19 September 2021

The Backlash Against Globalized Trade Is Changing, Not Subsiding


Former U.S. President Donald Trump upended what was once a relatively staid global economic and trade system. Under the banner of “America First,” Trump launched a trade war with China and threatened America’s European allies with another, imposing steel and aluminum tariffs that have proven to be difficult to reverse. He also undermined the ability of the World Trade Organization to resolve global disputes by blocking key appointments. For all of this upheaval, Trump left office with only one clear-cut accomplishment: an updated NAFTA deal known officially as the U.S.-Mexico-Canada Act, or USMCA.

Even as Trump sowed chaos in America’s trade relationships, most of the world reinforced its commitment to trade liberalization. One of Trump’s first moves in office was to pull America out of the huge Pacific Rim trade deal known then as the Trans-Pacific Partnership. But the remaining 11 members moved forward with the deal largely intact, renaming it the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP. While the TPP was originally designed to contain China, Beijing is now actually showing interest in joining the revamped bloc. Meanwhile, upon being sealed in late 2020, the Regional Comprehensive Economic Partnership comprising 15 Asia-Pacific nations became the world’s largest trading bloc.

The European Union has also pushed ahead with agreements on several fronts, including beginning 2021 by improving its bilateral trade deal with Japan, which was already the largest in history when it came into force in 2019. The EU also finalized trade agreements with South America’s Mercosur trade bloc and Canada. Both deals have triggered backlashes within individual member states, though, and while the agreement with Canada, known as the Comprehensive Economic and Trade Agreement, has been provisionally ratified, there is no guarantee either deal will ultimately be approved.

The COVID-19 pandemic has introduced its own challenges to the global trade order. In the scramble to secure vaccines and treatments, countries have reverted to the kind of nationalism Trump celebrated, including threatening to limit exports of vaccines and key treatments. That nationalist instinct will not be the former president’s only legacy.

In Washington, President Joe Biden’s administration has repudiated much of its predecessor’s policies—except in the arena of trade. Biden is facing no pressure from the left wing of the Democratic party to revert to the status quo on free trade, and he could open himself to criticism from critical Rust Belt voters if he reverses Trump’s trade agenda. As a result, the trade war with China looks set to continue, even though Trump’s negotiators made little headway on the unfair trade practices that spurred Washington to take on Beijing in the first place. Perhaps more surprisingly, Biden has yet to remove the aluminum and steel tariffs on American allies. And his “foreign policy for the middle class,” including elements of industrial policy and supply chain nationalism, has some observers wondering if it isn’t simply a softer and gentler name for the same objectives pursued by Trump.

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