New Political Economy

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Trump & Trade: The Crisis in the Multilateral

Trading System

Kristen Hopewell

To cite this article: Kristen Hopewell (2021) Trump & Trade: The Crisis in the Multilateral Trading
System, New Political Economy, 26:2, 271-282, DOI: 10.1080/13563467.2020.1841135

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NEW POLITICAL ECONOMY
2021, VOL. 26, NO. 2, 271–282
https://doi.org/10.1080/13563467.2020.1841135

Trump & Trade: The Crisis in the Multilateral Trading System

Kristen Hopewell
School of Public Policy and Global Affairs, University of British Columbia, Vancouver, Canada

ABSTRACT KEYWORDS
President Trump is widely seen as reversing 70 years of US trade policy Trump; trade; WTO; US
and abdicating the American hegemon’s traditional leadership role in hegemony; realism
the multilateral trading system. Trump has threatened to withdraw the
US from the WTO, abandoned trade multilateralism for aggressive
unilateralism, and jeopardised the WTO’s dispute settlement mechanism
by blocking appointments to its Appellate Body. As this article shows,
however, both the crisis in the multilateral trading system and the
American hegemon’s turn away from the WTO – including abandoning
multilateral trade negotiations and blocking Appellate Body
appointments – originated prior to Trump. This shift in the US
orientation towards the multilateral trading system cannot, therefore,
solely be attributed to the rise of populism under Trump. It is also a
reaction to the decline of the US’s institutional power – its power over
the core institution and rules governing trade. Amid the rise of China
and other emerging powers, the US’s ability to dominate global trade
governance and write the rules of global trade sharply diminished,
leading to an erosion of American support for the multilateral trading
system it once led. While realism has fallen out of favour in IPE,
understanding recent dynamics in the trading system requires revisiting
its core insights.

For over half a century, the US constructed and led the liberal international economic order, centred
on an open and rules-based multilateral trading system. The American hegemon ‘ran the system’,
providing leadership and facilitating cooperation among states (Ikenberry 2015). While the system
reflected and reinforced American primacy, it also required the buy-in of other states (Chorev
2008). As a result, although the core institutions of the trading system – the General Agreement
on Tariffs and Trade (GATT) and subsequently the World Trade Organization (WTO) – served as a
channel for the projection of American power, their rules also served to reign in the arbitrary and
indiscriminate use of power by the hegemon. Multilateralism – the commitment to multilateral
cooperation in pursuit of free trade, based on the principle of reciprocity, or the idea that participants
would enjoy roughly equivalent benefits – is a foundational principle of the system, as is the notion
that it is a rules-based system, based on the rule of law rather than raw power (Conti 2011). The rules
of the multilateral trading system have played a key role in fostering increasing economic integration
and creating stable conditions for the functioning of global markets.
Now, however, under President Trump, the US has abandoned its traditional support for, and lea-
dership of, the liberal trading order, forsaking its longstanding commitment to multilateralism and a
rules-based trading system, and instead resorting to aggressive unilateral actions – such as the threat
of trade sanctions or withdrawal from trade agreements – to strong-arm other states into making

CONTACT Kristen Hopewell kristen.hopewell@ubc.ca School of Public Policy and Global Affairs, University of British
Columbia, 1855 West Mall, Room 367, Vancouver, BC V6 T 1Z2, Canada
© 2020 Informa UK Limited, trading as Taylor & Francis Group
272 K. HOPEWELL

one-sided concessions. Trump has imposed tariffs on $30 billion of steel and aluminum imports,
ostensibly on the grounds of national security, and has threatened to raise tariffs on $350 billion
worth of imported cars, trucks and auto parts on similarly dubious grounds. He has ignited a
trade war with China by imposing tariffs on $360 billion worth of goods from China and threatening
further tariffs on all $520 billion of Chinese imports. While Trump’s actions are in flagrant violation of
WTO rules, he has threatened to withdraw the US from the WTO and jeopardised the WTO’s dispute
settlement mechanism by blocking appointments to its Appellate Body. Trump’s policies pose a pro-
found threat to the global trading system and the stability of the global economy.
Under President Trump, the US is not only abdicating its leadership role in the WTO – the core
pillar of the US-led liberal international economic order – but actively undermining the institution
and rules it spent over half a century constructing. Remarkably, it is the US that has become the ‘revi-
sionist’ state in the global trade regime, and the chief threat to the liberal order constructed under
American hegemony. This behaviour is deeply puzzling. From its hegemonic position in the inter-
national system, the US has enjoyed an extraordinary degree of ‘institutional power’ – the ability
to shape global institutions and rules to guide, steer and constrain the actions of others (Barnett
and Duvall 2005). Global economic institutions like the WTO, built and dominated by the US,
have reflected its interests and preferences and served as an important instrument of its power
(Chorev 2008). Mainstream and critical scholars alike have characterised the liberal order and its con-
stituent institutions as forming part of an informal ‘American empire’ or ‘imperium’ (Katzenstein
2005, Wood 2005, Panitch and Gindin 2012). Why then would the ‘emperor’ sabotage its own
empire?
The predominant explanation has attributed this shift to the surge of populist anti-trade senti-
ment and economic nationalism that Trump stoked during his election campaign and has made a
key focus of his presidency. In this article, however, I show that the multilateral trading system
was already in crisis prior to Trump. The WTO’s core negotiation function had collapsed, as
evident in the breakdown of the Doha Round and the repeated failure of subsequent negotiations.
While Trump’s blatant disregard for global trade rules and rejection of trade multilateralism in favour
of aggressive multilateralism has been widely seen as a dramatic reversal of American policy, I argue
that, in fact, the US retreat from multilateralism and the rules-based trading system – including aban-
doning multilateral trade negotiations at the WTO and undermining its dispute settlement mechan-
ism by blocking appointments to the Appellate Body – pre-dated Trump.
This shift in the US’s orientation towards the multilateral trading system cannot, therefore, solely
be explained by the ‘idiosyncrasies’ of the Trump administration or the rise of populism (cf. Scott and
Wilkinson 2020; Kahler 2020). I argue that it is also, in part, a reaction to the decline of the US’s insti-
tutional power – its power over the core institution and rules governing trade – which has been
severely weakened by contemporary power shifts. Amid the rise of China and other emerging
powers, the US’s ability to dominate global trade governance and write the rules of the trading
system has sharply diminished, leading to an erosion of American support for the multilateral
trading system it once led. As its control over the core institution and rules governing trade has
diminished, the US has grown increasingly dissatisfied with the global trade regime.
To understand recent changes in the US stance towards the trading system, solely individualist
explanations or those grounded in domestic politics alone are thus inadequate: we also need to
incorporate system-level, or structuralist, explanations, centred on changes in the distribution of
power in the international system, which requires revisiting some of the core insights of realism.
While realism has fallen out of fashion in IPE, I argue that the field has been too quick to throw
away many of its key insights; recent developments in the trading system underscore the need to
bring these insights back to the study of IPE.
The purpose of this special issue is to examine how important dynamics that define contemporary
capitalism can be missed or misconstrued: the concept of ‘blind spots’ highlights the ways in which
our theoretical assumptions can act as filters or lenses, structuring our interpretation of empirical
events and leading to oversights, biases, or omissions that blind us to the significance of certain
 NEW POLITICAL ECONOMY 273

developments. As this article will demonstrate, even though signs of a growing crisis in the multi-
lateral trading system and the abdication of American leadership were evident before Trump,
their significance was widely overlooked. Prevailing theoretical assumptions, stemming from the
marginalisation of realism and neglect of its core theoretical insights, led to blind spots that
obscured these important changes taking place in the trading system.
This special issue highlights two dangers of ‘presentism’ and ahistorical political economy, both of
which are highly relevant to analyses of Trump and the trading system. The first is treating the
present ‘as if it had the potential to endure indefinitely’ (Best et al. 2020). As this article will show,
scholars have often tended to treat the US-led liberal international economic order, and American
support for that order, as fixed, static and unchanging, rather than as historically contingent and
changeable – and thus to overestimate the stability and durability of its constituent institutions,
and to assume that any potential threat or shock would come from outside the system, from external
challengers, such as China, rather than from the American hegemon itself.
The second danger of presentism lies in treating the past ‘as if it were irrelevant to understanding
the present’ (Best et al. 2020): a misreading of the past can lead us to misconstrue the present, and
thus leave us unprepared for the future. In seeking to criticise Trump’s agenda and underscore the
danger it poses to the global trade regime, Trump is typically presented as a sharp rupture, a sudden
reversal of decades of American leadership and support for the multilateral trading system. This
article, however, problematises this stylised periodisation, arguing that reading Trump as a radical
break with the past relies on an idealised version of the recent past that exaggerates both the stab-
ility of the multilateral trading system as well as US support for the system in the years immediately
prior to Trump. To be clear, this is not to underplay the significance of Trump’s assault on the liberal
trading order, which undoubtedly represents a dramatic escalation of previous trends. But it is
important to recognise that Trump represents an intensification and deepening of emerging pat-
terns of US behaviour in the trading system. Crucially, what this suggests is that it cannot be
assumed that Trump is simply an aberration and that US trade policy and global trade governance
will go ‘back to normal’ once he leaves office. Instead, we are witnessing a deeper and more funda-
mental shift in the American hegemon’s orientation towards the multilateral trading system that
goes beyond the Trump administration and is likely to outlast his presidency.

All that is Solid Melts into Air

If the current shift in US trade policy under President Trump has come as a shock, it is because of the
failure to recognise or fully appreciate important signals of the weakening of the global trade regime
and the US’s changing orientation towards the regime over the past two decades. A key blind spot in
IPE is that it has taken American leadership of the liberal international economic order – and its core
pillar, the multilateral trading system – for granted, failing to recognise the fragility of that order, or
the contingent and precarious nature of the US commitment to global economic institutions.
This is true of both mainstream and critical IPE. Writing in 2014, for instance, David Lake charac-
terised the US-led liberal international economic order as ‘highly robust’ and ‘institutionalized’,
arguing that it had become ‘self-enforcing’ and ‘self-sustaining’:
Imagine the political outcry from industries around the world that have adapted their production and sales to a
global market if the WTO were, say, to come under threat from protectionist forces. Previous collapses notwith-
standing, globalization appears to have created interests sufficiently vested in economic openness that it is now
a one-way bet, an observation supported by the near absence of protectionism in the Great Recession that
began in 2008.

Similarly, critical scholars described the WTO as ‘constitutionalizing’ free trade, by ‘locking in’ the lib-
eralisation of trade and global markets, and likewise hailed the avoidance of a descent into protec-
tionism during the 2008 Global Financial Crisis as a sign of the strength of the multilateral trading
system (Panitch and Gindin 2012, Gill and Cutler 2014). Many argued that the American empire –
274 K. HOPEWELL

centred on governance institutions like the WTO – remained as strong as ever, with no real threat on
the horizon (Panitch and Gindin 2012). What these accounts overlooked or ignored, however, was
the fact that even then the WTO was in serious trouble, its core negotiation function having
collapsed.
Moreover, in the quote above, Lake was addressing the question of whether actors in other
countries would come to support the US-led liberal international economic order; US support for
that order was never in question but simply assumed. While there has been extensive debate
about the future of the liberal order in the context of shifting power, the debate has centred on
whether emerging powers such as China would chose to challenge or adapt to the American imper-
ium (Breslin 2013, Lake 2014, Ikenberry 2015) – not whether the US would. Since the system and its
rules were created by the American hegemon to advance its interests, it has been assumed that any
threat would come from rising powers like China (Patrick 2010, Kupchan 2014). Yet amid the intense
focus on China’s intentions and whether it poses a threat to the liberal economic order, what has
been missed is the US’s growing dissatisfaction with the system. Over the past two decades, the
American hegemon has increasingly begun to retreat from and undermine the multilateral
trading regime.
These oversights were the result of analytical blind spots: the dominant theoretical assumptions
in the field of IPE acted as blinders, causing many to overlook the significance of these new devel-
opments. The stability of the trading system was originally a core concern of IPE research. Heavily
influenced by realism, the first-wave of IPE scholarship in the 1970s focused on system-level analy-
sis and interaction between states, and saw changes in the distribution of power among states as
potentially highly destabilising for the liberal international economic order (Krasner 1976, Gilpin
1981, Kindleberger 1981). Today, however, realism is almost entirely absent from contemporary
IPE scholarship, reflecting the prevailing belief that it has become less relevant to understanding
the world in an era of globalisation. In mainstream (predominantly American) IPE, liberalism has
overwhelmingly emerged as the dominant theoretical paradigm, while others, such as realism,
have been marginalised. Liberalism has effectively become ‘the only game in town’ (Blyth 2009,
p. 2), while the percentage of journal articles coming from a realist paradigm has declined to
near extinction (Maliniak and Tierney 2009). In mainstream journals, realism is rarely taken
seriously, but instead presented as a foil for liberalism – a ‘whipping boy’ or ‘straw man’ that
enables analysts to show how international institutions and laws matter (Steinberg 2013). Even
in critical IPE journals, such as RIPE and NPE, which are characterised by a greater diversity of
approaches, realism is virtually ignored (Sharman and Weaver 2013). As Jason Sharman and Cathe-
rine Weaver (2013, 1089) state, across the field of IPE, realism is ‘conspicuously under-represented’.
This theoretical narrowing of the field has left IPE unprepared for recent developments in the mul-
tilateral trading system.

Actors: States and Inter-state Conflict

Both liberal and critical IPE, grounded in Marxist or historical materialist approaches, have criticised
realism’s focus on states as central actors in world politics, as well as its emphasis on inter-state
conflict.1 With the end of the Cold War, many dismissed realism’s preoccupation with inter-state
conflict as outdated, and argued that state conflict is receding due to growing global economic inte-
gration. The state-centric focus of realism has also been criticised: it is frequently assumed that states
are becoming less important actors amid a rescaling of authority to transnational institutions and the
increasing prominence of non-state actors, such as multinational corporations, the transnational
capitalist class, and global civil society (Robinson 2015). Looking at the multilateral trading
system, however, it is clear that we are seeing a reassertion of state power and an intensification
of inter-state conflict, evident first in the breakdown of the WTO’s core negotiation function and
now in the US’s overt use of coercive power in trade.
 NEW POLITICAL ECONOMY 275

Interests: Relative vs. Absolute Gains

In mainstream IPE, liberalism’s ascent has corresponded with a widespread sense that growing econ-
omic interdependence has transformed world politics: maximising economic welfare, efficiency and
growth has become the principal goal of states, and since, according to the principles of economic
liberalism, international trade is a positive-sum game that makes all countries better off, states have
an interest in cooperating to promote free trade. Amid contemporary power shifts and the rise of
China, many have assumed that all states have an interest in maintaining the open, liberal trading
order that has successfully enhanced their economic welfare, and states will therefore seek to
cooperate to ensure the preservation of that system (Ikenberry 2015, Nye 2015). It is liberalism’s
emphasis on positive-sum gains and the mutual benefits of cooperation that makes the US’s
recent behaviour – withdrawing its support for the liberal trading order and now, under Trump,
actively sabotaging that order – surprising. From the perspective of liberalism, it is simply illogical
that states would willingly take actions that would damage their own economic welfare. Similarly,
critical IPE has emphasised an alignment between states and capital, with states and global insti-
tutions like the WTO working to advance the interests of the transnational capitalist class (Robinson
2015; Gill 2008), or the American hegemon, specifically, managing the growth and defense of global
capitalism to promote the outward expansion of its multinational corporations (Wood 2005, Panitch
and Gindin 2012, Anderson 2013). But the assumption that economic rationality will prevail – that
states will put maximising economic welfare and mutual gains, or the interests of capital and the
expansion of global capitalism, first – has been upended by the US assault on the multilateral
trading system and its resort to aggressive protectionist measures.
Realism is better equipped to explain this shift in the US orientation towards the trade regime.
Realism assumes that states act primarily on the basis of self-interest and, far from being naturally
harmonious, state interests are often in conflict. States seek to maximise their status and power
vis-à-vis other states; since the struggle for power is a zero-sum game, states are concerned not
solely with absolute gains but also with relative gains (Kirshner 2009). It is the matter of relative
gains that accounts for the US’s growing dissatisfaction with the trading system. In absolute
terms, the American hegemon has benefited enormously from the liberal international order it con-
structed. Increasing trade and economic integration have helped to fuel a significant expansion of
the American economy: since 1980, real average per capita income has grown by 80 per cent.2
Indeed, contrary to claims about the decline of American manufacturing, the US manufacturing
sector has grown by 40 per cent over the past 20 years, measured in terms of real output, even
though manufacturing employment has fallen.3 For the US, the absolute economic gains from
trade are clear. But, as its recent actions show, the US is not concerned solely about absolute
gains, or with maximising the gains for its multinational corporations and/or the transnational capi-
talist class by creating the conditions for global capitalism to flourish. In a context of potential hege-
monic decline, with China rapidly gaining economic might and threatening to erode American
primacy, the US is now acutely concerned about its relative power and maintaining its dominant pos-
ition in the global economy. It is the issue of relative gains – the fact that China appears to be gaining
more from the multilateral trading system than the US – that has led the US to conclude that its inter-
ests are no longer being served by the system. Using trade policy as an instrument of economic coer-
cion, the US is now seeking to redistribute wealth and power in its own favour at the expense of
efficiency and overall gains, which is why the US is willing to jeopardise the liberal trading order
by openly violating its rules and principles.

International Institutions
Both liberal and critical IPE have stressed the growing institutionalisation and legalisation (Goldstein
et al. 2000) or ‘constitutionalization’ (Panitch and Gindin 2012; Gill and Cutler 2014) of international
economic relations. States have been seen as relinquishing substantial sovereignty and autonomy
276 K. HOPEWELL

over important policy areas, transferring authority to supra-national institutions and agreeing to
comply with their norms and rules (Milner and Moravcsik 2009). Nowhere has this been more
evident than in trade, where the establishment of the WTO in 1995 marked a significant expansion
of global trade rules and the creation of a binding enforcement mechanism (Chorev 2008). Liberal
institutionalism has emphasised that power politics could be, if not overcome, than at least
muted through the creation of international institutions and rules. The dominance of liberalism in
mainstream IPE has led to a tendency to reify, or attach a false concreteness to, international insti-
tutions. Major international economic institutions like the WTO have been treated as a durable, per-
manent feature of the international landscape. Yet, as the following analysis will show, the WTO –
arguably the most important global governance institution – was in crisis even prior to Trump
and its future is now in serious doubt.
In contrast to liberalism, critical IPE has been highly attuned to how unequal power – and particu-
larly the dominance of the US – structures the global economy and its governing institutions (Ander-
son 2013; Gill 2008). But if liberalism has attached false concreteness to international institutions,
critical IPE scholarship on the global order has tended to treat American dominance in – and thus
support for – the global economic institutions that constitute the liberal international economic
order as static and enduring rather than recognising this as historically contingent and changeable
(Panitch and Gindin 2012). The question then is why, if global economic institutions like the WTO
serve as a tool of American power, the US would not only relinquish but sabotage that tool.
Critical scholarship on international trade has challenged the notion that the US is a ‘benevo-
lent’ actor in global trade governance (Singh 2020). Instead, such scholarship has shown that the
multilateral trading system and its rules have been heavily shaped by the interests of the most
powerful states – the US and other rich countries – to the disadvantage of much of the devel-
oping world (Hopewell 2015; Scott and Wilkinson 2020). Power asymmetries have resulted in
highly unequal outcomes in trade negotiations, as well as dispute settlement (Chorev 2008,
Conti 2011). But recent power shifts at the WTO, driven by the rise of China, India and Brazil,
have brought an end to the longstanding dominance of the US and other rich countries and
ensured that ‘the voice of developing countries … cannot now be ignored’ (Scott and Wilkinson
2020, p. 10). Critical scholars have frequently argued that a shift in power within multilateral
economic institutions to give greater weight, voice and influence to developing countries
would strengthen those institutions by making them more representative, inclusive and legiti-
mate (Vestergaard and Wade 2015). Instead, however, this rebalancing of power has thrown
the WTO into crisis.
With its emphasis on the fragility of international institutions and the difficulty of achieving and
sustaining international cooperation (Kirshner 2009), realism is essential for explaining the current
crisis at the WTO. As Susan Strange (1982, p. 487, 488) argued, prevailing approaches to global gov-
ernance often imply ‘an exaggerated measure of predictability and order’ and ‘exaggerate the static
quality of arrangements for managing the international system’. International regimes are created by
the most powerful states to advance their national interests, and are therefore ‘easily upset when
either the balance of bargaining power or the perception of national interests (or both together)
change’ (Strange 1982, p. 487). The authority of international organisations is limited by the
consent of powerful states; ultimately their rules are weak and ineffectual when perceived to
conflict with the core national interests of powerful states. This is precisely what we have seen in
the multilateral trading system. There has been a change in the balance of bargaining power –
the rise of new powers has severely undercut the US’s ability to dominate the trade regime and
set its rules – alongside a change in the perception of American national interests, driven by fears
of hegemonic decline. The US was willing to participate in the multilateral trading system and
abide by its rules, as long as doing so served its economic and strategic interests. But the US no
longer thinks the system is serving its interests. The most powerful state has withdrawn its
support for the multilateral trading system and refused to be bound by its rules, and as a result,
the system has been thrown into crisis.
 NEW POLITICAL ECONOMY 277

It is rising powers that are expected to be the revisionist states – seeking to change the rules
of the system to reflect their own interests – while the hegemon seeks to defend the existing
order and maintain the status quo (Gilpin 1981, Kirshner 2009). Yet within the trading system,
China is not a revisionist actor, nor has it been seeking to alter the rules. On the contrary,
China is highly satisfied with the existing system of global trade rules, which has enabled its
remarkable economic rise by providing access to global markets, while still allowing considerable
scope for its interventionist state policies to facilitate economic development, industrial upgrad-
ing and catch-up (Hopewell 2016). China, in short, has no desire to change the rules – just the
opposite, it is eager to maintain the status quo. Instead, however, it is the US that has become
dissatisfied with the rules of the trading system – and it is dissatisfied precisely because the
system is not working adequately to discipline China’s trade policies or to enable the US to main-
tain its economic supremacy. Hence US complaints that the WTO has proven inadequate to
address China’s ‘unfair’ trade practices, such as heavy industrial subsidies, forced technology
transfer, and intellectual property infringement, which the US fears are being used to erode its
economic dominance. It is thus the US – who sees its dominance increasingly under threat
from a rising China – that has become the disruptive actor and the revisionist state in the inter-
national trading system.

Breakdown of the WTO’s Negotiation Function

Historically, the multilateral trading system was dominated by the US, who constructed the rules of
the system to favour its own interests, while developing countries were marginalised and excluded.
However, over the course of the Doha Round of trade negotiations, which began in 2001, a signifi-
cant shift in power occurred due to the rise of China, India and Brazil (Hopewell 2016). Brazil and
India mobilised large coalitions of developing countries to challenge the traditional dominance of
the US and other advanced-industrialized states, helping to transform the round into a North–
South confrontation. As a result, the draft texts of the proposed Doha agreement came to encom-
pass substantial ‘special and differential treatment’ (SDT) provisions for developing countries, in the
form of reduced liberalisation commitments, greater flexibilities and exemptions, and longer
implementation periods.
In 2008, the WTO looked to be on the cusp of concluding the Doha Round: the key provisions of
the deal had been largely determined (such as tariff reduction formulas for manufactured and agri-
cultural goods and their main exemptions and flexibilities) and talks had shifted to finalising out-
standing issues. But, at that point, the US balked – and it did so specifically because of China.
Under the proposed agreement, China would be entitled to the substantial SDT that developing
countries had been able to secure in the round. However, this had become politically untenable
in the US: Washington was unwilling to extend special treatment to China, the country it sees as
a major economic competitor and its chief hegemonic rival. The US refused to conclude the Doha
Round unless greater liberalisation was required of China and other large emerging economies.
Yet China insisted that, as a developing country, it is entitled to SDT and refused to make additional
concessions to the US. In contrast with the past, when the US was often able to overpower other
states to secure its desired outcomes in trade negotiations, the US was unable to overpower
China or force it to accept greater liberalisation.
With the US and China at loggerheads, the negotiations became deadlocked. All subsequent
efforts to break the standoff have failed, and most members now consider the Doha Round dead.
Since the Doha collapse, there have been attempts to resuscitate the WTO’s negotiating function
by crafting narrower, targeted agreements on seemingly less controversial issues, rather than a
broad-based, comprehensive trade round (Margulis 2018). However, even with a piecemeal
approach, there have been few areas where states have been able to reach agreement, due to per-
sistent conflict between the US and China over whether the latter should be entitled to SDT (Hope-
well 2019). Amid contemporary power shifts, the core negotiating function of the WTO – the
278 K. HOPEWELL

negotiation of successive multilateral trade agreements to drive forward the opening and liberalisa-
tion of global markets – has become paralyzed.

The American Turn Away from Multilateralism

The American hegemon’s turn away from multilateralism in trade began during the George W. Bush
and Obama administrations. Confronted by a counterweight to its power at the WTO that prevented
it from securing its desired objectives – first Brazil and India, then China in the later stages of the
round – the US abandoned trade multilateralism. Instead, the US turned to negotiating new bilateral
and regional free trade agreements (FTAs). The key catalyst came when developing world coalitions
led by Brazil and India blocked a draft text of the Doha agriculture agreement proposed by the US
and EU in 2003 and instead turned the tables by demanding that those states undertake greater lib-
eralisation. The US responded by attempting to leverage its national power in a strategy of ‘competi-
tive liberalisation’, which would reward cooperative countries with trade agreements and punish
uncooperative ones. The US sought to use the threat of turning from the WTO to FTAs to pressure
other countries to capitulate to its demands in the Doha negotiations, but this strategy proved
unsuccessful (Hopewell 2016). Frustrated in its efforts to secure its preferred outcomes at the
WTO, the US turn away from multilateralism and towards bilateral and regional FTAs intensified
under President Obama, with a focus on mega-regional trade agreements, such as the TPP and
TTIP, as an alternative to the multilateralism of the WTO and as part of a geopolitical strategy for
responding to China’s rise.
The Doha Round was a US-led initiative, forcefully launched by the American hegemon, using a
combination of carrots and sticks to overcome the opposition of other states, particularly in the
developing world. Yet within a decade, the US abandoned the Doha Round, just as it was on the
verge of being concluded. Thwarted in its efforts to secure greater concessions from China, the
US declared that the round was doomed and walked away from the agreement on the table. The
rise of China and other emerging powers significantly undermined American dominance at the
WTO, and the US’s ability to get its way in multilateral trade negotiations. Even before Trump,
finding itself barred from achieving its preferred outcomes at the WTO by an increasingly assertive
China and other rising powers, the US had largely disengaged from the institution as a forum for
negotiating international trade agreements.

Undermining the Dispute Settlement Mechanism

The US is also threatening another critical function of the WTO: its dispute settlement system. Ironi-
cally, it was the US who drove the creation of the WTO’s powerful dispute settlement mechanism,
seeking to legalise and judicialize the process for resolving trade disputes in order to provide a stron-
ger means of enforcing global trade rules (Conti 2011). Yet the US is now blocking appointments to
the WTO Appellate Body. The Appellate Body hears appeals of decisions by WTO dispute settlement
panels, serving effectively as a ‘supreme court’ for trade disputes, and as such is a crucial part of the
dispute settlement system.
Under President Trump, however, the US has been blocking all new appointments to the Appel-
late Body as the terms of its current judges expire. There are a total of seven seats on the Appellate
Body, and it requires a minimum of three judges to form a panel to adjudicate a dispute. Since
December 2019, with six of its seven seats vacant, the Appellate Body has not had enough judges
to adjudicate disputes. The US has thus imperilled the WTO’s entire dispute settlement mechanism:
if appealed, a dispute settlement panel decision is blocked – and will not become legally binding –
until a decision of the Appellate Body. Consequently, without a functioning Appellate Body to hear
the case, the country ruled against in a dispute can block adoption of the panel decision simply by
filing an appeal. While the US accuses the Appellate Body of judicial overreach and has expressed
 NEW POLITICAL ECONOMY 279

dissatisfaction with Appellate Body rulings that have gone against it, other states see this as the US
effectively taking the WTO hostage.4
Importantly, however, the US had already began undermining the WTO’s dispute settlement
system before Trump. The US first began complaining about excessive judicial activism by the Appel-
late Body under the George W. Bush administration, after the Appellate Body ruled against the US on
several cases involving its controversial methodology (‘zeroing’) for calculating antidumping duties
used to block imports.5 It was under President Obama that the US started blocking Appellate Body
appointments. Appellate Body members are appointed by consensus for four year terms, which can
be renewed once. By unwritten tradition, reappointment is usually automatic. Yet in an unprece-
dented move in 2011, the US blocked the reappointment of its own appointee, US judge Jennifer
Hillman, for a second term, because it was displeased that she had not upheld US import relief
measures challenged in WTO disputes. Then in 2016, the US blocked the reappointment of
Korean judge Seung Wha Chang, because it disagreed with Appellate Body decisions in cases he
had sat on. By signalling that it would not reappoint Appellate Body judges who made decisions
that did not conform to US wishes, the US drew universal condemnation from other WTO
members, who viewed its actions as a serious threat to the independence and impartiality of the
Appellate Body.6
The US has grown increasingly frustrated with the Appellate Body both for constraining the US’s
ability to use trade defense measures such as anti-dumping and countervailing duties – of which
China is its primary target – to block imports, and for limiting the application of WTO subsidy
rules to China’s SOEs (the ‘public body’ decision) (Shaffer 2018). The US’s dissatisfaction with the
WTO dispute settlement system is thus a direct result of its perceived failure to adequately
address the ‘unfair’ trade practices fuelling China’s rise. Under President Trump, the US has now
taken this to a new extreme, blocking all appointments to the Appellate Body and thus effectively
sabotaging the WTO’s enforcement mechanism.

Conclusion
As this paper has shown, the crisis in the multilateral trading system pre-dated President Trump. The
institution designed to prevent global trade wars had already been substantially weakened prior to
Trump: the core negotiation function of the WTO had broken down, the US had abandoned multi-
lateralism in trade, and had begun undermining its dispute settlement mechanism by blocking
appointments to the Appellate Body. The abdication of American leadership in the trading system
and its retreat from multilateralism began before Trump, and was a response to power shifts that
had limited the ability of the US to get its way in multilateral trade negotiations. When thwarted
from securing its preferred outcomes in the Doha Round, the US turned away from the WTO, disen-
gaging from the institution and focusing instead on the negotiation of bilateral and regional trade
agreements. This strategy of moving trade negotiations to forums where the US has more leverage
to extract concessions from other states has continued and deepened under Trump. While Trump is
now openly hostile to the rules-based multilateral trading system, the US had already begun to
undermine that system prior to his presidency.
For most of its history, the American hegemon played the dominant role in constructing and
enforcing the rules of the trading system. But the US’s institutional power – its power over the gov-
erning institutions of the trading system and ability to set the rules of global trade – has been
severely weakened by contemporary power shifts. US efforts to construct new trade rules in the
Doha Round failed due to the rise of China and other emerging powers, who refused to defer to
US power or capitulate to its demands. American efforts to use the multilateral trading system to
discipline China’s trading practices have been unsuccessful, while the Appellate Body has increas-
ingly interpreted WTO rules in ways that run counter to American interests. The US has lost its pre-
vious control over the core institution and rules governing trade, which is why it has grown
increasingly dissatisfied with the multilateral trading system.
280 K. HOPEWELL

A distinct and defining feature of American hegemony to date is that it has been exercised in and
through international institutions. The US constructed the institutions and rules governing the
global economy, which served as an important means for the US to consolidate its power and
advance its economic and strategic interests. However, the US is now abandoning those same insti-
tutions and instead resorting to aggressive unilateralism based on the raw use of coercive power.
The world is witnessing a decline of American hegemony – in the Gramscian sense of its ability to
lead through consent rather than just coercion, which in the case of American hegemony has
meant exercising power through the leadership of multilateral institutions that depended on the
participation of other states – and a reassertion of US power in a different form. This is, in short, a
shift from hegemony to domination. And, as predicted by structuralist accounts, this era of
eroding hegemony is producing growing disorder and instability in the international political
economy.
This is not to suggest, however, that we adopt a narrow structuralist analysis that is mechanical or
deterministic. While shifts in the distribution of power have been a key driver of contemporary
changes in the multilateral trading system, how states decide to respond to those shifts in relative
power is shaped by domestic political decision-making and leadership, as well as interstate bargain-
ing. The fact that Trump is in power, with a populist political programme centred specifically on
stoking popular anger and a sense of US victimisation, undoubtedly matters. Trump has united wide-
spread domestic discontent over increasing economic dislocation, precariousness and inequality in
the US – much of which has been caused not by trade but by decades of neoliberal policies, along-
side rising automation – with growing concern about American hegemonic decline amid the rise of
China. In fusing these two currents, he has created a powerful narrative to account for the US’s
current economic and social ills. By directing popular anger toward ‘unfair trade’ with China and
others, Trump turns attention away from the role of domestic economic policies in contributing
to rising inequality and the increasingly economic hardship and anxiety felt by many Americans.
Trump’s approach to trade differs from his predecessors in important ways, including in his obses-
sion with the US trade deficit, his instrumental view of trade and eagerness to use the threat of tariffs
as leverage in international negotiations (proclaiming himself ‘Tariff Man’), his belligerence and will-
ingness to resort to overt, direct bullying, and his erratic and often contradictory behaviour.
While growing US dissatisfaction with the multilateral trading system has been evident for many
years, Trump has taken this to a new extreme. The US had begun abandoning WTO negotiations and
undermining its enforcement mechanism under Presidents Bush and Obama, but under President
Trump, the US is now blatantly disregarding established WTO rules, sabotaging its dispute settle-
ment system, and threatening to exit the institution entirely. As this article has shown, however,
the problem with reading Trump solely as a break with the past is that this blinds us to important
connections between his policies and those of his immediate predecessors. Situating Trump
within this historical context highlights the fact that the US turn away from trade multilateralism
cannot simply be dismissed as a peculiarity or aberration of the Trump presidency, but instead a
deeper and more fundamental shift is taking place in the American hegemon’s orientation
towards the multilateral trading system. Importantly, what this suggests is that the current chal-
lenges facing the multilateral trading system are not simply a product of Trump but likely to
persist even after he leaves office.

Notes
1. ‘Critical’ IPE is a broad label that potentially encompasses many different approaches and objects of study. This
discussion focuses primarily on neo-Gramscian scholarship, which, since it is fundamentally concerned with
American hegemony and the liberal international economic order, is most relevant to the analysis presented
here.
2. World Bank data.
3. Ibid.
4. Interview with negotiators, Brasilia, March 2018 and London, November 2018.
 NEW POLITICAL ECONOMY 281

5. ‘Zeroing’ makes it easier to find evidence of dumping and inflates the resulting antidumping duties.
6. Interviews with negotiators, Geneva, July 2017.

Acknowledgements
I would like to thank the organizers and participants of the ‘Political Economy on Trial’ workshop at the Sheffield Pol-
itical Economy Research Institute, and the editors of this joint special issue, Jacqueline Best, Geneviève LeBaron, Colin
Hay, and Daniel Mügge. I am also grateful for the extensive feedback from three anonymous reviewers, and from
Marieke de Goede, Marcia Vera Espinoza, and Andrew Gamble.

Disclosure Statement
No potential conflict of interest was reported by the author(s).

Funding
This work was supported by Economic and Social Research Council [grant number ES/N017390/1].

Notes on contributor
Kristen Hopewell is Canada Research Chair in Global Policy at the University of British Columbia and author of Clash of
Powers: US-China Rivalry in Global Trade Governance (Cambridge University Press, 2020).

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