📚The TL;DR📝

1. The postwar U.S.-led trade order, born at Bretton Woods to promote stability and peace, evolved through the liberalization of trade under the Washington Consensus but ultimately unraveled under globalization’s inequalities and subsequent political backlash.

2. Trump’s protectionist agenda in 2016, marked by trade wars with China, the renegotiation of NAFTA, and sweeping tariffs, signaled a decisive break from the Washington Consensus.

3. Amid a sweeping wave of trade renegotiations, the United States has struck new deals with major partners, such as the United Kingdom, the EU, China, and Vietnam, that replace free-market ideals with economic security provisions and higher tariffs.

4. The new trade order is defined by mutual mistrust, reshoring, and frequent policy changes.

5. For American consumers, the new trade order means higher prices and greater vulnerability to supply chain disruptions as domestic production takes center stage.

📌Building the New Trade (Dis)Order📌

When Donald Trump declared “liberation” on April 2, 2025, announcing a breadth of tariffs on foreign imports, he tore apart the global trade architecture he believed had shackled the American economy. What followed in the ensuing months was a flurry of threats and high-stakes negotiations as countries quickly caved to Washington’s new demands. The cost of exclusion from the U.S. market was too high. 

The international trade system is undergoing a transition phase as the United States reorganizes its priorities and rewrites the rules of economic engagement. The trading order that arises may be defined by everything a conventional order is not: volatility, distrust, and chronic uncertainty. Consumers will face higher prices, but state subsidies for critical industries will boost employment and trade policy will become increasingly integrated with national security policy.

The Old Trade Order

The new trade order has roots in the old order. At the end of World War II, 44 nations convened at the Bretton Woods Conference to rewire the global economy after the monetary chaos of the interwar years. U.S. policymakers had a vision: a stable, integrated economic system that would not only promote mutual prosperity but also ensure long-term peace. The Bretton Woods system was created on the promise of exchange rate stability around the U.S. dollar, eliminating volatility caused by currency fluctuations. Led by the United States, it established the International Monetary Fund (IMF) and World Bank to provide financial stability and fund postwar reconstruction and development.

The pursuit of order also led to the gradual liberalization of global trade through the creation of the General Agreement on Tariffs and Trade (GATT) in 1947, bringing down the quotas, tariffs, and subsidies that characterized the interwar period. GATT served as a precursor to the World Trade Organization (WTO). These novel institutions contributed to creating one of the most stable and prosperous periods of economic growth in modern history, known as the golden age of capitalism. However, by the late 1960s, the Bretton Woods system began to strain under U.S. inflation, trade deficits, and rising international demand for gold. In August 1971, President Nixon pulled the United States dollar off gold, and exchange rates began to float freely against one another. 

This accelerated trade liberalization. In the 1970s, Debt crises caused by new markets, oil shocks, and inflation demanded a new approach to stability. In response, John Williamson, a British economist at the Peterson Institute, summarized what he saw as the 10 policy prescriptions to relieve crisis-stricken developing economies. Arguing for deregulation, privatization, and financial liberation, Williamson famously suggested that the rising tide of free trade lifts all boats. Lower your trade barriers, pursue efficiency, and allow comparative advantage to flourish. This ideology, championed by the United States, became known as the Washington Consensus. 

Facilitated by the fall of communism, the neoliberal Western model proliferated. In 1994, the United States, Mexico, and Canada signed the historic North American Free Trade Agreement (NAFTA), reinforcing the global shift toward neoliberal economic governance that led to the World Trade Organization (WTO). The WTO was intended as an international institution that expanded on GATT to foster dialogue about trade in services, intellectual property provisions, and trade dispute settlement mechanisms. There was a trust that came with the order that others would play by the rules. Being a part of the order brought relatively greater economic benefits than being isolated. China’s accession into the WTO in 2001 signified that the world was resolutely convinced, and the Washington Consensus was here to stay.

However, the system had imperfections. Although American consumers benefited from cheaper imports, American manufacturers and multinational corporations expanded production networks across borders, seeking lower labor costs. The high-skilled American service economy boomed at the expense of low-skilled manufacturing industries. The explosive growth in the Chinese manufacturing sector contributed to the hollowing out of American manufacturing in the Midwest. The 2008 financial crisis exacerbated such job displacement and eroded public trust in globalization. By the 2010s, skepticism toward free trade had evolved into political backlash. Although politicians acknowledged the displacements, the promise that manufacturing workers would be reskilled to stay afloat in the economic transition never materialized. The politicization of the employment losses only exacerbated the negative image of free trade. The overt rejection of the Trans-Pacific Trade Partnership (TPP) by both Donald Trump and Hillary Clinton on the 2016 campaign trail is a testament to the bipartisan disillusionment with free trade. The system that the United States once spearheaded was being struck down by its own hand. 

The Return of Protectionism

Trump argued that countries were sold a glorified picture of free trade, and the United States was a fool for worshipping the Washington Consensus. He promised to smash open previously closed markets, restore the nostalgic glory days of American manufacturing, and unleash the full potential of American industries. Wide support for Trump’s move to protectionism was a result of two decades of distrust in the system.

Once in office, Trump defied the neoliberal economic model. In 2018, Trump launched a trade war with China in an effort to reduce the U.S. trade deficit and curb “unfair trade practices.” Since China’s integration into the WTO, there has been vast evidence of intellectual property theft from American companies and dumping in the United States. The first Trump Administration imposed tariffs on hundreds of billions of dollars worth of Chinese goods, prompting Beijing to impose retaliatory tariffs on U.S. exports. The conflict disrupted global supply chains, raised input costs at home, and forced Washington to provide billions in subsidies to U.S. farmers hurt by China’s retaliatory measures. Then, Trump renegotiated NAFTA. The result was the 2020 United States-Mexico-Canada Agreement (USMCA), which added stricter rules of origin for automobiles, higher labor standards, and updated provisions for digital trade.

The United States was not the only country riding the protectionist wave. Under its Made in China 2025 initiative, the Chinese government has actively intervened in its economy to build national champions, such as Huawei, in strategic technological industries and climb the global value chain from low-cost, labor-intensive manufacturing to high-value, innovation-driven services. The EU has also engaged in industrial policy through the European Industrial Strategy and massive investments in green infrastructure aimed at boosting competitiveness with Chinese-made products. 

The Washington Consensus entered its final days as many of Trump’s protectionist measures were extended under the Biden Administration. In 2018, Trump imposed a 25% tariff on steel and a 10% tariff on aluminum, arguing that these products are critical for national security and thus should be largely produced in-house. Biden agreed. He not only maintained these tariffs, but also increased tariffs on Russian steel and aluminum in 2023 to 200% following Russia’s invasion of Ukraine. On Liberation Day, when Trump initiated tariffs on around 90 countries simultaneously, Trump cemented the end of the Washington Consensus.

The New Disorder

The wave of renegotiations now engulfing nearly every U.S. trade relationship will eventually subside as deals are struck. Countries recognize that a tariff between 15% and 20% is preferable to being locked out of the world’s largest consumer market and the center of the global economy. Thus far, the White House has struck deals with the United Kingdom, the EU, Vietnam, South Korea, Japan, the Philippines, and Indonesia. However, these new deals are forcing governments to abandon long-held assumptions about free markets that they have accepted as facts for decades. 

Notably, the United States and the United Kingdom signed the U.S.-U.K. Economic Prosperity Deal (EPD) in September 2025. The provisions include agricultural market access for U.S. products, reducing U.S. tariffs on U.K. cars from 27.5% to 10%, and a dedicated section regarding economic security in the agreement. They agreed to “strengthen coordination to address non-market policies and practices of third countries” and to “cooperate more closely on the use of investment screening measures, export controls, and ICT vendor security.” Economic security provisions of this explicit nature are a new phenomenon.

In July 2025, the United States reached deals with the EU and Vietnam. In the former, the two parties agreed on U.S. tariffs of 15% on most EU goods, including autos, auto parts, pharmaceuticals, and semiconductors. However, Section 232 tariffs, which pertain to national security protections, on EU steel, aluminum, and copper will remain at 50%. Importantly, the EU will purchase energy as part of a diversification effort away from Russian oil and gas. In the latter deal, Vietnam agreed to zero tariffs on certain U.S. goods. However, the Trump Administration imposed a 20% tariff baseline and a 40% tariff on all trans-shipments:  goods that pass through Vietnam on their way to their final destination. The goal is to target Chinese goods dumps that sneak through Vietnam to their final destination in the United States.

While the United States and China have not reached a formalized, long-term trade agreement as of October 2025, both countries have emphasized the crux of negotiations: export controls and rare earth minerals (REMs). The United States has been careful about controlling what American technology, especially advanced chips from companies like Nvidia, can be sold to Chinese entities. However, China controls over 90% global REM production. These REMs are essential ingredients for electronics, modern defense applications, and high-tech consumer products. Initial discussions suggest that the United States is reluctantly willing to lift some export controls to ease Chinese rare earth metal restrictions. Economic interdependence comes with a cost.

🌎Why It Matters🌎

It is rational and even necessary for governments to protect and subsidize industries critical to national security or economic livelihood. IP theft, dumping, and unequal subsidization programs have long defined the U.S.-China trade relationship. Third-party countries, as evident with the Vietnam deal, will be penalized for enabling bad behavior. However, U.S. adversaries are not the only violators. The EU and UK still face tariff and quota penalties. As the Trump Administration seeks to build domestic capacity, Americans working in subsidy-favorable industries, including agriculture and manufacturing, would be better off compensated to staying afloat. Naturally, making things at home may not be the most productive decision, potentially leading to higher prices for consumers.

Chokepoints are fatal. It is too dangerous to rely on foreign powers for essential inputs, especially those related to national security. Allowing one country to dominate your access to REMs, semiconductors, food, or ships dooms you when conflict arises.. Reliant on China for critical minerals, the United States is forced to make concessions at the negotiation table. On the ground, American consumers face both increased vulnerability to supply chain disruptions and higher costs as businesses resort to alternatives.

If dependencies exist, powerful countries can tear apart trade deals when dissatisfied. This dissatisfaction does not have to be trade-related. A trade deal can be leveraged to compel behavior in another dimension of the relationship. This is most evident with the United States, but it can occur in any relationship with a power imbalance, such as  China’s engagement with Southeast Asian states. This last condition guarantees a permanent state of distrust. If agreements can be unilaterally broken and changed, the new “order” is inherently unstable, fragile, and untrustworthy—all the characteristics that do not resemble order. The volatility of this  new trade order seeps into everyday life, making it substantially harder to anticipate changes in tariffs and, by extension, changes in prices. 

The United States is the protagonist in this story, spearheading the renegotiation of the free trade global order it once championed, but it could easily become the antagonist. As the center of the worldwide economy, it has the tremendous power to define what trade will look like moving forward. The new order—or disorder—will be what the United States makes of it.