June 09, 2025
Tell Me How This Trade War Ends
On April 2, a day he dubbed “Liberation Day,” President Donald Trump stood in the White House Rose Garden and announced a sweeping new program of tariffs intended to rebalance U.S. trade. Trump’s tariff rates were shockingly high, triggering a stock market selloff and a flight away from U.S. assets, rare rebukes from some Republicans in Congress, and diplomatic outrage around the world. After a week of mounting backlash, the president announced a 90-day pause on most of the country-specific tariffs, leading foreign counterparts to scramble for deals that would allow them to escape the levies before the clock ran out. U.S. court rulings questioning the legality of the president’s tariffs have added further uncertainty.
The Trump administration’s trade policy chaos has already caused harm, slowing growth, raising prices, and sparking dire predictions about the fate of the world economy. Yet there is a kernel of truth in the president’s insistence that the international trade system needs a reset. Distrust of free trade has been rising in both political parties in the United States. Governments around the world are more and more willing to intervene in their economies to safeguard national interests. The U.S.-led global trading order, constructed over eight decades following World War II, has frayed.
Against this backdrop, Trump has turned the United States into a revisionist power seeking to shatter what remains of the economic order.
What comes next is uncertain. But there is no going back to a time when the United States championed ever freer trade. Although many of the targets of Trump’s tariffs, including businesses and foreign states, may pine for such a world, structural geopolitical changes have made it untenable. Instead of trying to turn back time, these actors should push the administration to usher in the needed transformation of the global trading order.
Disruptive tariffs, then, can create an opportunity. And despite the president’s erratic behavior, the United States retains deep-rooted structural advantages that give it the power to lead a new trade effort. Many countries are dependent on the U.S. market, and few see China as a viable alternative. Most major economies will seek accommodation with the United States, even after being beaten up by heavy U.S. tariffs. Washington can therefore leverage its trade wars to achieve a productive restructuring of the international economic system.
Read the full article on Foreign Affairs.
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