Reforming trade architecture in a time of global chaos

(Text by Chuin Wei Yap)

Speaking at Chatham House on 27 March, 2025, at its Global Trade Conference, Hinrich Foundation Senior Research Fellow Keith Rockwell opened with a reflection on how much he – and much of the rest of the world – had underestimated the level of chaos in global trade that the new Trump administration has wrought in slightly more than two months.

Watch the recap:

"A year ago, at this conference, I said something like, ‘Well, 2024 is not a year in which we will see much trade activity, but things should pick up in 2025,’" Rockwell said. "But I did not foresee this."

Nobody did. Trump last week leveled the steepest American tariffs in a century worldwide, imposing a baseline 10% tariff on all exporters to the US, and even higher tariffs on some 60 countries including China, the European Union, Switzerland, Japan, Vietnam, Cambodia, and Laos.

The announcements capped by last week’s reciprocal tariffs fundamentally up-end the global rules-based order. In his remarks at Chatham House, Rockwell touched on the broad sweep of the Trump administration’s directives and the impact they have triggered in the rest of the world:

• Threats leveled at the sovereignty of Canada and Greenland.
• Retaliation from trading partners, including longtime US allies: Among them, the EU imposed tariffs on 8 billion euros of US exports to Europe including bourbon, motorcycles, and lighters. More retaliation is being weighed not just from Europe, but many other nations around the world. A global trade war is now well underway.
• How the US moves threaten to move retaliation against the US trade surplus in services. Trade in services, increasingly an important growth engine for the global economy, is a priority for the US in global trade. The US is by far the world’s largest services exporter at US$1.1 trillion in 2024. Services as a category was a key topic on which Washington sought multilateral agreement in the General Agreement on Trade in Services (GATS) at the Uruguay Round, the eighth and final round of global tariff reductions that the US led.
• The shaky legal basis of Trump’s use of the US International Emergency Economy Powers Act (IEEPA) to legitimate the new US tariffs.
• The highly complex, imprecise, and costly administration of such a new reciprocal tariff system for the US. "If the Trump administration wants to haggle over every tariff line from every country, depending on the degree of granularity, this means between 11,000 to 19,000 tariffs lines for roughly 200 countries and territories," Rockwell said at Chatham House. "They would be assessing between roughly 2.3 million and 3.9 million tariff lines, depending on how granular the assessors choose to go."
• The Trump administration had "simply arrived at very large numbers and expect trading partners to buckle or face punishingly high tariffs," Rockwell said.

A poll held at the Chatham House conference’s opening session, based on a question provided by the Hinrich Foundation, asked respondents if they "believe rising geopolitical tensions and trade fragmentation threaten the stability and importance of the global multilateral trading system." All respondents voted yes, according to Chatham House data provided to the Foundation.

Other speakers at the opening panel of the conference, aside from Rockwell, included British ambassador to the World Trade Organization Simon Manley, Brazil’s trade secretary Tatiana Prazeres, McKinsey Global Institute Partner Jeongmin Seong. The panel was chaired by the Clingendael Institute’s Senior Research Fellow and Chatham House Associate Fellow Rem Korteweg.

In their remarks, Seong pointed to the long trajectory of the US shift toward tariffs, initially focused on efforts to counter China’s rise. The uncertainties from the US approach on trade has only increased the vulnerabilities in the international system and diversification in new trade relationships is still rooted in "old geographies," Seong said, according to notes provided by Chatham House.

"Every day, you wake up to something that you would not expect to see," Prazeres said. "Trade is being used as a ‘power tool,’ [and] this creates uncertainty as it gets further weaponized."

Brazil is focusing on building ties with like-minded and Latin American nations. "You can still strongly push for multilateralism, even if it does feel harder to do so," she said.

The WTO needs to be re-framed as a "helpful guide and tool," Manley said.

"Is this an opportunity for the WTO to reinvent itself or will it remain an illustrious ‘holy grail’ that is out of sight due to the national behaviors?" he asked.

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