The multilateral trade regime – built under the aegis of the GATT and institutionalized by the establishment, in 1995, of the GATT’s successor, the World Trade Organization – is now effectively dead and buried. Since 2019, during Trump’s first term, the Appellate Body for the WTO’s Dispute Settlement Mechanism has been inquorate – decapitated by American refusals to approve judges. For more than five years, no WTO decision has been legally enforceable.
Furthermore, notifications to the WTO of new trade barriers justified on “national security” grounds have soared since 2019, covering even products as innocuous as doorframes, coffee beans, and alcoholic beverages. Such exceptions render trade actions injudicable – at least under the US legal interpretation. Since 2017, the US alone has filed 30 such notifications. Mexico has filed 14, and Switzerland, Brazil, and Saudi Arabia have filed, 12, 10, and eight, respectively. In 2024, “national security” notifications reached an all-time high of 95.
Trump’s “reciprocal” tariffs would also appear to violate US commitments under WTO Most Favored Nation rules (applying identical rates across member states) and Tariff Binding rules (establishing maximum rates). When the world’s leading importer brazenly flouts its most basic legal commitments, and decapitates the body empowered to sanction such action, it seems clear that the prevailing regime is a dead letter.
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The effect of Trump’s wayward tariffs, together with his ongoing threat of further tariffs, refusal to confirm WTO appellate judges, and repeated invocation of “national security” to cloak mercantilism, is likely to erode in the coming years global trade norms that were built up over eight decades. The result will be higher prices, less innovation, lower living standards, and greater geopolitical friction.
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This is a profound and painful shock to those of us who believed that the liberal order, for all its faults and limitations, was a blessed inheritance. A future US administration, equipped with muscle memory of an ordered past, may well try to restore elements of it; but, shorn of the moral authority and resource-dominance that accompanied America’s victory in World War II, it is difficult to see how it could succeed. With Europe still too disunited to fill the vacuum, and China professing no universal values, a dangerous period of Hobbesian each-against-all disorder seems inevitable.
But not all news is bad; news of the weakening of the climate religion is genuinely good. A slice:
Global banks significantly increased their financing for coal, oil and gas projects last year, according to a new report by climate advocacy groups, marking a reversal at a time when lenders are backtracking on climate pledges.
For a non-trade example, it is an enumerated power of Congress to “lay and collect taxes.” Congress has created the Internal Revenue Service, which is part of the executive branch, to do that job. The IRS has considerable power, but it is limited. It cannot change the tax brackets, create new tax credits, or invent a different kind of tax. When the IRS misbehaves (which it does), it is accountable to Congress, because that is ultimately where the constitutional authority lies.
It is not possible that Congress, in writing a law to delegate power to the executive branch, could completely cede its enumerated power in the Constitution. Any statute that it passes doesn’t change what the Constitution says. This becomes an issue for courts when the statute is vague.
The administration argued that because IEEPA says the president has the power to “regulate . . . importation,” that means Trump’s tariffs were permitted. IEEPA does say those words, and tariffs are one way to regulate importation, but such a power can’t be unlimited, because the Constitution says that only Congress has the power to levy tariffs.
What Trump did was essentially unlimited. He imposed tariffs on nearly every country in the world at the same time at very high rates and claimed unilateral authority to adjust them at will. That basically is the power to levy tariffs, which the Constitution says is a power reserved exclusively to Congress. The IEEPA, then, cannot allow unlimited tariffs.
I was happy to talk recently with David Lin about Phil Gramm’s and my new book, The Triumph of Economic Freedom.
Jack Nicastro asks: “How much of Trump’s ‘Built in America’ phone is actually built in America?”
President Trump imposed 50% tariffs on steel and aluminum earlier this month. Regardless of any exemptions the administration offers, building a modern America-class amphibious assault ship requires 45,000 tons of steel. The net effect of this trade policy will be higher costs across the board, from military aircraft and lightweight armor plating to submarine repairs and shipbuilding.
Tariffs will also affect small, specialized components like those used in jet engines, night vision systems, and landing gear. When I recently met with a New Hampshire company that makes ball bearings for the aerospace industry, executives told me tariffs have driven up their costs and extended their production time—concerns industry leaders echoed in Paris.
These delays and rising costs don’t only slow American readiness; they erode our allies’ trust in the U.S. as a dependable partner.
Benjamin Zycher is understandably unimpressed with what he calls Trump’s “Soviet humor.” A slice:
Donald Trump is no George Washington. Nor is he Stalin. But in his exquisite ability to make almost everything about him—as Alice Roosevelt Longworth said of her father, Theodore Roosevelt, he “always wanted to be the corpse at every funeral, the bride at every wedding and the baby at every christening”—Trump will engender a body of humor that will be with us for a very long time.
