Learning is pattern recognition, spotting a picture before all its constituent dots are explicitly connected. What’s the pattern formed by the following “dots” – all international trade events that occurred in the eight years between two U.S. presidential inaugurations, on January 20 in 2017 and 2025?
First, President Donald Trump imposed tariffs of 25 percent on Chinese-origin merchandise under Section 301 of the Trade Act of 1974, as amended. Throughout his term, U.S. President Joe Biden maintained the tariffs imposed by his predecessor and successor, and hiked some of them to 100 percent.
Second, Biden toughened export controls on sensitive technology (e.g., advanced semiconductors). The People’s Republic of China responded in tit-for-tat fashion, including imposing limits on rare earth shipments to the United States.
Third, in his first and second terms, Trump pledged an “America First” trade policy, which in the Biden interregnum became the euphemism “worker friendly trade policy.” In perhaps the biggest trade difference between them, Biden negotiated the inchoate, big yawn Indo-Pacific Economic Framework (IPEF) after Trump foolishly withdrew from the best-ever trade deal to contain China – the Trans-Pacific Partnership (TPP).
Fourth, during the presidential campaign of 2024, Trump threatened additional 10 percent, or even 100-200 percent, tariffs on China, plus 25 percent tariffs on Canada and Mexico if they didn’t police their borders against fentanyl and undocumented migrants. He also proposed a universal tariff of maybe 10-60 percent on goods from all other countries. These threats continued after he took office. He refined the universal tariff threat: maybe it would be 25 percent, phased in via 2.5 percent increments, to rectify the United States’ trade deficit and protect U.S. jobs. In response to such threats, President Xi Jinping of China, Prime Minister Justin Trudeau of Canada, and Mexican President Claudia Sheinbaum vowed to tariff U.S.-made goods in retaliation.
Fifth, throughout all of this disruption, the 166-member World Trade Organization (WTO) was, and continues to be, a non-factor. Its “Supreme Court” (the Appellate Body), devoid of new members needed to replace term-limited ones because the U.S. opposes all candidates as judicially active, is a null set. Thus, the premier global trade body has been largely impotent in policing its fundamental rules favoring trade liberalization, those dating from the General Agreement on Tariffs and Trade (GATT).
Added to these dots were the dramatic events of late January-early and February 2025, namely: threats to impose 25 percent tariffs on all steel and aluminum from all countries, threats to hit all goods from all countries with reciprocal tariffs, threats to put sector-specific tariffs on autos, chips, lumber, and pharmaceuticals, threats to fight digital services taxes of other countries with tariffs on their goods, and levying 10 percent tariffs on all Chinese merchandise.
The pattern connecting these, and many other, dots is “aggressive neo-mercantilism.” The picture formed is of a paradigm shift in the theory and practice of global trade, from a disposition to free trade, with a tolerance for managed trade, to an embrace of protectionism justified by national security.
Trade is no longer about economic openness with a view to harmony among nations. Now, from the United States’ perspective, trade is about fending off the “other” – read, China – to extend Washington’s post-World War II pre-eminence. In the post-colonial narrative of the People’s Republic of China (PRC), trade is exploitative, as it was for the Middle Kingdom after the 1839-1842 and 1856-1860 Opium Wars.
Hence, for the U.S. and China alike, trade isn’t merely about trade, and tariffs aren’t just about tariffs. Trade also encompasses boatloads of non-import-export matters, with the goal of reaching an ostensible safe harbor, the beacon of which is not efficiency, not amity, and definitely not generosity – but national security. That harbor flag says, “aggressive neo-mercantilism.”
Middling and small powers have little choice but to imitate or drown.
