When US President Donald Trump announced the imposition of “reciprocal” tariffs on virtually the entire globe on April 2nd, many observers felt that they were witnessing a historic event—the “end of globalization as we know it”, the starting shot to an economic calamity on the scale of the Covid-19 pandemic or, as the prime minister of Singapore put it, “a seismic change in the global order”. And it was indeed a momentous act: with the stroke of a pen, President Trump brought US tariffs up to a level last seen more than a hundred years ago, and higher even than the notorious Smoot-Hawley tariff of 1930 that is widely faulted for having deepened the Great Depression. The farcical way in which the new tariffs had been calculated—based on an misleading formula apparently suggested by ChatGPT—only added to the sense of bewilderment.
What should international (trade) lawyers make of these developments? As always, when international law faces a fundamental challenge, we are caught between utopia and apology. On the one hand, it sounds trite, almost naïve, to point out the obvious illegality of the tariffs under every trade agreement that the United States has ever concluded. On the other hand, are we really prepared to join the ranks of the cynics who wearily conclude that international trade law generally and the World Trade Organization (WTO) specifically do not matter anymore? And yet, neither the tariffs nor international trade law are going anywhere anytime soon, so it is important that we think about their relationship.
In this post, I will suggest that the new tariffs represent a qualitative change from the tariffs adopted by the first Trump administration and maintained by the Biden administration. The latter were merely illegal, while the former are antithetical to the very institution of international trade law. I will then argue that other countries should bifurcate their approach to international trade law in the context of the tariffs. They need to recognize that the United States has made itself an outcast in the international trade regime and treat it as such, while continuing to respect international trade law in their relationships with each other.
What Makes These Tariffs Different
During the first Trump administration, Trump’s ambition to reverse decades of trade liberalization was reined in by his advisors. He ended up imposing tariffs on steel and aluminium imports from virtually all US trading partners as well as on a vast range of imports from China. These tariffs represented stark departures from previous practice and were found to be illegal by WTO panels, but there was still some connective tissue, however thin, between the tariffs and international trade law. The first set of tariffs, adopted under Section 232 of the Trade Expansion Act of 1962, were justified by the Trump administration on national security grounds—and there are security exceptions in WTO law, which the administration stridently argued would have provided it the discretion to adopt the tariffs if the exceptions had been properly interpreted as self-judging. The second set of tariffs, adopted under Section 301 of the Trade Act of 1974, were based on a unilateral finding by the Trump administration that China had engaged in “unreasonable or discriminatory” practices. They were impossible to justify under WTO law (the United States tried) but could at least be plausibly defended as a response to the insufficiency of WTO law in responding to China’s economic practices. These so-called Section 301 tariffs applied only to China; it thus appeared that the administration was only taking its relationship with China out of the framework of WTO law, without removing the United States from that framework entirely. And the tariffs were based on an extensive investigation that addressed long-standing concerns from stakeholders. They inaugurated a radically new normal in the US trade relationship with China, but that new normal appeared stable enough to allow companies (however grudgingly) to adapt.
The new tariffs are of a different nature. The tariffs do not hit a specific adversary, but virtually all places on earth—including uninhabited island in Antarctica (a quirk that has given rise to a wealth of penguin-themed memes). They also have no relationship whatsoever to the actual trade barriers that countries impose on US exports. And the United States’ attempt to invoke the security exception to justify the tariffs stretches the exception so far that trade obligations lose all meaning.
But the tariffs also represent a radical break with the trade regime in that they are antithetical to the very institution of international trade law. A central purpose of a rules-based international trade regime is to provide “security and predictability” to international trade relations, as the WTO’s Dispute Settlement Understanding puts it. The Trump administration uses tariffs to do exactly the opposite: to generate insecurity. The administration is sending an unmistakable signal to companies that the only place where they are safe from tariffs is the United States. The administration is thus not simply ignoring international trade law; it is deliberately undermining the very purpose that international trade law serves. It will be hard, perhaps even impossible, for a future US administration to restore other countries’ trust in the predictability of trade relations with the United States, even if it wanted to.
What the Tariffs Mean for Other Countries and International (Trade) Lawyers
It follows that the rules of international trade law no longer provide any guidance to other countries on how the United States will conduct itself in its international trade relations. Instead, what governs US trade from now on is US domestic law, which can change at any moment. People interested in understanding US trade relations have found their WTO law expertise virtually useless and have instead been reduced to parsing the language of President Trump’s executive orders, waiting for the latest guidance from US Customs and Border Protection, and speculating about the intricacies of US constitutional and administrative law. (The one exception to the irrelevance of international law to US conduct is the United States-Mexico-Canada Agreement (USMCA), which the Trump administration, in a meek concession to economic realities, has allowed to shield some limited imports from Canada and Mexico from the tariffs otherwise imposed on those countries.).
If the rules of international trade law no longer have traction on what the United States will do, should they nevertheless still shape the response of US trading partners? During the first Trump administration, most major US trading partners decided that the response should be no: they retaliated against the United States’ tariffs without awaiting authorization to do so from the WTO’s Dispute Settlement Body and thereby themselves acted inconsistently with their WTO obligations. This time around, countries like China and Canada have adopted the same approach: they hit back against the United States tariffs almost immediately.
From the perspective of WTO law, this is an impermissible form of vigilante justice. However, imposing immediate retaliation is eminently reasonable in light of the dynamics of trade negotiations. In trade negotiations, trade barriers represent bargaining chips, and the illegal tariffs imposed by the United States are, among other things, an illegitimate attempt to acquire additional bargaining chips. The dollar-for-dollar retaliation by the United States’s trading partners during the first Trump administration was in large part an attempt to deny the United States any bargaining advantage that it might otherwise have obtained from imposing the illegal tariffs. Given these dynamics, immediate retaliation, while it may appear to undermine international trade law further, can actually help to protect the integrity of negotiated commitments by deterring countries from using illegal means to achieve legal change.
What matters most, however, is that other countries continue to respect their WTO obligations in their relationships with each other. To be sure, the United States’s abandonment of its WTO obligations has knock-on effects for virtually all other countries. Many fear that exports destined for the United States will be diverted to their markets and may be tempted to adopt protective measures in response, but there are WTO-consistent ways of doing so, for example with safeguard measures. As stocks plummet and business sentiment deteriorates in the United States, the humble promise of international trade law—to offer security and predictability to international trading relations—appears newly attractive. The wise path for other WTO Members is to work hard among themselves to improve the highly imperfect system of international trade law that we have, be it at a bilateral, regional, plurilateral, or multilateral level. For whatever else President Trump did on April 2nd, he did not offer a superior alternative to that system—not for the United States, and much less for the world.