Trans-Pacific Partnership (TPP), and renegotiated others, including the North American Free Trade Agreement (NAFTA) and the US-Korea Free Trade Agreement. Many of Trump's actions, such as the tariffs he has imposed on steel and aluminum, amount to overt protectionism and have hurt the US economy. Others have had less obvious, but no less damaging, effects. By flouting international trade rules, the administration has diminished the country's standing in the world and led other governments to consider using the same tools to limit trade arbitrarily. It has taken deliberate steps to weaken the World Trade Organization (WTO)—some of which will permanently damage the multilateral trading system. And in its boldest move, it is trying to use trade policy to decouple the US and Chinese economies.

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