How Tariffs Are Undermining Global Prosperity and Stability

The unpredictable pattern of tariffs implemented by the Trump administration has severely disrupted the global trading framework, causing significant uncertainty for businesses and consumers alike. The administration's frequent announcements of tariffs on imports from nearly all U.S. trading partners, followed by pauses or rollbacks, have added to the market instability, compounded further by ongoing legal disputes.

Regardless of the ultimate tariff outcomes, their effects will extend well beyond trade alone. The elevation of tariffs—or even the persistent threat of their imposition—undermines global commerce and erodes economic connections that are crucial for maintaining stable international relations. By dismantling established trade rules and sidelining free trade agreements, the administration has weakened the foundations of the international rules-based system, including challenging the authority and operations of the World Trade Organization.

Curtailing opportunities for developing nations—especially those with burgeoning young populations—to grow through trade risks triggering increased migration flows that could strain receiving countries. A retreat from open trade policies will also harm consumers worldwide by driving up prices and limiting product choices, potentially fueling political unrest within affected nations.

While a complete withdrawal from global trade seems improbable, current shifts in international commerce are intensifying geopolitical divides. Historically, commercial interests have served as a stabilizing force between competing powers. For example, over the past twenty years, tensions between the United States and China were tempered by American companies' eagerness to access China’s expanding middle-class market and its supplier networks.

Similarly, U.S. investors seeking entry into China’s financial markets played a moderating role. During the 2000s, when China adjusted its currency to boost export competitiveness, American business interests helped prevent retaliatory measures. Moreover, the economic benefits derived from engaging with U.S. firms encouraged Beijing to adopt certain free-market reforms, such as easing restrictions on inbound and outbound investments and reducing government intervention in currency and financial markets, at least temporarily aligning with global economic norms.