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Does Trump’s return spell the end of free trade?

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Attac France & bilaterals.org | 13 March 2025

Does Trump’s return spell the end of free trade?

Donald Trump’s return to power and his fresh round of tariffs have sent further shockwaves through the neoliberal order that has shaped global trade since the 1990s. While these moves are driving a wedge through the Western camp, to some extent they follow a long-standing tradition in US policy. So, does this mark the death of free trade?

Fresh from re-election, Trump wasted no time imposing the tariffs he had promised, upending an international trade system largely shaped by the US itself and its allies since the triumph of neoliberalism in the early 1990s. On the surface, his approach looks like a radical departure - brutal, unpredictable, and at odds with past presidents. But “America First” didn’t start with Trump.

Trade as a tool of dominance

Historically, Washington has always defended its strategic interests in a variety of ways. With the collapse of the Soviet bloc, the US positioned itself as the leader of a unipolar world, shaping an economic multilateralism in line with its interests. This neoliberal framework, presented as a universal model, served above all to consolidate US economic dominance, to the benefit of its transnational corporations.

From Clinton to Biden, trade liberalisation has often marched hand in hand with military and diplomatic intervention. As journalist Thomas Friedman put it in 1999: “McDonald’s cannot flourish without McDonnell Douglas, the builder of the F-15.” George W. Bush’s war on terror, of which the invasion of Iraq was the most devastating example, is a case in point, with US corporations cashing in on Washington’s conflicts. Meanwhile, America’s legal system has often been a weapon against foreign competitors. For instance, the Foreign Corrupt Practices Act, ostensibly targeting corruption of foreign public officials, has disproportionately hit non-US firms like Alstom and Siemens, while BNP was sentenced for bypassing US sanctions on Iran.

The fusion of trade and diplomacy is nothing new. As far back as the late 18th century, US commerce treaties blended economic and strategic goals. More recently, trade deals with Saudi Arabia and Bahrain were signed after their boycotts of Israel were lifted. During the war on terror, Washington rewarded Australia with a free trade agreement for its loyalty. Under Obama, the Trans-Pacific Partnership was described as a geopolitical weapon against China. And Trump’s USMCA [1], successor to the North American Free Trade Agreement, includes clauses implicitly aimed at Beijing.

A transactional and imperialist shift

Trump’s second term signals a break from the neoconservative doctrines that dominated US foreign policy since Clinton. Gone is the pretence of spreading democracy or maintaining global stability, replaced by a logic of pure deal-making. The US now negotiates like a real estate mogul, favouring one-on-one deals. The Trump administration seems to be embracing the multipolar nature of today’s world in order to make the most of it. In some ways, it’s a throwback to the realpolitik of Henry Kissinger, the US national security adviser in the early 1970s. Back then, Washington reached out to Beijing to counter the Soviet Union; today, Trump is playing the Russian card to better target China. Meanwhile, he’s bullying long-time allies, threatening them with trade or strategic sanctions if they don’t fall in line.

While Trump has made no secret of his rejection of the logic of multilateral free trade, this dynamic is not new to the US. Under Obama, the United States had already begun to paralyse the World Trade Organisation by blocking the appointment of judges to its appellate body, a policy continued under Trump and then Biden. Likewise, the crackdown on Chinese tech firms had started under Obama.

Economic coercion as policy

But Trump has gone a step further with a quasi-imperial approach to what he considers his sphere of influence. He has not hesitated to impose tariffs on Mexico and Canada on the pretext of their inaction on illegal immigration and drug trafficking, in violation of the USMCA, which he himself renegotiated. He forced Panama to leave China’s Belt and Road Initiative and threatened Colombia with sanctions if it refused to take back migrants, to which Bogotá eventually gave in. The European Union hasn’t been spared either, with Trump targeting nations that dared tax or regulate Silicon Valley giants. Not to mention his erratic provocations, such as the threat to invade Greenland or annex Canada.

This is no longer mere protectionism but a coercive, imperialist policy that even vassalises traditional allies.

Some classic aspects of free trade agreements could be applied to digital trade. The USMCA was built on the Trans-Pacific Partnership, which gave Big Tech a free hand with minimal regulation. In a timid U-turn, the Biden administration withdrew its support for certain clauses pushed by the digital industry at the WTO, notably on the free flow of personal data and the non-disclosure of source code.

But the rallying of GAFAM + Musk around Donald Trump, combined with the perception of the digital economy and artificial intelligence as major strategic issues, heralds a return to strength for Big Tech interests. Obstacles such as data localisation laws, digital taxes, and forced source code transfers could soon be in Washington’s crosshairs.

Once again, the rhetoric of coercion and transactional agreements is likely to prevail, to the detriment of concerted, balanced regulation of the digital space.

Europe trapped in a free trade bubble

Despite some protectionist initiatives, the European Union (EU) remains trapped in a trade logic inherited from the 1990s. Since Trump’s re-election, the European Commission has finalised free trade agreements with Mercosur and Mexico, a digital trade agreement with Korea, while accelerating negotiations with several Asian countries (India, Indonesia, Malaysia, Philippines, Thailand).

At the same time, the EU’s so-called energy transition is fuelling a scramble for raw materials from the South, as trade agreements aim to secure the EU’s supply. For example, the strategic importance of lithium, an essential mineral for electric vehicle batteries, smartphones and renewable energy storage, has been largely absent from public debate on the agreement with Mercosur. Argentina, Bolivia and Brazil, with significant reserves, are at the centre of this new rush for white gold. Other mineral-rich countries are in the sights of negotiators in Brussels. Against a backdrop of growing tensions with the United States, the EU seems ready to step up its extraction drive, perpetuating a neocolonial logic. The consequences are predictable: environmental devastation and meagre economic benefits for local populations.

The acceleration of free trade agreement negotiations will therefore be at the heart of European economic policy for years to come. In recent months, the European Commission has also signed other types of agreements, such as “sustainable investment facilitation agreements” and “strategic partnerships on raw materials.” More recently, it has announced a new concept of "clean trade and investment partnership.” These agreements are less binding in scope than the broader free trade deals, but will complement them to meet the needs of European multinationals, which are always looking for new international markets.

Above all, these initiatives illustrate the European Union’s notorious inability to break free from a logic inherited from the end of the Cold War, in which free trade is still seen as an instrument of power and an engine of prosperity. Behind the rhetoric of cooperation, sustainable development and human rights, Brussels is in reality pursuing an open trade agenda dictated by the interests of its large corporations. But the global context has changed radically: globalised neoliberal capitalism has been exposed as flawed, first by the subprime crisis, then by the Covid-19 pandemic and growing geopolitical tensions. The EU-Mercosur agreement is a perfect example: under discussion since 1995, at a time when global warming was a marginal concern, it is now completely out of step with today’s challenges.

The Global South: navigating new tensions

The consequences for the global South, characterised by its economic and political heterogeneity, are felt on several levels. The weakest economies and populations of the South are once again caught between the strategic interests of the major powers, with growing instability increasing their vulnerability. Others, however, could benefit from this reshuffling of the cards.

Trump has already targeted Vietnam and India, accusing them of “unfair” trade practices and slapping tariffs to strong-arm them into opening their markets further. India, which is in the midst of negotiating a trade deal with Washington, may well have to make concessions to appease the US president.

To maintain the dollar’s supremacy, Trump is also threatening sanctions against countries embracing currency alternatives from the BRICS+ (Brazil, Russia, India, China, South Africa and their new partners [2]) or willing to favour another currency over the dollar. This pressure is particularly aimed at India, Brazil and South Africa, which are exploring alternatives to the dollar.

Yet some members of the BRICS+ could take advantage of the situation by attracting other Southern economies that are tired of Western domination and looking for more reliable partners. Russia and China, which could be perceived as more solid guarantors of international trade and the preservation of national assets, could gradually shape rules that would appear more attractive to many emerging economies. Beijing and Moscow (via the Eurasian Economic Union) are thus multiplying their free trade agreements. Russia’s resilience in the face of Western sanctions and its exclusion from the SWIFT [3] system, an essential component of international finance, may also inspire some governments.

Other BRICS+ powers, such as the United Arab Emirates, India, Iran and Indonesia, are expanding their network of trade agreements, consolidating their regional influence and asserting their status as middle powers. This dynamic is reinforcing the emergence of new "sub-hegemonies" within the global South, where certain states become poles of power for weaker economies, without fundamentally challenging the dominance of the great powers.

In the short term, however, US hegemony in international trade remains unchallenged, underpinned by the pre-eminence of the dollar and the digital monopoly of the American giants. It is estimated that nearly 70% of the world’s internet traffic passes through Amazon’s servers, and two-thirds of the cloud computing [4] market is cornered by Microsoft, Amazon and Google - a strategic stranglehold that further consolidates their power.

The failure of free trade and the rise of authoritarianism

Donald Trump’s election marked a turning point in global trade, but it is part of a trend that began long before his arrival. His bullying tactics towards his trading partners should not obscure a deeper reality: American policy has always been a lever in the service of the dominance of its big corporations. While his strategy challenges the free trade doctrine that has been in place since the 1990s, it does not mean the end of free trade or the beginning of "deglobalisation". Trade flows remain at historically high levels, but are now being reshaped by geopolitical and security considerations. Free trade agreements remain a key tool for many governments to consolidate strategic alliances, increase their influence and secure their supply chains.

Yet, the rise of Trump and the spread of various forms of authoritarianism prove one thing: the free trade experiment has failed. In the West, it has gutted manufacturing, widened inequality, and downgraded the working class. In their quest for ever higher profits, transnational corporations have massively outsourced production to countries with laxer social and environmental standards, leaving millions of people behind.

In the global South, the damage is even greater. Small-scale agriculture has been sacrificed on the altar of exports, the environment degraded under the pressure of extractive industries, and millions of workers are trapped in conditions akin to modern-day slavery. Under the guise of growth and competitiveness, free trade has primarily served the interests of the major powers, consolidating a system in which rich countries exploit the resources and labour of the most vulnerable nations.

At the dawn of a new era marked by the digital revolution and climate challenges, international trade needs to be reshaped. The free-trade model, a vestige of another age, cannot meet the challenges of the 21st century. But if the alternative is Trump-style coercion and authoritarian capitalism, the world faces even greater upheaval. Without prioritising human rights, social justice, and strong sustainability, history’s mistakes will be repeated - on a more devastating scale.