Trump’s Trade War Is Driving the World Away

Now that trade negotiations between the United States and Canada over the extension of the U.S.-Canada-Mexico Agreement have collapsed and President Trump is slapping 50 percent tariffs on a slew of Canadian goods, Prime Minister Mark Carney has announced plans to engage in economic and security talks with the European Union this fall. The United States will not be at that negotiating table.

This is a striking development, but it is typical of the rapidly spreading reaction of many U.S. trading partners to the myopic my-way-or-the-highway mania of the Trump trade policy. As the Trump administration tries to coerce international trading partners through unilateral economic leverage to address trade and non-trade concerns, those partners are increasingly reacting by circumventing the United States.

The most obvious example is Canada, one of our leading trading partners, which the president is punishing with punitive tariffs, gratuitous insults and nomenclatural nonsense such as the renaming of Lake Ontario.

The results of this posture aren’t promising. As journalists Dean Blundell and Zev Shalev have pointed out, “Canada is the number-one export market for 27 states, six of them swing states — Michigan (39 percent of everything it exports), Wisconsin (31), then Pennsylvania, Georgia, Minnesota and North Carolina. Two years ago, it was 36.”

With only a few weeks left before Americans vote in what may become historically pivotal midterm elections, Trump and his advisers may come to regret this position against Canada.

Canada is not alone. Not long after beginning his second term, Trump, in violation of international trade law and U.S. treaty commitments as a member of the World Trade Organization, announced steep and sweeping global tariffs on imported products from nearly all countries. He called that day, April 2, “Liberation Day.” They were only the beginning. The United States has applied more tariffs since then, globally and on individual countries and their products, even as the Supreme Court has overruled some of Trump’s supposedly “reciprocal” tariffs.

This onslaught of American tariffs has not, however, had the intended effect. Instead of making the rest of the world more dependent on trade with the United States, the “Liberation Day” tariffs have inspired U.S. trading partners to proclaim their own liberation from the U.S. market. The once-leading U.S. trading partners are now going to great lengths to tilt their trade policies away from the United States and toward more trade with the rest of the world.

While the United States has embraced trade coercion, many of its trading partners have deepened trade cooperation, leading to further economic integration. As the United States no longer tries to hide its protectionism, many of its trading partners are maintaining their commitments to further trade liberalization and concluding new trade agreements to achieve it — agreements that exclude the United States.

Intense American media and political focus on Trump’s unpredictable trade maneuvers has largely obscured the trend toward increased global integration that is occurring outside the United States. Several examples of new and evolving trade arrangements between other countries that do not involve the United States are evidence of this new Trump-caused trend in world trade. It’s a trend that seems bound to gain momentum in the absence of any sign that the country intends to return to its historical bipartisan policy of lowering tariffs and other barriers to trade and upholding the international rules of trade that find their most important expression in the rule-based multilateral trading system of the WTO.

This trend is amply evidenced in the new trade agreements between the European Union and India, the EU and the MERCOSUR (Mercado Común del Sur, or Southern Common Market) countries of South America, those involving MERCOSUR and other Latin American countries, the implementation of the African Continental Free Trade Area, and the evolution of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. This worldwide turn away from trade with the United States is also evident in Canada’s recent trade overture to the European Union.

This emerging trend in world trade can be expected to continue until the United States — one can hope — returns to its senses on trade policy. When will that be?