Donald Trump
A new era of protectionism is sweeping the globe at a pace unmatched in decades, driven largely by US President Donald Trump’s aggressive trade agenda and echoed by retaliatory measures from countries across Europe, Asia, and North America, the Wall Street Journal reported. Economists warn the result could be a lasting unravelling of global trade norms, with potentially severe consequences for growth, prices, and international diplomacy.
Trump’s latest wave of tariffs — including new levies on semiconductors, cars, and pharmaceuticals — builds on the trade barriers introduced during his first term and expands the scope of economic confrontation to nearly all major US trading partners. The European Union, China, and Canada have responded in kind, with measures such as 50% tariffs on American whiskey and motorcycles, and new duties on hundreds of US goods.
Protectionism goes global
Even before Trump’s return to the Oval Office, countries were moving to shield key industries, particularly from Chinese overproduction in steel, chemicals, electric vehicles, and packaging. Now, as Trump’s tariff wall redirects trade flows globally, those efforts are escalating. South Korea, Vietnam, Mexico, and even Russia have all imposed new penalties on Chinese goods in recent months.
The number of import restrictions among G20 economies has soared to 4,650 — up 75% since 2016 and nearly 10 times the number in place in 2008, according to Global Trade Alert. In the US alone, 90% of imported product categories are now subject to restrictions. Average US tariff rates have climbed from 1.5% in 2016 to 8.4% today, and could hit 18% if Trump delivers on all his threats — levels not seen since 1946.
Echoes of Smoot-Hawley
While the current situation is far from a repeat of the 1930s Great Depression, when the Smoot-Hawley Act triggered a global trade collapse, economists draw troubling parallels. Then, as now, a wave of protectionism aimed at shielding domestic jobs led to global retaliation and fractured economic ties.
“The de-escalation scenario is a really tricky one,” said Douglas Irwin, a trade historian at Dartmouth. “Once barriers go up, they’re hard to bring down.”
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Uncertain economic fallout
Trump and his allies claim tariffs will restore American manufacturing, eliminate trade deficits, and spark domestic job growth. But the broader impact has already begun to show: consumer confidence is declining, investment is slowing, and major corporations like BMW are warning of billion-dollar losses from trade disruptions.
Fitch Ratings forecasts global economic growth will slow to 2.4% this year, down from 2.9% in 2024, citing the expanding trade war. The International Monetary Fund says capital and commerce are increasingly flowing along geopolitical lines, dividing the world into rival trade blocs.
A sidelined WTO and fractured future
Once a pillar of the post-World War II order, the World Trade Organization has been sidelined — especially by the US, which has blocked appointments to its appellate body since 2019. Trump has accused the WTO of overreach and ignored its rulings. With the collapse of multilateral trade efforts, experts say there is little hope of returning to the level of openness seen just a decade ago.
The rise of tariffs may now be sustained not just by populist politics but also by national security concerns. As countries rearm and protect strategic industries — from semiconductors to green energy — trade is becoming increasingly entangled with defence and industrial policy.
“The narrative that integration makes us all better off is gone,” said economist Neil Shearing. “It’s every country for itself now.”