Over the last two years, the United States has carried out one of the most massive swings in foreign economic policy since the trade wars of the 1930s, abandoning the multilateralism forged after World War II and adopting a new strategy of going it alone. The implications for U.S. and global economic growth are enormous, and the consequences for U.S. firms’ ability to access foreign markets are sweeping. Regardless of whether the shift toward unilateralism is short-lived, its macroeconomic effects are likely to be long-lasting. First, trade policy uncertainty has risen in a way that may not be easily or quickly reversed. This has already had a substantial impact on growth due to the depressing effect on firm activity, and it is likely to continue. Second, the tilt toward unilateral protectionism is likely to reduce U.S. firms’ ability to access many foreign markets for a long time to come.
Since January 2018, the United States has carried out one of the most massive swings in foreign economic policy since the trade wars of the 1930s, abandoning the multilateralism forged after World War II and adopting a new strategy of going it alone. The implications for U.S. and global economic growth are enormous, and the consequences for U.S. firms’ ability to access foreign markets are sweeping.
