World War Trade

Key Takeaways

• Trump tariffs raised prices on everyday US consumer goods.
• US manufacturers face supply‑chain disruptions and higher input costs.
• EU, CPTPP and ASEAN deepen regional trade ties while sidelining the US.
• Baldwin argues the era of “globalisation is safe” is permanently over.
• Supreme Court ruled most 2025 tariffs unconstitutional, spurring new tariff cycles.

Pulse Analysis

The Trump administration’s tariff onslaught, launched in 2024 and intensified in 2025, has upended the post‑World‑War II trade order. Baldwin’s *World War Trade* documents how policymakers abandoned the Kennedy‑era mantra that lower tariffs automatically generate jobs and growth. Instead, tariffs have become a political lever, repeatedly raised, lowered, and re‑justified, creating uncertainty for firms that rely on intricate, cross‑border supply chains. The result is a stark price shock for everyday items—coffee, bananas, beef—while manufacturers grapple with higher input costs and reduced export competitiveness.

For U.S. producers, the reality is that modern manufacturing is inseparable from imported components. The tariff regime, predicated on a “foreign‑pay‑the‑price” myth, has instead passed costs onto American shoppers, eroding consumer purchasing power and fueling an affordability crisis. Companies face not only higher tariffs but also legal challenges; the Supreme Court’s 2025 decision deeming many tariffs unconstitutional forced the administration to recalibrate, yet it quickly responded with new, pretextual measures. This cycle undermines long‑term investment decisions and hampers the United States’ ability to maintain a resilient, cost‑effective production base.

Globally, the backlash has accelerated regional integration that deliberately sidelines the United States. The EU, CPTPP and ASEAN have launched joint dialogues focused on supply‑chain resilience, digital trade, and WTO compliance, laying groundwork for deeper economic ties without U.S. input. Baldwin’s "domino theory of regionalism" predicts a cascade of such agreements, further marginalizing American firms from key markets. As the assumption that globalization is inherently safe fades, businesses worldwide must navigate a fragmented trade landscape where regional blocs set the rules, and the U.S. must rethink its trade strategy to remain relevant.