Global trade is not collapsing under mounting protectionism, but instead undergoing a profound and uncoordinated restructuring, US experts say.
As the United States continues to use tariffs as a form of “political theater” to address domestic grievances, the rest of the world is moving toward a new, decentralized multilateralism, they said. This shift is being driven by a “domino effect” of regional agreements, with China playing a pivotal role in helping stabilize the global trading system, they added.
During a presentation on April 29 at the Peterson Institute for International Economics in Washington, Richard Baldwin, a professor at IMD Business School, said current trade frictions between the world’s two largest economies are a long-term rather than a temporary episode.
US trade policy, characterized by aggressive tariff threats, is fundamentally about domestic political signaling, Baldwin said. “This is theater — tariff theater — not trade policy.”
In an interview with China Daily, Gary Hufbauer, a nonresident senior fellow at the Peterson Institute, agreed with this assessment, saying “blowback from the financial markets, powerful firms and concern about affordability” have acted to restrain the height of effective tariffs.
As a result, the White House has initiated or allowed a range of special arrangements and exemptions, he said.
Both experts expressed concern that national security is being misused to justify protectionism. Hufbauer said efficiency is being “tossed out the window” as proponents of restrictions use security claims as an “all-purpose rationale”.
Some US lawmakers are demanding a total ban on Chinese automobiles and parts in the name of national security, a move he described as “ridiculous”.
This prioritization of politics over efficiency is consistent with findings from the World Trade Organization. In a March report, the WTO projected global merchandise trade growth would slow to 1.9 percent this year. While import growth in North America is forecast to stay flat, Asia is expected to lead with growth exceeding 3 percent.
Experts said the outlook underscores Asia’s role — underpinned by China’s robust industrial output — as the primary engine of global recovery, despite Western protectionism.
In contrast to US unilateralism, China has been recognized for its role in maintaining the integrity of the multilateral system.
Baldwin said Beijing’s strategic use of export controls was intended to prevent the collapse of the global trade order.
“China’s export controls did work,” he said. “That dampened anti-Chinese aggression and indirectly protected the WTO system.” China remains a natural defender of global connectivity, he added.
Advocating dialogue
Beijing continues to advocate dialogue and stability. On Thursday evening, Chinese Vice-Premier He Lifeng held a video call with US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer to discuss the implementation of consensuses reached during previous summits.
During the candid and constructive exchange, both sides agreed to utilize trade and economic consultation mechanisms to manage differences.
As the US abdicates trade leadership, other countries are moving toward what Baldwin calls “WTO 2.0” through regional blocs such as the Regional Comprehensive Economic Partnership.
Hufbauer said this appears to be the current “plan B” for the rest of the world.
Both experts said the current measures satisfy domestic hawks but do not achieve their stated economic goals.
As the global trading landscape shifts, the world is no longer looking to Washington for leadership in law-based commerce, Baldwin said.
“The whole rest of the world likes the multilateral rules-based trading system,” he said.
