Fixing Global Trade: Why Tariffs and Trade Wars Aren’t Enough

The World Unpacked

Our modern global trading system is broken. How can we fix it?

We seem to have moved beyond the free trade consensus of the globalization era. Few politicians today still publicly support the assumption that trade, unrestricted by national borders, makes everyone more prosperous. Under President Trump, the United States has wielded tariffs and industrial policy to reshape the international trade order to better serve American interests, and the Biden administration has upheld and doubled down on many of these. But these interventions do not yet add up to a new trade policy consensus.

This week's episode dives into a provocative new argument: in order to achieve freer trade, the world needs more trade interventions. What is global trade policy doing wrong? What new trade rules are needed to create a system that both harnesses the benefits of free trade and preserves nations' freedom to direct their economies? And what policy interventions might help foster this future of freer trade? Sophia discusses these questions and more with Michael Pettis, a nonresident Senior Fellow for Carnegie China and expert on China's economy.

1. Michael Pettis and Erica Hogan, "Trade Intervention for Freer Trade," Carnegie Endowment for International Peace, October 3, 2024.