Trump & Trade: The Crisis in the Multilateral Trading System

Abstract

President Trump is widely seen as instigating a dramatic reversal of 70 years of US trade policy and abdicating the American hegemon’s traditional leadership role in the multilateral trading system. Trump has threatened to withdraw the US from the WTO, abandoned trade multilateralism for aggressive unilateral actions that are in blatant violation of WTO rules, and jeopardized the WTO’s dispute settlement mechanism by blocking appointments to its Appellate Body. Trump’s policies are commonly attributed to the surge of populist anti-trade sentiment under his presidency. As this article shows, however, both the crisis in the multilateral trading system and the American hegemon’s turn away from the WTO – including abandoning multilateral trade negotiations and blocking Appellate Body appointments – originated prior to Trump. This shift in the US orientation towards the multilateral trading system cannot, therefore, solely be attributed to the rise of populism under Trump. It is also a reaction to the decline of the US’s institutional power – its power over the core institution and rules governing trade. Amid the rise of China and other emerging powers, the US’s ability to dominate global trade governance and write the rules of global trade sharply diminished, leading to an erosion of American support for the multilateral trading system it once led. While realism has fallen out of favour in IPE, understanding recent dynamics in the trading system requires revisiting its core insights.