The United States, which was central to the establishment of the global trading system 75 years ago, is challenging it these days. Last month, the World Trade Organization (WTO) declared that some of the tariffs imposed by the Trump administration, which U.S. President Joe Biden has kept in place, are illegitimate, according to the WTO’s own rules. The Biden administration responded essentially by saying it considers the tariffs to be justified on national security grounds. Conveniently, the appellate body at the WTO that would be tasked with adjudicating the dispute is unable to do its job because the United States has refused to appoint judges that would allow it to function. This comes as Europe is also upset at the United States for subsidies and the 2022 Inflation Reduction Act, which Europe claims are also in violation of the WTO. That may lead to other retaliatory tariffs—essentially the kind of trade war the WTO was designed to prevent.
Is the United States intentionally trying to sabotage the WTO? Is China the real culprit, as Washington suggests? And who defines what free trade means in the first place? Those are a few of the questions that came up in my recent conversation with FP economics columnist Adam Tooze on the podcast we co-host, Ones and Tooze. What follows is an excerpt, edited for length and clarity.
For the full conversation, look for Ones and Tooze wherever you get your podcasts.
