A Strategic Shift in Global Trade
The return of Donald Trump to the White House in 2025 has reawakened a wave of American protectionism.
With aggressive tariffs, institutional distrust, and regulatory rollbacks, the U.S. uses its economic power as a geopolitical tool again. Measures that began during his first term intensified, challenging global trade norms and forcing countries to rethink their economic alliances.
Geopolitics by Tariff
Under his renewed “America First” doctrine, Trump has imposed staggering tariffs — 125% on Chinese goods and 25% on Canadian imports — and even threatened to exit existing trade agreements. Although these moves are framed as efforts to protect domestic industries and jobs, they serve a broader geopolitical purpose: reasserting U.S. dominance in a shifting world order by using trade barriers as leverage.
The Erosion of the Liberal World Order
These protectionist policies depart from the post-World War II liberal trade system. The U.S. now prioritises containment and self-sufficiency over multilateralism and open markets.
Brexit, the expansion of BRICS, and growing trade blocs and other key global events reflect a world inching toward economic fragmentation rather than cooperation.
Meanwhile, traditional U.S. allies continue to defend institutions such as the IMF and World Bank – a strategy of selective engagement that allows the U.S. to maintain influence through global financial systems while reducing its reliance on open trade.
The IMF and World Bank were originally established to promote global economic stability and avert financial crises. The U.S. has historically used them as tools of dominance, ensuring that countries receiving financial aid align with its geopolitical interests, exemplified by its post-World War II support of Japan and Europe.
If the U.S. were to withdraw its support from these institutions, it would forfeit a critical source of leverage, allowing China and other emerging economies to reshape global financial rules.
In short, while the U.S. is stepping back from free trade, it remains intent on controlling the financial architecture that underpins the global economy, thereby containing its rivals and maintaining its dominance in economic governance.
On the other hand, a multipolar alliance, led by China and Russia, is striving to build alternative economic frameworks that mitigate dependence on the dollar and Western-led institutions.
The U.S.–China Rivalry Deepens
Since the 2008 financial crisis, China has expanded its dominance in global infrastructure and supply chains through initiatives such as the Belt and Road Initiative (BRI). This program has significantly bolstered China’s economic ties with Asia, Africa, Latin America, and parts of Europe. Countries such as Pakistan, Indonesia, Kenya, and Brazil have benefited from substantial investments in ports, railways, and energy projects.
In addition, China has deepened its role in global manufacturing by integrating into supply chains across sectors such as electronics, automotive, and renewable energy. Nations like Vietnam, Mexico, and Central and Eastern Europe have experienced increased Chinese investment and trade partnerships, reaping the benefits of their manufacturing expansion. What began as a trade dispute has evolved into a clash of ideologies and strategic ambitions.
A Historical Perspective
Historically, especially during the mid-20th century, the U.S. championed global trade as a tool for peace and development. It led efforts to create frameworks such as the North Atlantic Treaty Organisation (NATO), the Warsaw Pact, the United Nations, the General Agreement on Tariffs and Trade (GATT), the IMF, and the World Bank—all designed to promote global cooperation and reduce the likelihood of conflict through economic interdependence.
However, in the 2000s, a series of protectionist actions and subsequent policies under the Obama, Trump, and Biden administrations have shifted the focus. Laws such as Section 232 and Section 301 have been used to impose tariffs on both rivals and close allies by citing national security concerns or countering unfair trade practices. These measures signal a move away from an unwavering commitment to open, multilateral trade toward a more selective engagement dictated by national security and competitiveness.
A Memorandum for Protectionism
Trump’s 2025 trade memo argues that trade deficits threaten national security. It outlines measures including a global tariff, countervailing duties, and the creation of a new agency, the External Revenue Service, to collect and monitor tariffs. Although these moves are intended to boost domestic production, they risk deepening global instability and, in the worst-case scenario, triggering recessions in both the U.S. and worldwide.
Markets React, Global Ripples Follow
When Trump’s tariffs hit the market, the impact was immediate and seismic. Within hours of an earlier tariff announcement in July 2018, the U.S. dollar fell nearly 2%, and global investment flows became jittery. Supply chains, refined over decades of integration, began to unravel.
These tariffs, widely seen as tools of protectionism, disrupted everything from factory production to financial markets. Industries such as agriculture and green technology, which are essential in addressing food insecurity and climate change, have found themselves particularly hard-hit as rising costs and logistical complications ripple across international networks.
With tariffs affecting everything from the price of metals used in green tech to the competitiveness of food exports, global economic growth is now forecasted to slow to 2.9% in both the current and following years, a significant downgrade from earlier forecasts.
In contrast, open trade policies build a foundation for sustained growth and resilience. Lower barriers to trade nurture innovation, reduce production costs through specialisation and economies of scale, and create mutual dependence that can smooth over geopolitical frictions.
Open markets empower industries to quickly adapt to global trends, fuel technology advances, and offer consumers a broader range of quality products at competitive prices. In stark contrast, the pursuit of self-sufficiency through tariffs tends to lock economies into inefficient production patterns that stifle innovation and inflate costs.
Multiple studies have demonstrated that protectionism not only yields lower growth but also reduces competitiveness and heightens vulnerability during global disruptions. Ultimately, a commitment to liberal trade remains the most effective pathway to shared prosperity and long-term stability in an interconnected global system.
The Big Picture and conclusion
The current trajectory of American trade policy foreshadows systemic change. Protectionism, deregulation, and even climate denial are converging into a new global reality. While the U.S. may believe it`s securing its economic future, it risks forfeiting its leadership in addressing 21st-century challenges like food security, clean technology, and global cooperation.
The second Trump presidency marks more than a political comeback; it represents a paradigm shift in global trade. By undermining multilateralism, weaponising tariffs, and rejecting environmental leadership, the U.S. is creating a vacuum in global governance. The international community must now face a clear choice: adapt to this new era of protectionism, or forge new alliances that uphold openness, cooperation, and sustainability. Historical and economic evidence shows that although protectionism may offer short-term gains, open trade drives innovation, efficiency, and long-term growth. Global partnerships based on shared standards and mutual benefits present the more resilient path to addressing future challenges such as food security, climate change, and technological disruption.
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