The Order After Trump. Photo courtesy of Willbook
In April last year, U.S. President Donald Trump declared “Liberation Day” and announced he would impose reciprocal tariffs on trading partners around the world. Although the U.S. Supreme Court later struck down the tariff measures, the Trump administration has continued its protectionist course, using other legal grounds to roll out new tariffs one after another. In response, the Chinese government has tightened its grip on critical mineral supply chains by introducing a licensing system for rare earth exports. The rules- and norms-based free trade regime has collapsed, and trade war has become an irreversible “new normal.”
A Financial Times economics columnist and a former chief economist at the U.S. State Department trace how the trade war Trump set off is settling into a new economic order. The authors met more than 100 people on the front lines — policymakers, trade negotiators and multinational executives — to capture their firsthand voices.
The book argues that hoping for a return to the peaceful trade order of the past is naive. Its case is that even after Trump leaves office, America’s protectionist stance is bound to continue. For one, now that the idea that free trade benefits the United States has lost public support, politicians have no reason to push for greater openness. What is more, because trade makes up a relatively small share of the U.S. economy, Americans hold a strong conviction that the country can prosper on its own. In fact, as of 2024, the only countries with a lower ratio of exports and imports to gross domestic product (GDP) than the United States were Haiti, Sudan and Ethiopia.
The book first traces how the world’s trade rules came apart. It points to China’s export-led growth strategy — manufacturing (and exporting) too much while consuming (and importing) too little — as a major factor in widening trade imbalances. According to Goldman Sachs, China’s current account surplus is projected to reach 1% of global GDP around 2029, the largest for any single economy in history. By contrast, as of 2024, the average Chinese person consumed only about 10% as much as the average American. Normally, when demand falls short, supply shrinks. But in China, where the function of weeding out failing companies has been paralyzed, this mechanism did not work, and Chinese firms offloaded their overproduction onto other countries.
The authors also closely examine the weapons of the trade war and their effects. The first is tariffs, which became familiar to Koreans as well when Trump brought them back last year. A tariff is a tax on imported goods, paid by the importer when the goods cross the border. But according to economists, tariffs contribute only marginally to raising revenue and do little to improve the trade balance. Tariffs also raise the price of imported parts, undermining the export competitiveness of a country’s own finished goods, while chilling jobs and corporate investment.
Export controls are also a powerful economic weapon, but their impact should not be overstated, the authors argue. “Export controls erode a country’s reputation as a reliable supplier, dampening trade and investment. They also remind the targeted country how urgent it is to break free of its dependence, ultimately nullifying the effect of the restriction itself.” China’s progress in achieving semiconductor self-reliance and developing artificial intelligence (AI) models despite U.S. controls on advanced chip exports vividly illustrates this point.
In the preface to the Korean edition, the authors warn that Korea will inevitably be drawn into the U.S.-China trade war whether it wants to be or not. Analyzing the governments that have joined the fight, they note that “both Korea and Japan are reducing their dependence on China, but they also know well that if they side entirely with the pirate (the United States), the giant warship right next to them (China) could blow a huge hole in their flank.” The book sounds an alarm for politicians and labor unions who ignore the harsh reality of the U.S.-China hegemony contest over the reshaping of semiconductor supply chains, absorbed instead in dividing up short-term gains. 392 pages, 25,800 won.