Trump’s Backward March on Trade
After three years of the Trump administration, the economic costs of "America First" are continuing to mount, with global trade and GDP growth slowing and investment in decline. Ironically, the biggest loser has been America.
WASHINGTON, DC – Following America’s disastrous 1930 Smoot-Hawley Tariff Act, the subsequent international trade war, and eventually World War II, the United States went on to lead the world toward a more open multilateral trading system. In 1947, the international community adopted the General Agreement on Tariffs and Trade, which would later become the World Trade Organization. Under this international body, trade was bound to the rule of law and the principle of non-discrimination among trading partners.
The system has been a huge success. Over the past seven decades, world trade has grown almost twice as fast as real output. And owing to US leadership, there have been ongoing multilateral negotiations to lower tariffs, remove other barriers (such as quantitative import restrictions), and facilitate trade expansion.
But in 2017, US President Donald Trump’s new administration abandoned America’s longstanding commitment to the open multilateral trading system, opting instead for a power-based approach to international economic relations. Under the new dispensation, “might” supposedly makes “right.”