President Trump declared himself “Liberation Day” and announced full tariffs on U.S. trading partners, when an advanced Western economy revolved around its own walls, echoing another moment.
Like Brexit, Britain's fate voted to leave the EU nearly nine years ago, and Trump's tariffs hammered the established order. Removing the United States from the global economy is not like the United Kingdom from European-wide trade groups, but also Brexit, a comparable act of liberation.
The shock of Mr. Trump's actions echoed even more widely given the size of the U.S. economy and its position among global commercial enterprises. Yet, like Brexit, its ultimate impact is not resolved: Mr. Trump can still turn himself around and be condemned by a turmoil in plunge markets or a one-time deal.
More importantly, the rise of free trade may be irreversible, with the benefit so powerful that the rest of the world has also found a way, even without central players, according to economists. The obstacles have been declining with all the setbacks in trade liberalization and the dissatisfaction expressed in Mr. Trump’s actions.
Optimists point out that the EU has not dissolved after Britain left. Today, London’s political speech is about how Britain can get closer to its European neighbors. Nevertheless, this possibility has only been turbulent for years. Economists expect similar chaos to help the global trade system due to Mr. Trump’s drama exports.
“This will not be the end of free trade, but it is undoubtedly a retreat from unrestricted free trade, which is the way the world seems to be developing,” said Eswar S. Prasad, a professor of trade policy at Cornell University. “It will be a time when the rest of the world will promote free trade together,” he said. “The reality is that it will be for every country.”
Such a world will not only be unruly, but may also be more dangerous. While trade wars do not necessarily lead to shooting wars, historians point out that certain conflicts, such as the war in 1812 and the Opium War in the mid-19th century, are rooted in trade disputes. A full-scale trade war between the United States and China will inject sparks into an already combustible relationship.
Professor Prasad said: “If you consider the wider conflict between the United States and China, economic and financial relations provide a level of balance. Now, that balance is eroding.”
Mr. Trump has stopped British gunboat diplomacy against China during the Opium War. But his faithful gesture to some of the closest trading partners in the United States, such as Canada and Mexico, deepens the sense of dislocation and can split the country.
Economists say the U.S. has a singular stance as the world's largest growth engine because it can't replace its appetite for German-made cars and iPhones assembled in China, which will make it difficult for countries to reposition their trading relationships in the less popular U.S. market.
This shows that many countries will eventually try to cut deals with Mr. Trump. Others would impose retaliatory tariffs to improve their negotiated status in the United States.
China attacked quickly on Friday, with China's Tit-for-Tat tariffs of 34% after speculating that it could coordinate with reactions from Japan and South Korea. The EU has been warning countries to find themselves pricing from the U.S. market and not to pour cheap exports into their markets.
“It depends a lot on how Europe decides to play the issue,” said Simon Johnson, a professor at the MIT Sloan School of Management and former chief economist at the International Monetary Foundation. “Europeans can get close to China and get a lot of slack from Vietnam.”
“That would create a large non-U.S. trading group,” he continued. “But I don't think Europeans are happy with all the Chinese exports that have flowed into Europe. Where do these excess exports go?”
Europe may face tough challenges in resisting the absorption of more Chinese imports. They could either take steps to make China reduce exports through demand in its own population, which they have tried in the past, with mixed results. Or, they could reach an agreement with Mr. Trump, what they failed to do in their first term despite signing a preliminary agreement.
For all criticisms of Mr. Trump’s blunt approach, economists say he is responding to a real question: the rise of China as an overcompetitive trading capacity that has largely subsidized its own companies. Mr. Trump believes that this has hollowed out the US manufacturing industry. He claimed that the tariffs would be brought back.
When he took office, President Barack Obama asked one of his Democratic predecessors, Bill Clinton, whether he had given up too much in allowing China to join the World Trade Organization. Mr. Obama imposed a 35% tariff on China from 2009 to 2012 because of the dumping of tires to the U.S. market. When Joseph R. Biden Jr.
“The global trade system has been under pressure for some time, and this pressure is indeed a symbol of China's rise,” Professor Johnson said. “It's more destructive and destructive than Japan.”
In 2024, Professor Johnson won the Nobel Prize in Economics with Daron Acemoglu of MIT and James A. Robinson of the University of Chicago to study institutional research in the colonial era, making some countries richer in development than others. He said that one common factor is that both in Asia and Africa: “Almost all countries escaping poverty have done this through trade,” he said.
Therefore, the world is unlikely to fall into autism, where countries try to produce everything they need within their own borders. In any case, from semiconductor factories in Taiwan to automatic parts suppliers in Canada, the nature of the global supply chain makes this economic isolation impossible under almost any circumstances.
Economists say the countries that face the biggest trade war are low-income exporters of commodity goods, which have little leverage in response to Mr. Trump. Several of them were in Africa, including Nigeria, which was hit by 14% tariffs, and Kenya and Ghana both hit with 10% hits.
The World Trade Organization estimates that Mr. Trump's measures will reduce global commodity trade sales by 1% in 2025, which is nearly four percentage points lower than previous forecasts. A full-scale trade war will further damage.
Nevertheless, some optimists predict that Trump's tariffs will accelerate integration in other countries through bilateral trade agreements or regional trade agreements. They noted that the United States was the only country to withdraw from the Trans-Pacific Partnership, which later renegotiated without it, and signed a trade agreement with the Pacific and the Pacific among other large economies.
Even Brexit, despite its same dissatisfaction with Mr. Trump’s magazine campaign’s complaints about globalization, has not constituted a trade protectionist project. Brexits believe that once they are free from the EU, the UK can negotiate a better trade deal on its own. Last week, they believed Brexit was the reason why 10% of the UK tariffs were half of the EU.
“You're going to see more countries around the world reaching free trade deals across the United States,” said Jason Furman, a professor of economic policy at Harvard Kennedy School, who served as chairman of the Economic Advisory Board during his administration. “I think this is a turning point for the United States at the center of the global trading system, but not about the world's view of free trade,” he said.
