A trade rebellion that never happens
In mid-July, an appeal from Financial Times columnist Martin Wolf emerged, urging a response to President Trump’s new tariff strategy. He labeled the move not just irrational but also a moral failing, suggesting that U.S. trading partners should retaliate. According to him, America had been “cheated,” and it was time for the world to stand up.
However, like many economists, Wolf seemed to overlook a fundamental aspect of the global economy: no country can afford to stop trading with the U.S. They all rely on American consumers to purchase their goods.
What actually unfolded in the following weeks wasn’t a retaliation, but rather a series of quiet negotiations where countries made concessions to maintain their access to the U.S. market. The UK was eager to align first, Japan quickly offered new investments, and the EU hurried to negotiate. Even Switzerland sent officials to the U.S. without waiting for an invitation.
A global trade revolt was, frankly, never realistic.
There are no surplus, no deficit anchors
What Wolf and others seem to miss is the structural nature of the current global trading system. Almost all economies, including the EU, Japan, China, and South Korea, depend on maintaining trade surpluses to support their domestic growth and financial stability.
This situation necessitates net importers on the opposite side. The U.S. is the only nation that consistently fulfills that role.
The numbers lay it out clearly. The EU reported a current account surplus of 2.5% of GDP in the first quarter, Japan had the largest surplus last year, and China continues to post significant surpluses.
This isn’t coincidental. It reflects the U.S. trade deficit, which surpassed 6% of GDP last quarter. If the U.S. doesn’t absorb those exports, these countries have no one to sell to. They just can’t coordinate a response to the U.S. since none of them are ready to implement structural reforms to readjust their economies.
And why would they? The Trump administration’s basic demands were about rebalancing, but what incentive is there to adjust their economies to take on the U.S.? Changing their structures to accommodate U.S. tariffs and investment demands offers little benefit—they’d rather not become deficit anchors for an anti-American coalition.
So, while experts imagined the formation of an anti-American trade bloc, the actual governments crunched the numbers and recognized the truth: the U.S. remains a vital buyer.
You can’t retaliate against the best customers
Retaliation requires some form of leverage. In trade, this leverage comes from the ability to walk away. But nobody wants to turn their back on U.S. consumers.
Wolf highlighted tariffs on Brazil and Laos as particularly egregious. Yet, these examples actually underscore the point. Laos, with its small surplus, lacks a fallback market. Meanwhile, Brazil’s major industries are heavily dependent on U.S. imports. Power imbalances result from structure, not ideology.
The same logic extends to larger economies. Germany doesn’t want to become a net importer, Japan cannot afford to survive under those conditions, and China worries about the repercussions of losing its surplus. No nation is in a position to supplant the U.S. as a last resort buyer.
This explains why they didn’t retaliate—they opted to negotiate.
WTO arguments also fail
Another misconception held by many of Trump’s critics is the belief that the WTO could intervene to correct U.S. actions and restore order. This misunderstanding overlooks both history and current realities.
The WTO has historically accepted asymmetric trade practices. For instance, the EU’s VAT rebates encourage exports, state capitalism in China distorts pricing, and Japan maintains market access barriers in key sectors. These are not seen as violations; they’re simply part of the norm. It wasn’t Trump’s tariffs that tested WTO law; it was the unrealistic expectation that the U.S. must tolerate such biases under the banner of “free trade.”
The real shift wasn’t due to Trump’s tariffs; it resulted from an elite consensus that prevented addressing imbalances.
The reorganization has already happened
The crucial point isn’t who opposed Trump’s tariffs, but what occurred afterwards. If the strategy was as flawed as Trump’s critics insisted, we’d have witnessed retaliation, withdrawal, or outright confusion. Instead, we observed a procession of trade envoys seeking conditions.
Ultimately, the global community seems to grasp a reality that many economists have yet to: the U.S. economy is the cornerstone of the global trading framework. Attempting to rebel against it risks collapsing the entire export-driven system.
American critics may not be fond of the new dynamics, but access to the U.S. market remains indispensable.
