No, Trump Did Not Start the Global 'Trade War'

Newsweek

3 days ago

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After strong growth in 2024, global trade will take a hit this year. Many point the finger at President Donald Trump. That's a mistake.
The World Trade Organization said the volume of merchandise trade this year will contract by 0.2 percent. Its revised forecast "is nearly three percentage points lower than it would have been without recent policy shifts."
The culprit? The trade body blames "a surge in tariffs and trade policy uncertainty." That, of course, is an indirect reference to Trump's series of tariff hikes, pauses, and pullbacks.
Just about everyone thinks Trump is responsible for the breakdown of the global trade system.
A banner showing a picture of President Donald Trump is displayed outside of the U.S. Department of Agriculture (USDA) building on June 3, 2025, in Washington, D.C.
A banner showing a picture of President Donald Trump is displayed outside of the U.S. Department of Agriculture (USDA) building on June 3, 2025, in Washington, D.C.The Associated Press, for instance, wrote that the American president declared "a trade war on the rest of the world." By doing so, he has "panicked global financial markets, raised the risk of a recession and broken the political and economic alliances that made much of the world stable for business after World War II."
That narrative is superficial. It's far more accurate to say the post-war rules-based trade order is dead, but China killed it, and Trump stopped pretending it continued to exist.
There had been great hope at the turn of the century that China would end long-standing predatory and criminal trade practices by joining the World Trade Organization. By and large, however, Beijing did not abandon those practices after accession in December 2001.
Trump, in response to Chinese intransigence, changed the world, irrevocably. As POLITICO wrote, "The Trump administration has dealt a lasting blow to much of the post-World War II consensus around free trade and long-term cooperation." Former Secretary of State Condoleezza Rice, at the just-concluded Aspen Security Forum said, "We have to recognize that we're probably not going back to exactly that system."
In all probability, we're not going back to that system at all. For one thing, there is, at least at this moment, almost no domestic pressure on Trump. His policies are working.
"Remember in April, after Liberation Day and the markets plunged and there was so much concern about what this would do to growth, these higher reciprocal rates, what it would do to inflation," CNBC's Sara Eisen said on July 16. "Guess what? First of all, those rates haven't panned out and while we have seen higher tariff rates across the board, what hasn't panned out either is a big surge of inflation, weakness in the economy, or a slump in the financial markets."
"We saw $26.6 billion come in the month of June," Eisen said, referring to the federal government's net tariff revenue. "Of course, someone's paying for the tariffs, but it's not the American consumer."
Yet can Trump, to use one of his favorite terms, keep "winning"?
"There's no question that foreign-based exporters keep paying many of the new levies," Washington, D.C. trade analyst Alan Tonelson told Newsweek this month. "Import prices from major trade competitors such as China, Mexico, and Canada are down on an annual basis. In fact, for import-heavy items such as footwear, smartphones, and school supplies, prices keep falling. Strikingly, on an annual basis the per-vehicle prices of Japanese auto exports to the U.S. have nosedived nearly 30 percent."
There is some bipartisan support for his general policy.
"It's a big deal that you've now had two presidents of two different parties take a protectionist line," said Robert Zoellick, former U.S. Trade Representative and former World Bank Group president, at Aspen, referring to Trump and Joe Biden. "That is a very big switch in the nature of trade politics."
Nonetheless, Trump needs to execute policies well. As Tonelson, who blogs on trade at RealityChek, noted, "It's reasonable to argue that Trump's tariff moves have been needlessly complicated and erratic and that domestic businesses would benefit from predictability."
Yet as the trade expert also said, "most American companies have managed to navigate the turbulence."
Foreign competitors have far fewer options. "The U.S. remains the largest integrated market, so no foreign leader will last long after being priced out of serving American customers," Charles Ortel, an Asia-based investor and financial writer, told Newsweek. "Meanwhile, many will rush to invest inside America so as to work around these tariffs."
Trump will also have to stimulate American-owned manufacturing, best done with an expanded investment tax credit.
At a time when China is fast preparing for war—"Dare to fight," is Xi Jinping's trademark phrase these days—Trump will not have much time to rebuild American manufacturing behind his new tariff wall.
Time is running out for another reason: Trump's trade measures are roiling global trade, which means they are also roiling geopolitics and changing the world, as Rice suggested.
"Any student of history will know the most dangerous phase is the interregnum between one world order and another," Singapore Foreign Minster Vivian Balakrishnan said at Aspen. "Are we in that interregnum? Yes, we are."
Gordon G. Chang is the author of Plan Red: China's Project to Destroy America and The Coming Collapse of China. Follow him on X @GordonGChang.
The views expressed in this article are the writer's own.