Tariffs, Trade Wars, and Talks: Shift from Multilateralism to Bilateralism

The Trump 2.0 administration’s ‘reciprocal’ tariffs wreaked havoc on the global economy. The move not only challenged the already fragile rules-based multilateral trading system but also caused market fluctuations and fear of supply chain disruptions, triggering uncertainty across businesses. While much has been written about these tariffs, this piece focuses on the bigger problem caused by such unilateral governmental actions, which represent a shift from multilateralism to bilateralism in international trade. This piece first discusses the international trade law implications of such tariff increases and the responses to them from other countries, while capturing the latest developments. It then examines how similar tariff increases by the Trump 1.0 administration played out in the past and highlights how the US uses tariffs to bring countries to the negotiating table, further eroding the relevance of the World Trade Organization (WTO).