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Trump’s Tariffs Herald the Return of ‘Managed Trade’ (World Politics Review)

August 7, 2018

By Kimberly Ann Elliott 

How will President Donald Trump’s trade wars end, assuming they do? There are at least some hints now about how things may play out, and they are not reassuring. Administration officials keep saying that the tariffs imposed against China and other American trading partners, including close allies in Canada and the European Union, are being used as leverage to remove unfair trade practices abroad, improve market access for U.S. exporters and reduce the deficit. But it is looking more and more like the outcome could instead be continued trade protection in myriad forms.

One little noticed aspect of Trump’s trade policy is the revival of “managed trade” as a means to address “unfair” trade deficits. In addition to pressures on China and other countries to import more American natural gas, soybeans and other products, this revival is reflected in the return of “voluntary” export restraints, known as VERs, which were a common response to trade pressures in important sectors in the 1980s, including steel and automobiles. The pressures to increase American exports by unspecified means and at the expense of other trading partners are, at best, inconsistent with the spirit of the international rules-based trading system. Reviving the use of VERs, on the other hand, is a clear violation of the rules that the United States agreed to when it helped create the World Trade Organization in the mid-1990s. This is yet another in the long list of ways that the Trump administration is undermining the rule of law and multilateral institutions. 

Read the full article here.

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Photo of Kimberly Ann Eliott
Visiting Fellow