Trade Agreements, Explained

Trade deals are everywhere in the news, with President Donald Trump taking a flurry of trade actions within his first few months in office to raise across-the-board tariffs on nearly all U.S. trading partners and negotiate new deals. At one point, the administration said that they would secure “90 deals in 90 days,” an ambitious and unrealistic target. Negotiations are ongoing, but what exactly is being negotiated can be hard to follow. It is often unclear what makes a deal a trade agreement, and what impact it could have on U.S. consumers, businesses, and the broader economy.

Types of Trade Agreements

At the most basic level, a trade agreement is a set of rules agreed upon by two or more countries to regulate their economic interactions, with a focus on government barriers to trade, either imposed at a country’s border or internally through regulations or taxes. Trade agreements can cover a wide range of policies, including measures to lower tariffs or quotas on imports; the adoption of other countries’ standards or regulations (e.g., food health and safety standards); and rules on foreign investment, intellectual property protection, and environmental and labor standards.

These agreements can take several forms. Multilateral trade agreements, such as those that make up the World Trade Organization (WTO), establish rules for all members of the organization (166 in the case of the WTO). Under the WTO, member governments agree to extend the same benefits to all other members, often referred to as the most-favored-nation (MFN) principle. For example, all members have agreed to certain tariff ceilings and to apply that same rate to imports from all other members. This arrangement not only provides equitable trading opportunities but also makes tariff rates predictable for businesses and consumers.

Although WTO members are not allowed to treat any country worse than their agreed commitments, they can treat other countries even better. One way to extend preferential treatment is through plurilateral agreements, which involve three or more countries negotiating rules between themselves that do not always extend to other countries. Those trade agreements are often focused on specific sectors or issues. For example, the WTO Government Procurement Agreement (GPA) sets forth rules on competition in domestic procurement markets, guiding how governments make purchases when building things such as roads and bridges. The GPA is considered a closed plurilateral agreement because the benefits are limited to its signatories. Another type of plurilateral agreement is the Information Technology Agreement (ITA), an open agreement that extends benefits to all WTO members, even if they have not signed the deal. The ITA removed tariffs on a wide range of information technology products, quadrupling exports of those products from 1996 to 2021.

Another way to promote trade with a select group of partners is through a preferential trade agreement (PTA) negotiated outside of the WTO, a mechanism that provides better trade treatment to some countries than others. PTAs are sometimes referred to as free trade agreements, but that term is misleading, as PTAs often involve varying degrees of managed trade through tariff and nontariff barriers and sometimes impose stringent requirements for market access.

PTAs can include more than two countries. The Comprehensive and Progressive Trans-Pacific Partnership agreement and the United States-Mexico-Canada Agreement (USMCA) are examples. There are also bilateral PTAs, which are agreements between two countries to reduce barriers between them. An example of this type of PTA is the United States-Australia Free Trade Agreement. PTAs have two typical features: first, they extend benefits only to the parties to the agreement; second, they are comprehensive in scope, eliminating barriers on substantially all trade between the countries involved. As a result, they cover a wide range of economic activity, including broad tariff reductions, trade in industrial products, agriculture, and services.

The widely accepted norm that PTAs should cover substantially all trade is embedded in WTO rules. Even though that standard was never strictly enforced, in recent years, some WTO members have abandoned it altogether. Importantly, multilateral, plurilateral, and preferential trade agreements share common binding rules that are subject to some form of neutral dispute settlement when a conflict arises. That norm, however, is also being challenged, mainly by the United States.

Recently, a newer type of international economic arrangement has gained traction: trade-related agreements, that are often nonbinding. Such arrangements do not meet the definition of a trade agreement because they are limited in their coverage, impose no constraints on tariffs or other forms of protectionism, and encourage economic cooperation activities or regulatory adjustments through nonbinding commitments. That means parties to those accords are not required to follow through on their commitments and there is no legal recourse if one of the parties reneges on the deal.

The Indo-Pacific Economic Framework, negotiated by the Biden administration, is an example of such a nonbinding agreement. It provides a framework for ongoing discussion on issues such as supporting supply chain resilience, building a clean economy, and ensuring best practices on anticorruption policies. In the United States, these types of agreements typically do not require legislative approval, because they do not require changes to U.S. law. Since the first Trump administration, these deals have become the most common form of trade cooperation.

The deals that the Trump administration has been negotiating since threatening to impose sky-high tariffs on all U.S. trading partners in early April 2025 also fall into this category. Notably, they are highly asymmetrical, meaning only U.S. trading partners are being asked to make offers or concessions. The deals are also characterized by five core sets of commitments: tariff reductions, cooperation on nontariff barriers, digital trade rules, economic security coordination, and commercial considerations (which include investment promises and agreements to purchase goods, such as airplanes and liquefied natural gas, from the United States).

Those trade-related agreements do not include congressional oversight, nor are they formally incorporated into U.S. law via statute, which raises questions about whether they reflect the desires of the American people and whether they are durable beyond a single administration.

How Trade Agreements Are Negotiated

The U.S. Constitution grants Congress the express power “to lay and collect Taxes, Duties, Imposts and Excises” and to “regulate Commerce with foreign nations.” That language gives Congress primary authority over trade policy, with the responsibility to enact laws that authorize and oversee trade policies, trade programs, and trade agreements. On the other hand, presidents have the power to negotiate treaties, which many have used to negotiate investment treaties or friendship, commerce, and navigation treaties.

Trade agreements have not usually taken the form of treaties, however; rather, they tend to be congressional-executive agreements. Congress first delegated negotiating authority to the president in 1934 with the Reciprocal Trade Agreements Act. Since 1974, Trade Promotion Authority (TPA) has been the primary pathway by which Congress has granted the executive branch authority to conduct trade negotiations.

TPA preserves an important role for Congress in making trade policy and bolsters the executive branch’s credibility in negotiations. TPA sets negotiating objectives for the executive branch and includes a requirement for consultations with Congress as negotiations develop. If the executive branch follows the objectives laid out by Congress and consults with legislators throughout the process, the president can submit trade agreements for fast-track approval. Under that expedited process, implementing legislation faces a simple up-or-down vote within ninety days of being introduced. No amendments are allowed, and the legislation is subject to limited floor debate. Though TPA limits congressional input after a deal is signed, it provides ample opportunity for input during negotiations. Congress can call cabinet members to testify and brief the relevant committees (Senate Finance and House Ways and Means) on updates.

Limiting Congress’s ability to amend a deal once it is signed is important because it prevents a disruption to the negotiated compromise reached between the United States and its trading partners. Essentially, foreign partners know that with TPA legislation in place, whatever commitments they make with the executive branch will not be altered later, and, when voted on by Congress, those commitments will become part of U.S. law, guaranteeing more stability in their economic relations. The table below provides a general timeline for negotiations conducted under TPA. Since 1974, TPA has been renewed four times; fifteen PTAs and two General Agreements on Tariffs and Trade/WTO rounds of negotiations have also been concluded under this authority. TPA expired in 2021, and the executive branch has not requested its renewal.

The executive branch plays an important role in making trade policy and is responsible for negotiating, implementing, and monitoring trade agreements. The U.S. Trade Representative (USTR), appointed by the president to be the chief advisor on trade, plays a critical role in developing and implementing the administration’s priorities and communicating those to Congress through the congressionally mandated Trade Policy Agenda and Annual Report. Holding a position established by Congress, the USTR also consults with stakeholders both formally and informally.

The Office of the USTR oversees advisory committees, which represent “industry, agriculture, small business, labor, service industries, retailers, non-federal governments, nongovernmental environmental and conservation organizations, and consumer interests who have expertise in general trade, investment, and development issues,” and permits members to comment on draft proposals during trade negotiations.  

Other agencies also help make trade policy. The U.S. Department of Commerce provides market research and export promotion through the International Trade Administration, while also investigating unfair trade practices, export controls, and potential national security threats. Other agencies maintain topical responsibilities. The U.S. Department of Agriculture advises on agricultural issues in trade negotiations and regulates agricultural trade through the Animal and Plant Inspection Service, the Food Safety and Inspection Service, and the Foreign Agricultural Service. Similarly, the Department of Health and Human Services advises on trade policy issues related to public health, while the U.S. Department of Labor monitors compliance with labor provisions in trade agreements and tracks trade preference eligibility. Meanwhile, the U.S. Department of Treasury provides guidance on currency provisions in trade agreements and investment screening.

Overall, making trade policy is a whole-of-government endeavor that includes both public and private stakeholders throughout the process. Although the process has sometimes been criticized for its lack of transparency, it has historically allowed for a wide variety of input to ensure that there is enough political support for the trade initiatives that Congress and the president undertake.  Theoretically, if the government pursues an unpopular policy, it will face backlash from the public, who can punish it electorally.

In recent years, however, the process of making trade policy has frayed, with presidents sidestepping many of the procedures that allow for public input and congressional oversight. And as power over trade policy becomes concentrated in the executive branch, there are increasing concerns about limited transparency and special-interest lobbying.

Current U.S. Trade Agreements

Contrary to popular belief, the United States has few trade agreements. Furthermore, the largest trade agreement that the country is party to is not a preferential trade agreement, but the multilateral WTO agreements. The WTO provides the architecture for global trade rules through a set of agreements and annexes that its 166 members have agreed to. The basic rules of the WTO center on trade in goods, trade in services, and intellectual property rights. Through those rules, countries have agreed to reduce tariff and nontariff barriers, improve market access for specific services, and uphold standards on subsidies, agriculture, and other trade topics. WTO members also established a peaceful means to settle trade disputes and created a secretariat, which monitors the implementation of the various agreements, supports members as they notify one another about their policies, and facilitates dialogue.

The breadth of the tariff commitments WTO members have made are often taken for granted, despite contributing to open, stable, and predictable global trade. MFN, a key principle that undergirds the multilateral tariff concessions between WTO members, essentially means that a concession granted to one is granted to all. For example, if the United States applies a 10 percent tariff on apples for one country, it cannot raise apple tariffs above that for other countries. Entering the WTO requires countries to negotiate and commit to maximum tariff rates. Countries can unilaterally apply lower tariffs, or enter into PTAs, but they cannot raise their MFN tariffs unilaterally, except in cases where retaliatory action has been authorized through the dispute settlement process or through the use of trade remedies to counter dumping or unfair subsidization. President Trump’s tariff actions are in direct opposition to this foundational trade principle.

More than 80 percent of global trade takes place under WTO tariff commitments, making it by far the most widely applied tariff scheme. The United States also maintains unilateral preference arrangements with some developing countries under the Generalized System of Preferences (GSP) and the African Growth and Opportunities Act (AGOA). GSP, however, expired at the end of 2020, meaning that eligible countries have faced U.S. MFN rates since then. AGOA, for its part, is set to expire on September 30, 2025.

The United States maintains a limited number of PTAs. Currently, it has fourteen of them with twenty countries: Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, South Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, and Singapore.

The United States’ limited number of agreements sets it apart from other large economies. The EU maintains more than forty agreements with seventy countries, Canada maintains fifteen trade agreements with fifty-one countries, Mexico has thirteen trade agreements with fifty countries, China has twenty-two PTAs with a total of twenty-nine countries and regional blocs, and South Korea has twenty-two free trade agreements covering fifty-nine countries. Many core U.S. trading partners thus have better market access with the rest of the world than the United States does.

Furthering the divide in PTAs, those countries continue to actively pursue the development of new PTA networks, exemplified by the EU-Mercosur agreement (which connects the EU with several South American countries that make up a large common market). The United States, by contrast, has shied away from pursuing comprehensive PTAs, instead favoring alternative trade-related frameworks that do not improve U.S. market access.

One reason the United States has fewer PTAs is that it relies less on trade than other countries do. Rich in resources and geographically vast, the United States stands out among its peers. In fact, trade as a percentage of gross domestic product (GDP) sits at 25 percent for the United States, much lower than countries with similar levels of economic development. The map below shows trade as a percentage of GDP among select high-income countries.

How Trade Agreements Work

Trade agreements provide more trade opportunities between the countries that sign them. This means that when the United States entered into a trade agreement with Canada and Mexico in 1994 and updated it in 2020, all three countries extended preferential treatment to one another in the form of lower tariffs, coordination on standards, and access to services markets. Most of the trade that crosses the northern and southern U.S. borders under the USMCA enters duty-free. To take advantage of the preferential treatment under USMCA, however, both Canadian and Mexican companies need to demonstrate compliance with the agreement’s specific rules for what they are trading.

An important part of preferential treatment is ensuring that what is traded largely comes from the countries that are party to the agreement. For example, non-signatory countries would not enjoy USMCA privileges if they were to simply send their products to Mexico and then pack and ship them to the United States, because those products were not made in a USMCA country. To address the problem of third countries shipping goods through PTA partners, trade agreements include rules of origin (RoO), product-specific rules that help determine how much of a given good needs to be made in countries party to the agreement to benefit from preferential treatment. Essentially, they help clarify where something is made and what it takes to qualify as being made in a certain place.

Rules of origin are enforced differently across and within PTAs. Some products’ origins are easier to determine than others: for example, a company in Mexico that grows tomatoes can easily say that their tomatoes are wholly obtained from Mexico, because no part of the tomato came from somewhere else. It is straightforward to trace its origin and determine the corresponding duty rate.

Other products, particularly manufactured goods, have more complicated rules. There are different rules for products whose components come from third countries but are substantially transformed into something else in a country that is party to the agreement. For example, take a company in that Canada makes sleds out of wood imported from Finland. If that wood is imported in its raw form and then cut and shaped into a sled in Canada, it would qualify as originating from a USMCA country. Canada, however, could not import the finished sled bed and simply attach it onto runners. Importantly, other components of the sled, such as the steel runners, would need to be made in Canada. The table below outlines the most commonly applied approaches.

One particularly tricky part of rules of origin is rules on regional value content. Those rules determine how much of a product must be made within PTA partner countries. The method for calculating origin basically adds up the value of the inputs that make up the final product from each country. RoO for autos under USMCA are particularly stringent. They include rules not only on the value-added components of vehicles manufactured in Canada, Mexico, and the United States, but also require companies to account for the value of the labor that makes those vehicles.

Under the North American Free Trade Agreement (NAFTA), vehicles qualified for duty-free treatment if 62.5 percent of their components originated in North America. The remainder of the components could come from other countries. Under USMCA, however, those rules were tightened: vehicles now need to include 75 percent North American content, and 40 to 45 percent of the value of cars and trucks must be made by workers earning at least $16 per hour. The latter provision was specifically targeted at reducing inputs from Mexico. The table below shows the changes in the RoO on vehicles from NAFTA to USMCA. 

A 2018 report by the Center of Automotive Research estimates that between twenty-two and forty vehicle models imported into the United States from Canada or Mexico—accounting for 13–24 percent of all vehicle sales in the United States in 2017—do not qualify for preferential treatment due to the enhanced RoO. The U.S. International Trade Commission’s 2025 Report on the Economic Impact and Operation of the USMCA Automotive Rules of Origin found sixty-eight sourcing changes across thirty-one vehicle-model lines sold in the United States before USMCA rules of origin entered into effect, resulting in higher prices. For example, eight source changes were made to transmissions, resulting in an average price increase of $212.38 per vehicle. Models that were unable to comply with the more stringent RoO faced higher costs in the form of tariffs—in 2023, an estimated 8.2 percent of vehicles imported into the United States from Canada and Mexico entered under MFN duty rates, compared to only 0.5 percent in 2019, before USMCA’s implementation.

RoO, though important to ensure trade agreements are used fairly, can clearly become too cumbersome and make trade pacts too costly to use. In fact, an S&P Global Market Intelligence Report estimates that just 37.8 percent of U.S. imports from Canada and 48.9 percent of imports from Mexico enter on USMCA duty-free status. The paperwork burden is a major reason. Recent estimates suggest that 86 percent of Canadian exports to the United States are USMCA compliant, but not all file the necessary paperwork to claim duty-free status. The rest of the trade that comes from the United States’ two largest trading partners thus enters under WTO tariff rules.

The degree to which countries use the benefits eligible to them under PTAs is measured by comparing the amount of goods eligible for trade preferences to the amount of goods that actually receive preferential treatment. Generally speaking, while utilization rates are high in agricultural products and other raw commodities that are easily identifiable as wholly obtained goods, they are quite low in other sectors due to highly restrictive RoO or the costs associated with proving compliance. As the table below shows, the extent to which imports from PTA partners enter under preferential tariffs varies considerably, ranging from 95.2 percent of imports from Jordan entering under preferential treatment to 12.6 percent of imports from Israel entering under preferential treatment.

Therefore, even though trade agreements can help facilitate trade between countries, accessing their benefits is not always straightforward. In addition to RoO, there are other requirements that need to be met that limit the use of preferences. For example, countries face a range of nontariff regulatory barriers to trade, such as different requirements for conducting vehicle crash tests, so that even if a company meets the origin requirements, it still needs to meet the regulatory requirements to access a market its country has a trade agreement with.

Why the United States Should Negotiate Trade Agreements

Much of the value of trade agreements comes from the way they make the economic relationship between parties predictable. The rules that countries agree to are the ones they play by, and breaking them should come at a cost. This is particularly important for businesses, especially small and mid-sized businesses, that cannot operate if their costs keep changing or the rules keep shifting. Overall, trade agreements benefit the economy because they allow for lower cost inputs for producers and greater choices for consumers and provide stability and predictability for American businesses.

Since the mid-twentieth century shift toward trade liberalization, the U.S. economy has benefited tremendously. The economists Gary Hufbauer and Megan Hogan estimate that absent the expansion of freer trade, U.S. GDP would have been $2.6 trillion lower in 2022—at $22.9 trillion instead of $25.5 trillion—translating into a welfare loss of approximately $19,500 per household. Trade’s importance to the U.S. economy is only intensifying, evidenced by trade’s increasing share of GDP: between 1960 and 2019, imports rose from 4 percent to 15 percent of GDP while exports rose from 5 percent to 12 percent.

Underlying this macro-level growth are the gains and benefits brought to various sectors of the U.S. economy. Firms have benefited from greater competition and lower input costs, employment has been stimulated, markets for agricultural products have opened, and consumer choice has expanded while prices have been driven down.

With liberalized trade facilitating open markets, firms are exposed to greater competition, driving innovation and greater capacity to develop global value chains based on networks of comparative advantage. Even as the diffusion of global value chains has expanded U.S. service sector jobs (such as those in sales, finance, marketing, insurance, law, accounting, and transportation), the United States has sustained a large share of global manufacturing output. As the trade expert Colin Grabow has explained, in 2020, the United States “ranked second in the share of global manufacturing output at 15.92 percent—greater than Japan, Germany, and South Korea combined—and the sector by itself would constitute the world’s eighth-largest economy. The United States was the world’s fourth-largest steel producer in 2020, second-largest automaker in 2021, and largest aerospace exporter in 2021.”

Trade has also made important contributions to the job market: a 2021 study conducted by the U.S. Census Bureau reveals that despite making up only 6 percent of U.S. firms, those that trade in goods account for almost half of U.S. employment and “over 80 percent of employment in the manufacturing sector and more than half of employment in agriculture and mining, retail, transportation, utilities, wholesale, information, finance, insurance and real estate, and management.” Additionally, those firms contributed 39 percent of U.S. net job creation, displaying the highest net job creation rates for most of 1992 to 2019, particularly during economic downturns. More trade, not less, supports job opportunities.

Liberalized trade is also essential for the U.S. agricultural sector. With almost 20 percent of total farm production exported, U.S. agriculture exports account for approximately 8 percent of all U.S. goods exports. Of those agricultural exports, 57 percent of their value comes from soybeans, corn, beef products, tree nuts, pork products, dairy products, soybean meal, food preparations, wheat, and poultry products. For those products, access to foreign markets is essential. For example, over three-quarters of the United States’ soybean output and half of its corn output is purchased abroad. In 2024, 61 percent of U.S. agricultural exports went to Canada, China, the European Union, Japan, and Mexico alone. U.S. agricultural exports—valued at $197.4 billion in 2022—not only provided essential demand for farm goods but also generated an additional $214.6 billion in economic activity, with $73.6 billion going toward the services, trade, and transportation sector; $70.4 billion going to farm activity beyond the base value of agricultural exports; $52.5 billion going to manufacturing; and $18.1 billion going towards food processing. Together, that translates into an additional $2.09 of domestic economic activity for every $1.00 of agricultural exports.

For consumers, freer trade has meant greater consumer choice and lower prices. As the economists Christian Broda and David Weinstein have estimated, from 1972 to 2001, import varieties grew from roughly 71,000 to 259,000. Greater variety in turn drives competition, lowering prices. This is due not only to cheaper goods being imported from abroad but also to lower prices on domestically produced products as components become less expensive. As the economists Raphael Auer and Andreas Fischer have found, U.S. producer prices decreased by an average of 2.35 percent for every 1 percent increase in import market share of low-wage countries. Those cost savings have disproportionately benefited low- and middle-income households as big retailers, such as Walmart, are highly dependent on imports. But lower-income households are also more sensitive to price shifts and have greater buying power as costs decrease, meaning they benefit more than wealthier households from cost reductions.

That is precisely why high tariffs on everyday goods are a regressive tax, in which lower-income households pay a higher percentage of after-tax income relative to higher-income households. While the lowest after-tax income earners face an average 1.6 percent tariff burden, those at the highest levels face less than a 0.3 percent tariff burden. One additional challenge is the inequity embedded in the U.S. tariff schedule, where cheaper goods face higher tariffs than luxury goods. For example, while mass-market acrylic sweaters have a 32 percent tariff rate, wool sweaters have a 17 percent tariff, and cashmere sweaters have just a 4 percent tariff. The table below illustrates a few examples of this trend.

Trade has clear benefits for the U.S. economy. However, despite its net positive effect, there are undeniably trade-related losses concentrated in vulnerable industries. A commonly cited example of those losses is the China shock, when an estimated two million American workers in manufacturing and non-manufacturing sectors faced job displacement between 2001 and 2016 after China’s accession to the WTO. That said, the impact of the China shock is highly contested. The economist Don Boudreux has argued that job destruction in manufacturing has actually been slower than its historical average, and that the effects of the China shock on manufacturing employment are overstated. Others have shown that declines in U.S. manufacturing predate China’s entry into the WTO. In fact, U.S. manufacturing peaked in 1953, at the end of the Korean War, and has steadily declined since then. From 1977 until 2001, when China became a WTO member, U.S. manufacturing had already declined by 41 percent, and the manufacturing share of employment had also declined across other advanced economies. Furthermore, the economist Jeremy Horpedahl has countered that the metropolitan areas affected by the China shock have experienced positive real wage growth since 2001, with some areas even outpacing national averages—casting doubt on the claim that those places have been left behind.

Although trade-related losses create serious challenges, they do not justify a retreat from liberalized trade, particularly when those actions cost the United States even more. In fact, raising trade barriers comes with significant trade-offs. The economist Anne Krueger has put the annual cost of each job saved in the steel industry as a result of Trump’s 2018 steel tariffs at around $900,000. Furthermore, in contrast to the jobs saved in the steel industry, steel-consuming industries faced heavy losses, including seventy-five thousand lost manufacturing jobs in companies relying on steel and aluminum imports. While the sectors and localities harmed by trade expansion must be accounted for, remedying those losses requires strategic public policy with comprehensive economic adjustment and workforce development programs.

The United States' Role in the Global Trading System

Trade agreements are complex sets of rules that govern economic relationships among countries, and can form the basis for global standards. When the World Trade Organization was created, the United States played a leading role in shaping the rules that undergird it. Under the Trump administration, the United States wants a different set of rules but appears reluctant to reform the existing rules. In addition, the Trump administration’s reluctance to negotiate broad, comprehensive trade deals could lead to frameworks with weak enforcement and ambivalent legal status, which would be easy for other countries to ignore.

There are many ways to negotiate trade agreements, and all come with trade-offs. The best way for the United States to influence global trade is to negotiate consistent rules with the broadest set of countries to ensure uniform compliance. That is not the current state of play for U.S. trade policy. Critics of this approach support the Trump administration’s unilateral tariffs maneuvers to reshape the trading system to address trade imbalances and China’s nonmarket practices. They argue that tariffs can be effectively used as leverage to compel other countries to address U.S. trade concerns. However, structural challenges in the global trading system cannot be fixed through a series of bilateral deals—they must also bind the signatories of those deals to uphold those rules with each other, which Trump’s approach does not do. In reality, two systems are emerging—one that preserves the WTO system, and one that countries must now adhere to just to trade with the United States. This approach will only serve to isolate U.S. interests.

Instead, amassing a critical number of signatories would ensure new trade norms can develop that support U.S. foreign policy goals, for example, through negotiating global rules at the WTO on digital trade. Absent U.S. efforts to negotiate legally binding, substantive trade deals, other countries will likely fill the gap. Others are already proliferating their trade relationships, even more so as the United States turns inward.

Policymakers should consider the implications of U.S. retrenchment in global trade, including what it could mean for U.S. businesses, consumers, and the economy at large. Early economic figures indicate that the largest impacts from Trump’s trade approach have yet to be felt, though signs of slowing economic growth, high consumer prices, and rising unemployment are creeping into view. The United States should not wait for the worst to come to pass to reorient its trade approach. Dismantling U.S. trade commitments is easy, but rebuilding them to serve U.S. interests will be much tougher, not least because the nature of U.S. trade policy today, which does not distinguish between allies and adversaries, will leave the United States with fewer friends willing to collaborate on a new trading system with the United States at its core.