In just seven months, President Donald Trump has fundamentally altered the global trading system, a framework that took over seventy years to build.
The pace of this transformation has been surprisingly rapid, with other nations willing to abandon the established rules-based trading order that was once considered the bedrock of international economic prosperity.
To grasp the magnitude of this shift, it is essential to step back from the constant updates on tariffs.
When President Trump took office in January, the effective US tariff rate on imports was around 2.5 percent.
As of now, that rate has surged to over 15 percent and shows no signs of leveling off.
With the implementation of President Trump’s upcoming tariffs, including additional sector-specific tariffs on commodities, the US tariff rate could approach 20 percent—marking the highest level in a century, and nearly eight times what it was at the beginning of the year.
Identifying the critical moment that signifies a permanent shift can be challenging amid this upheaval.
However, one image stood out recently: European Commission President Ursula von der Leyen negotiating a trade deal at Trump’s golf course in Scotland.
This starkly contrasts with the multilateral trade discussions that the European Union (EU) has participated in for decades.
Just a few months prior, in April, the EU’s ambassador to the World Trade Organization (WTO) declared that President Trump’s tariffs breached WTO commitments and contradicted core principles of the organization.
Despite this rhetoric, the shifting landscape has led to a rapid departure from established trade norms, with the WTO absent in these evolving discussions.
Traditionally, the United States has approached trade agreements as a way to lower tariff and non-tariff barriers with other nations, fostering mutual economic benefits.
This approach was evident in various agreements, such as the North American Free Trade Agreement and others.
However, President Trump has redefined what a trade deal comprises—it now often includes imposing high tariffs, generally around 15 percent or more, on other countries, who must then pledge to increase investments in the United States.
Why are other nations accepting this new arrangement?
Firstly, if countries observe that others are adopting similar tariff levels and share competitiveness in certain sectors—like automotive—they may find it acceptable to align with such baseline tariff rates.
Secondly, these nations recognize that it is US importers who will be footing the bill for these new tariffs, rather than their own importers.
This has led to the mentality that if the United States is willing to impose such taxes without offering different rates, then other countries might as well comply.
The reluctance to retaliate against Trump’s tariffs among numerous countries, apart from China, stems from a calculated understanding that they cannot afford a contentious escalation akin to China’s experience.
This perspective is only partially accurate, as Trump’s swift transformation of the global trading system could not occur without cooperative entities in other nations.
Moreover, the willingness of various nations to engage in bilateral negotiations and offer investment pledges—regardless of how feasible these commitments may be—reflects a deep-seated frustration with the slow and cumbersome nature of trade negotiations that have characterized the last two decades.
Former European Trade Commissioner Peter Mandelson, now the British ambassador to the United States, once articulated the shortcomings of the WTO’s Doha Round, emphasizing its failure to adapt global trading norms in response to the rise of nations like China and India.
He identified this inadequacy as a
image source from：atlanticcouncil
