Trump’s Spectacular Trade Failure
Since coming to office in early 2017, US President Donald Trump has assumed that America could secure better "deals" with trading partners around the world by negotiating with them bilaterally. But after three and a half years, the evidence is clear: US trade policy has achieved the opposite of Trump's stated goals.
WASHINGTON, DC – Since World War II, the global economy has performed beyond the wildest dreams of its post-war architects, yielding unprecedented gains in health, education, living standards, poverty reduction, and wealth. Central to this success was the growth and liberalization of international trade, which was made possible with US leadership in the creation and stewardship of an open multilateral trading system.
That system – enshrined first through the General Agreement on Tariffs and Trade and then in the World Trade Organization – established international rule of law over global commerce, non-discrimination among trading partners, and a forum for negotiating tariff reductions and the removal of other trade barriers. The WTO succeeded the GATT in January 1995, and by 2000, average tariffs on manufacturers in advanced economies were about 2%, far below the levels of 1948. International trade had grown from around 20% of global GDP in the early post-war years to 39% in 1990 and 58% in 2018.
But the open multilateral trading system has been severely eroded over the past few years. The dollar value of world trade fell by 3% in 2019, even as world GDP was still rising. This reversal was largely the result of America’s shift toward bilateralism and protectionism since the beginning of US President Donald Trump’s term in January 2017. Trump seems to believe that the United States is powerful enough to secure better “deals” by negotiating (read: bullying) with trading partners one on one. But while the US is indeed a large trading country, it actually accounts for only 4% of the world’s population and less than one-fifth of global GDP. Those numbers alone justify skepticism about the effectiveness of Trumpian bilateral browbeating.