Experts Predict 'Period of Maximum Conflict' for US Trade Policy

"Maybe we'll settle down into an approach that will look a little more like the first Trump term, and then we could have a more rational conversation about what that means for the future of the system," said Ted Alden, a senior fellow at the Council on Foreign Relations. "But if I had to guess right now, I guess we are entering the period of maximum conflict in which we're going to see tariffs, we're going to see retaliation, and it's going to be sort of a show of strength. I think we really, unfortunately, are headed into a period of serious conflict, not construction of some new system."

Initially, he thought that Trump would take actions like he had in his first term: "We would see new tariffs, but they would be strategic and reasonably targeted, the way they were in the first Trump administration, probably again focused on China." But the tariffs that Trump has threatened and enacted "really upended a lot of my assumptions about what we were heading into." Alden was speaking at a conference this week hosted by the Washington International Trade Association.

Trump's tariff policies don't follow the logic of the "system of rules" that the world is accustomed to in international trade and instead, "it seems to me to be wholly disruptive, largely aimed at American allies. And the purpose is to test, here in the United States, to test the limits of the tariff weapon as a tool for making policy gains in all sorts of areas, some of them related to trade and the economy. Some of them not at all related to trade in the economy, like illegal migration or drug control," Alden said.

He likened Trump's approach to tariffs to China's "Wolf Warrior" diplomacy strategy, saying that Trump was "trying to use an economic weapon to try to pursue other goals that are not related to trade." That to Alden indicates that the current approach to tariffs is more than just a "phase," and represents a shift in the way the world will approach trade.

Stephen Vaughn, a partner at King & Spalding and former general counsel to the Office of the U.S. Trade Representative in the first Trump administration agreed that the rules of trade are changing. Trump is making clear how he thinks trade should work and anyone who comes to the bargaining table saying, "we really want to go back to 2015, that was working great," is not going to succeed; "I think that ship has sailed," Vaughn said.

He said that he is "disappointed" with the way other countries are engaging with the U.S. on trade and that "the rest of the world has been so unwilling to recognize the political problems that trade is causing in the United States and that we really see no serious efforts from anybody to try to help us address some of these problems." Until U.S. consumers start seeing benefits from global trade, there will not be any appetite from the Trump administration for more free trade agreements or relief from tariffs, he said.

Allies confused by the tariffs placed on them are misunderstanding how trade will work under Trump, according to Vaughn. He said that "if you think that the current system is working well, then obviously it doesn't make sense to change it. He [Trump] thinks it's a disaster, we could do much better."

Arancha González, the dean of the Paris School of International Affairs, retorted that while the EU could see the "resentment" of U.S. consumers toward global trade, the American economy has benefited more than anyone from it. When Europeans look at the U.S. economy "we see a roaring lion, [but] when we look and talk to our U.S. friends, they sound like a scared mouse. And this is what we don't understand," she said.

To Alden and Vaughn, though, the EU is focused on the past. Both agreed that history will see the World Trade Organization as "a Utopian project in much the way the League of Nations was, as a step too far," as Alden characterized it.