The current upheaval in international trade governance, with Trump’s return to the presidency, does not represent the death of global trade itself. But it does represent the final unraveling of the liberal institutional framework that emerged triumphant in the 1990s. The World Trade Organisation (WTO), as the institutional embodiment of this liberal paradigm, finds itself in a systemic crisis. Although the WTO crisis started before Trump’s two terms of office, what we see now is a critical moment which requires a fundamental reconceptualisation of international economic governance.
The twilight of the liberal trade order
The 1990s marked the zenith of liberal multilateralism in trade governance. It was characterised by unprecedented coordination among major powers pursuing market liberalisation. The United States, backed by its transnational corporations, stood as the principal architect. It drove the creation of the North American Free Trade Agreement (NAFTA) in 1994, and the establishment of the WTO in 1995, and spearheaded the ambitious Free Trade Area of the Americas (FTAA) project. This period witnessed remarkable convergence: Japan aggressively pursued regional agreements, South Korea embraced export-led liberalisation, and the European Union emerged as a forceful advocate for global trade rules.
President Bill Clinton signs the North American Free Trade Agreement in December 1993. The 1990s marked the zenith of liberal multilateralism in trade governance.
However, this liberal consensus began fragmenting by the early 2000s. The United States, constructed the institutional architecture of global trade. But paradoxically it began retreating from ambitious multilateral initiatives. From Bush through Obama’s presidency, American trade policy became increasingly defensive and selective, focusing on bilateral arrangements rather than system-building exercises. This withdrawal created a leadership vacuum that the European Union (EU) gradually filled, becoming the most active proponent of comprehensive trade agreements over the past decade.
The EU’s assumption of leadership manifested in an unprecedented wave of negotiations, including comprehensive partnerships with Canada, Japan, and Vietnam, while modernising existing agreements with Mexico and Chile. Again paradoxically, as the US retreated from multilateral commitments, China emerged as an unexpected defender of the WTO system. It advocated for multilateral trade rules and dispute settlement mechanisms, even while facing increasing American hostility. This shift revealed a fundamental transformation: the original architects of the liberal order were no longer its primary guardians. This suggested deeper structural problems beyond political preferences.
The WTO’s crisis: from Cancun to paralysis
The WTO’s crisis is longstanding, with no consensus on its starting point. Many trace it to the 2003 Cancun Ministerial Conference, where talks broke down due to conflicts between developed and developing nations. This was more than a failed negotiation; it exposed structural issues in promoting ‘free trade’ that often benefited powerful countries. The dominance of the liberal order, therefore, lasted less than a decade.
Cancun marked the effective end of the Doha Development Round, ostensibly designed to address developing countries’ concerns, but paralysed by fundamental disagreements over agricultural subsidies, industrial tariffs, and services liberalisation. Over two decades, the WTO achieved only marginal victories, notably the Trade Facilitation Agreement, while bilateral and regional arrangements proliferated outside its framework.
This multilateral paralysis occurred precisely as bilateral agreements accelerated. The EU has negotiated several comprehensive deals since 2000, while Asia witnessed mega-regionals like the Trans-Pacific Partnership (TPP-11) and the Regional Comprehensive Economic Partnership (RCEP). The WTO’s inability to adapt culminated in the Appellate Body crisis that effectively paralysed dispute settlement from 2019 onwards, formalising institutional decay evident for nearly two decades.
Trump’s political economy: continuity and transformation
Trump’s embrace of tariffs represents not an aberrant departure from American trade policy but a return to foundational strategies that built US industrial supremacy. Protectionist policies are deeply embedded in American economic history, with tariffs exceeding 40% until World War II. What appears as a radical departure is actually historical continuity, revealing the contingent nature of the “free trade” moment.
However, while Trump’s methods echo historical precedent, his political coalition represents significant transformation. During his first presidency (2017-2021), Trump’s trade nationalism attracted support primarily from declining industrial regions and traditional manufacturing workers. His second term reveals a markedly different class configuration, with crucial backing from emerging technology sectors focused on artificial intelligence, semiconductors, and renewable energy infrastructure.
This shift reflects the recognition by strategic sectors that technological competition with China requires state intervention to guarantee domestic production capabilities. Major technology companies, previously champions of globalisation, now support industrial policies ensuring supply chain resilience and technological sovereignty. The Biden administration’s Inflation Reduction Act and CHIPS and Science Act created bipartisan consensus around strategic protectionism. This provided Trump with a broader coalition, from traditional manufacturing to cutting-edge technology sectors.
This expanded class backing enables more sophisticated trade strategies transcending simple tariff walls. These include investment screening mechanisms, technology transfer restrictions, and coordinated approaches to critical infrastructure development.
The new bilateral strategies in the era of great power competition
The bilateral trade negotiations emerging in 2025 must be understood in the context of intensifying competition with China, and fundamental shifts in global energy and security priorities. Trump’s new agreements with the EU, Japan, and South Korea represent strategic partnerships designed to guarantee investment flows into the US, while creating coordinated approaches to technological competition with China.
Trump’s embrace of tariffs represents not an aberrant departure from American trade policy but a return to foundational strategies that built US industrial supremacy. Protectionist policies are deeply embedded in American economic history.
These arrangements prioritise “friend-shoring” over efficiency-based globalisation. This means deliberately choosing suppliers from politically aligned countries, even when they are more expensive than potential rivals. 1990s trade policy sought the lowest-cost producers globally (leading to heavy dependence on Chinese manufacturing). The new approach emphasises supply chain security and technological sovereignty over cost optimisation. Concrete examples include:
coordinated efforts to build semiconductor manufacturing capacity in allied territories (Taiwan Semiconductor Manufacturing Company factories in Arizona and Japan, with government subsidies); diversifying critical mineral supplies away from Chinese processing (US agreements with Pakistan for lithium, Indonesia for nickel); and ensuring energy security through alternative suppliers, following Europe’s painful experience with Russian gas dependency.
The agreements feature unprecedented provisions for coordinated investment screening, shared research and development initiatives, and mutual defence against economic coercion. This manifests in joint export controls preventing China from accessing advanced chip-making equipment (US-Netherlands-Japan coordination on ASML machines), pooled industrial policy investments (US CHIPS Act, EU Chips Act, and Japanese subsidies working in tandem rather than competition), and collective responses to economic pressure tactics. These are unlike the broad liberalisation commitments of 1990s agreements that removed barriers to let the most efficient producers win. These new arrangements explicitly strengthen collective capabilities against strategic competitors, while making it economically costly for rivals to weaponise trade dependencies.
Simultaneously, the US pursues resource security agreements with countries rich in critical materials essential for technological competition. Negotiations with Pakistan focus on lithium extraction for battery production, while agreements with Indonesia encompass nickel supplies crucial for electric vehicle manufacturing. African partnerships centre on rare earth elements and copper mining, creating strategic partnerships guaranteeing American access to materials essential for technological superiority.
Notably, these new agreements occur within what analysts observe as a shift toward the search for “energy security” rather than “energy transition”. This semantic shift reflects political accommodation with fossil fuel interests, while acknowledging the strategic necessity of securing supplies for renewable energy infrastructure. The resulting agreements combine traditional energy partnerships—guaranteeing oil and gas supplies—with new commitments for critical mineral extraction and processing.
Beyond liberal multilateralism
The current transformation represents more than cyclical policy shifts; it signals the emergence of a post-liberal trade regime characterised by explicit acknowledgment of geopolitical competition and state intervention. The WTO’s law-based approach to trade disputes appears increasingly obsolete. It is replaced by power-based negotiations between rival blocs seeking strategic advantage, rather than mutual benefit through market access.
The evidence points toward an era of intensified bilateral trade agreements, with a newly active US pursuing strategic partnerships designed to maintain technological and economic supremacy. Unlike the comprehensive liberalisation projects of the 1990s, these new arrangements explicitly serve geopolitical objectives, while accommodating domestic industrial and technological constituencies.
The WTO will likely persist as a bureaucratic shell while real trade governance shifts to bilateral, plurilateral, and regional arrangements more explicitly aligned with strategic competition. This represents not the death of international economic cooperation, but its reconstitution based on fundamentally different principles. They emphasise security and technological sovereignty over efficiency and market access.
The future of international trade will be shaped not by the resurrection of liberal multilateralism but by struggles over what forms of economic cooperation can emerge from its ruins. As international economic relations shift from liberal multilateralism to strategic bilateralism, social movements must offer new alternatives that go beyond both free trade’s universalism and the exclusionary nature of rising nationalism.
Luciana Ghiotto is an associate researcher with the Transnational Institute (TNI), specialising in trade and investment.
Amandla is a left wing media project built around a magazine that publishes six editions per year. It was initiated in 2006/7 by activists coming from different political traditions on the left.
