US counter multilateralism trade policy: Gravest danger to the world

Editor's note: He Weiwen is a senior fellow at the Center for China and Globalization. The article reflects the author's opinions and not necessarily the views of CGTN.

The US presidential election on November 5, 2024 is unlikely to change fundamentally its harmful counter-multilateralism trade policy, no matter who wins the White House.

US Former President Donald Trump, under the slogan of Making America Great Again (MAGA), started a sweeping unilateral trade offensive to counter the multilateral trading system with the WTO at its center, including sweeping tariffs on over $350 billion imports from China and other tariffs on steel and aluminum worldwide, as well as effectively paralyzing the WTO appellate body. The Office of the US Trade Representative (USTR) 2018 President Trade Policy Agenda put it bluntly that the current multilateral trading rules are "directed to the US", after which a significant China-US trade fall occurred during the years that followed. During the current 2024 presidential election campaign, he even pledged to impose 60 percent tariffs on imports from China and 10 or 20 percent tariffs across the board on all imports from the world over.

Joe Biden, when claiming "back to multilateralism", has kept his predecessor's unilateral tariffs policy intact, and even added new tariffs on Chinese solar panels, lithium batteries and EVs. However, he has pursued a much larger trade and investment strategy of "resilient supply chain" and "small yard and high fence", targeting at a fundamental fragmentation in world trade, based on "value".

It cannot be understated the levels to which the US will sink, while attempting to isolate China, to sure up its diminished place in global trade.

Firstly, the mechanism of Cross Atlantic Trade and Technology Council (TTC) between the US and EU, for dominating the high-tech supply chain and standards, excluding China, is hoped to replace the multilateral arrangement.

Secondly, the US set up the Indo-Pacific Economic Framework (IPEF), grouping countries in South and Southeast Asian countries, excluding China.

Thirdly, the Science and Chips Act and Inflation Reduction Act (IRA) allocated a tremendous amount of financial support to new chip-making investment in the US, at the cost of other trading partners, especially excluding China.

Fourthly, the US has adopted a series of high-tech bans and restrictions on the Chinese mainland, including the ban of 14 NM and more advanced chips, and of chip manufacturing steppers (US-Japan and The Netherlands agreement), as well as setting up the Chip 4 alliance to block China. Washington also announced the executive order to ban or restrict US investment in China in semiconductors and microelectronics, quantum information technologies and artificial intelligence.

Fifthly, it has listed over one thousand Chinese companies and institutions on Entity List, prohibiting or restricting them from normal business with the US.

According to the latest WTO Dispute Settlement Mechanism data, out of the total 629 cases of dispute among WTO members, the US is by far the largest respondent, with 159 cases sued by other members, or one quarter of the total, more than those against China (50) and the EU (96) combined.

Apparently, the US is the largest breaker of multilateral trading system and the arch obstacle to world free trade and globalization, and thus has caused serious harms to world economy and trade.

According to an IMF report, the number of unilateral trade restriction measures quadruped over the past three years. The geo-economic fragmentation has dragged world trade growth. The world goods trade growth rate used to be twice as fast as world GDP growth before the global financial crisis in 2008-2009, only slowed to around one percentage higher during 2010-2018, and to an estimated equal in 2024 and 2025. The phenomenal change in the global trade policy landscape has disrupted the global supply chain, with trade growth between hypothetical geopolitical blocs 4 to 6 percent slower than trade within these blocs.

As a result, the world cross-border direct investment volume has seen a steady fall over the past three years, from $1.622 trillion in 2021 to $1.356 trillion in 2022 and $1.332 trillion in 2023. The direct investment inflows into developing countries remained stagnant during this period.

The dormancy of the appellate body of the WTO dispute settlement mechanism has caused the WTO to be unable to check the US unilateral actions disrupting global trade and save multilateral trading system.

It is imperative to uphold world free trade and globalization without delay. China will, as always, resolutely oppose the poorly judged and counteractive trade policies of the US. Meanwhile, we should continue to work hard to maintain direct dialogues with Washington, and further develop business cooperation with the American business community to make the ballast of bilateral trade larger and stronger, so as to offset, at least partially, the adverse effect of Washington's misjudged trade policies.

We should work hard with all other WTO members to defend the multilateral trading system with the WTO, whose rules continue to remain at the core of international trade policy. Among them, trade and investment cooperation among the Global South is fundamental. We should continue to make BRI a greater success and a great mainstay supporting globalization. Trade and investment collaboration among G20 members, and among RCEP members, is also of great importance.

Total global merchandise exports reached $23.8 trillion in 2023, with 75 percent still based on WTO terms. It will become increasingly evident with time passing-by that Washington alone, cannot topple the whole world multilateral trading system, nor globalization and its global supply chain.