The international trade system, once a triumph of American-led multilateralism, is fracturing under the weight of Donald Trump’s second-term tariff blitz.
What began as a populist revolt against perceived unfairness in free trade in the 2010s has metastasized into a calculated assault on the post-war global trading system that the United States itself designed and established.
Trump’s policies—escalating tariffs on imports from rivals like China and allies such as Canada and the European Union alike—represent not mere protectionism but a brazen reconfiguration of world trade to entrench American global hegemony.
This is imperialism rebooted for the 21st century: wielding economic coercion as a cudgel to extract concessions, fragment alliances and redraw rules in Washington’s favor with the help of US military might. Far from “making America great again”, these measures risk impoverishing its consumers, alienating partners and accelerating a multipolar world where the dollar’s dominance wanes.
To grasp the audacity of Trump’s gambit, consider the trajectory. During his first term, he upended the orthodoxy of free trade, slapping tariffs on steel and aluminium imports under the guise of national security grounds—a flimsy exemption from Article XXI of the General Agreement on Tariffs and Trade (GATT), the cornerstone of the World Trade Organization (WTO). Targets included not just China, but steadfast partners like Canada, Mexico and the EU.
Joe Biden, far from reversing course, doubled down by retaining most of these levies while pursuing “friend-shoring” to lure manufacturing back home. Both Democrats and Republicans, once champions of the free trade regime the US forged after 1945, have pivoted to mercantilism.
The result? A bipartisan consensus that globalization’s fruits—cheaper goods for American households—must yield to the siren call of industrial revival, even if it means higher prices and slower economic growth.
Trump’s return to power in 2025 has turbocharged this shift. Eschewing the scattershot approach of old, his team has orchestrated a blitz of reciprocal tariffs, invoking the International Emergency Economic Powers Act (IEEPA) to declare the US trade imbalances a “national emergency.”
In April, he unveiled a baseline 10% duty on imports from virtually all trading partners, escalating to 25% on steel and aluminium globally, and up to 50% or more on autos, electronics and select goods from high-deficit nations like China, India and Brazil.
By May, these measures blanketed over $2.3 trillion in imports—71% of America’s total—tripling the average tariff rate to 11.6%, the highest since the 1930 folly of the Smoot-Hawley Tariff Act.
Critics, from the IMF to Wall Street, decry this as “chaotic madness.” On the surface, Trump’s bombast—tweets threatening 50% duties on China one day, 25% on Canada the next—invites the charge.
Yet peel back the bluster, and a sharper strategy emerges. Trump’s inner circle, including Commerce Secretary Howard Lutnick, has labored day-in-and-day-out to frame these tariffs not as blunt instruments but as levers of a grand redesign: dismantling the WTO’s multilateral edifice and erecting a web of bilateral trade pacts centered on Washington.
Whispers in policy circles point to an “International Customs Union” (ICU)—a Trumpian twist on the European model, but with America as the unassailable core. This would bind partners into zero-tariff zones for the US, contingent on matching its external duties and prioritizing American exports.
No ICU formal blueprint exists yet, but the scaffolding is visible in the deal-making frenzy: concessions extracted at gunpoint, investments funnelled into Rust Belt factories and trade flows rerouted to favor Yankee producers. The playbook is ruthless efficiency masked as reciprocity.
Take the 25-35% tariffs on Canada and Mexico, ostensibly to stem fentanyl flows and migrant caravans. These border behemoths, whose economies are inexorably tied to America’s via the USMCA, scrambled to comply, pledging billions in border tech and energy buys.
India, slapped with 50% duties on textiles and steel, buckled under pressure in the name of curbing Russian oil imports and inked a lopsided bilateral deal opening Indian markets to US agribusiness and tech. Even as the tariffs bite—projected by the Penn Wharton Budget Model to shave 6% off long-run GDP and 5% from wages—the White House touts them as surgical strikes against “non-market predators” like China and Vietnam.
Trump laments the WTO’s “hollowing out” of American industry, citing a 12-fold surge in its trade deficit since China’s 2001 accession. The numbers lend credence: the US goods deficit ballooned to $1.2 trillion in 2024, fueling offshoring that erased some 5 million manufacturing jobs from 1997 to 2024. Ohio’s steel mills, once humming with 70,000 workers, now limp on life support as Chinese dumping floods the market.
Yet herein lies the sleight of hand. Trump’s tariffs are less about revival than retribution—a tool to weaponize America’s market access, the world’s largest, against developing and smaller economies. The first-phase bilateralism of his ICU vision promises “fairness” but delivers fealty.
The EU, facing a threatened 30% wallop, capitulated in July to a 15% baseline tariff on 70% of its exports, sweetened with $750 billion in US energy purchases over three years and $600 billion in fresh investments in the US by 2028.
Germany’s Volkswagen, reeling from auto levies, committed to a sprawling Michigan plant, while the bloc pledged to purchase “vast amounts” of American arms—a geopolitical kicker that bolsters NATO spending without the fuss of congressional oversight.
Japan followed suit, reducing Trump’s proposed tariff rate from 25% to 15% on cars in exchange for a murky $550 billion “investment vehicle”—a fund that Trump can direct at will into semiconductors, rare earths or antibiotics, with the US retaining 90% of the profits.
South Korea and others eye similar capitulations, lest they face Trump’s full reciprocal tariff fury. This is no mere haggling; it is empire-building by ledger. Trump’s strategists argue the WTO’s equal-treatment facade—164 members bound by transparent rules—masks exploitation by state-subsidized giants, leaving the US footing the bill for global stability while rivals feast.
Since 1948, America’s open markets have underwritten Pax Americana. But Trump inverts the script, portraying the US as a victim rather than an architect and installer. His aides argue ending free trade is “essential” to resurrecting manufacturing at home, yet the evidence mocks the claim.
First-term steel tariffs propped up Pittsburgh momentarily, but net job gains were negligible—automation and productivity surges devoured the savings. This term’s barrage has lured announcements like Volkswagen’s, but at what cost?
Retaliation stings: Canada’s duties on US dairy and whiskey have idled Iowa farmers; India’s on soy and almonds have cratered Midwest exports. The Tax Foundation says tariffs will cost $1,300 per household in 2025—a regressive tax hitting low-income families hardest, as tariffs cascade through supply chains.
Worse, the ICU’s bilateral bent erodes the very multilateralism that amplified American power. The WTO, for all its paralysis (Trump has throttled its appellate body since 2019), facilitated global trade volumes that grew fivefold since 1995, lifting billions from poverty. Trump’s vision fragments this into a hub-and-spoke model, where Washington dictates terms and peripherals comply or perish.
Developing nations, already dollar-dependent, face the sharpest edge: weaker bargaining power in one-on-one scraps, vulnerability to sanctions and coercion to shun China’s Belt and Road or the Regional Comprehensive Economic Partnership (RCEP). Trump has targeted not only RCEP signatories with bespoke threats of 50% but also Brazil and India to dilute BRICS ambitions, including moves to erode dollar primacy.
If the BRICS bloc accelerates its de-dollarization push, Trump’s scepter dulls; a swift launch could hobble the ICU before birth, forcing a retreat to genuine negotiation. Critics rightly brand this imperialism’s latest iteration. Past presidents bent WTO rules—Clinton’s China entry, Bush’s farm subsidies—to tilt the board American-ward, granting market access as bait.
Trump discards the subtlety, demanding tribute outright: tariffs as tolls on the road to prosperity. It echoes gunboat diplomacy, sans the ironclads—coercing compliance through economic strangulation.
Allies chafe: EU leaders hail “damage control” deals as pyrrhic victories, while Japan’s pledge reeks of “vaporware”, a non-binding target laced with loopholes. Developing economies, from Vietnam’s factories to Brazil’s soy fields, dread a zero-sum scramble where US leverage crushes autonomy.
Regional pacts like RCEP and the Global South Trade Partnership—China’s reglobalization riposte since 2020—offer alternatives, but Trump’s blitz aims to isolate them, pressuring members to prioritize bilateral fealty.
The irony bites deep. Trump decries offshoring’s toll—5 million jobs vaporized, Detroit hollowed by Mexican wages, Covid exposing vulnerability in face masks to semiconductor chokepoints—yet his cure poisons the patient.
Tariffs inflate inputs, deterring investment; the OECD forecasts US growth slumping to 1.8% in 2025, half the pre-tariff pace. Geopolitically, they alienate the very coalitions needed to counter China: NATO strains under energy mandates, Indo-Pacific partners hedge toward Beijing.
Economically, the tariff is a double-edged sword that cuts deepest at home—higher costs for families, disrupted supply chains for firms like John Deere, whose orders have halved amid uncertainty. Globally, the IMF warns of trade growth cratering from 2.7% to 0.2%, a self-inflicted wound that dims the world’s engine of growth.
Trump’s tariffs are neither chaotic nor crazy; they are a manifesto for American dominion, cloaked in pro-worker rhetoric. By subverting the trade rules it once enshrined, the US risks not revival, but isolation—a hegemon hoarding scraps while rivals forge ahead.
Developed and developing worlds alike must counter this by bolstering the WTO as a commitment for re-globalization, accelerating BRICS alternatives and forging resilient blocs beyond Uncle Sam’s shadow. Absence of such resolve, Trump’s ICU may yet crown a new Gilded Age, where might makes trade, and the many subsidize the few.
The question is not whether America can afford this hubris—it cannot—but whether the globe can stomach its consequences.
Bhim Bhurtel is on X at @BhimBhurtel
US has a $37 trillion National debt. They have no means to reduce it by themselves,so, the rest of the world must pay it via tariffs , coersion, financial war, sanctions, and trade restrictions. This is the real AMERICA!