Tariffs, trade, and global upheaval: What next?

A hundred days into his second term, Donald Trump’s aggressive trade agenda has triggered global economic disruption and deepened geopolitical uncertainty. The Hinrich Foundation’s Trade Policy Head Deborah Elms and Senior Research Fellow Keith Rockwell joined a discussion on what this means for the future of global trade, moderated by Bloomberg News correspondent James Mayger.

Watch the webinar:

Highlights from the webinar:

How we got here

Elms compared the global trade system to a carefully crafted "ceramic vase" shattered by renewed tariffs introduced by President Trump in April. She emphasized that the system, a product of decades-long international cooperation, has now fractured, creating immense uncertainty about the future structure of global trade.

Rockwell noted that the World Trade Organization (WTO) has become ineffective due to outdated rules and excessive reliance on litigation. He pointed to the immediate economic disruptions, including severe shortages in goods, particularly rare earth minerals that are essential for advanced manufacturing and defense, now severely restricted by halted exports from China. He also listed other irreversible damages, including the permanent loss of US soybean market share to Brazil, canceled Boeing orders from China, market turmoil, and rising concerns in sectors such as shipping and logistics.

What might happen moving forward

Elms expressed skepticism over the coherence and effectiveness of current US trade policies, citing unclear and often conflicting demands that make genuine negotiations nearly impossible. She pointed to unrealistic US expectations, such as removing Chinese content entirely from products, an idea she described as economically and logistically unfeasible.

Rockwell supported Elms, emphasizing that key US demands like removing the EU's digital economy regulations or eliminating value-added taxes (VAT) are politically unviable. These

demands are leading trading partners to prioritize their domestic interests over US relations, undermining any meaningful resolution.

Elms further indicated that US trade policies under Trump have created deep uncertainty, prompting businesses worldwide to restructure their operations to minimize exposure to the US market, an effect that may be irreversible even if tariffs were rolled back. Firms are increasingly adopting a “US for US” model, where production for the US market is isolated from the rest of their global operations. Rockwell agreed, arguing that meaningful reshoring requires careful planning and incentives, citing the Biden administration’s Inflation Reduction Act (IRA) and CHIPS Act as preferable models for industrial strategy compared to Trump's punitive tariff approach.

Legal basis for trade agreements the US is pursuing

Elms clearly stated there is no solid legal foundation for US trade actions, predicting prolonged litigation over the legitimacy of invoking the International Emergency Economic Powers Act (IEEPA). Rockwell emphasized that current US trade actions may lack constitutional legitimacy. With Trade Promotion Authority (TPA) now expired, he argued that ongoing executive-led negotiations represent a “power grab” and criticized US Congress for failing to defend its role. Citing past practices where major trade deals required congressional approval, Rockwell cautioned that new agreements could fall into legal limbo without similar oversight, raising broader concerns about the erosion of constitutional norms.

Impact of tariffs

Rockwell explained that trust and market shares lost due to trade disruptions, like those experienced by US farmers, are likely irrecoverable. Elms noted that companies are pivoting to more stable regional agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), even if the US policy reversed. She emphasized that protectionist measures introduced by the US have normalized similar behaviors globally, citing Indonesia's new commodity royalty policies as an example.

Rockwell pointed out India’s shift from traditional protectionism toward serious negotiations with the US and the EU, potentially driven by supply chains reshuffling and new foreign investments.

Concerns regarding influx of cheap Chinese goods

Elms cautioned against the frequent and imprecise use of the term “overcapacity,” clarifying that excess production does not apply to all Chinese products. She warned that increased global market competition could potentially overwhelm smaller economies unable to compete with China's scale and efficiency, ultimately impacting their developmental pathways.

Rockwell noted that Europe has clearly identified and responded to Chinese dumping practices, adopting industrial policies like that require manufacturing in Europe, marking a significant shift in global economic tactics.

US retreat from global development efforts

Elms described the US withdrawal from global development projects as highly detrimental, noting that many countries now rely more heavily on foreign direct investment and regional trade as alternative avenues for growth. Rockwell highlighted the severe repercussions for African countries losing market access under initiatives like the African Growth and Opportunity Act (AGOA), coupled with reduced US aid, which is creating serious developmental challenges.

Journalism on trade issues

Both experts emphasized the need for deeper journalistic investigations that goes beyond headline political disputes. Rockwell called for more robust coverage of Africa and its engagement with Chinese investments, while Elms encouraged reporting on practical implications of supply chain disruptions and reshoring efforts, suggesting that deeper analysis would uncover why reshoring hasn't materialized despite political narratives. The AFPC-USA is responsible for the content of this educational program.

The AFPC-USA is responsible for the content of this educational program.

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