# I. Liberation Day, 2 April 2025<fnref n="1" />

No one claims they saw it coming, and yet all had been forewarned. Still, President Trump’s announcement of his reciprocal tariffs on 2 April 2025<fnref n="2" /> was an earthquake in international economic relations. No one was spared, not even uninhabited islands. The magnitude of the action was indeed a surprise, not the action itself. Here is why.

During his first Presidency (Trump I), President Trump had already undertaken a series of unilateral actions, including the adoption of safeguards in the name of national security that World Trade Organization (WTO) panels found to be inconsistent with the obligations that the United States had assumed. The US—China agreement (“Phase One”) was evidence that President Trump was all in favour of addressing trade deficits through “managed trade”, paying no heed to the WTO framework, as Hufbauer pointedly underscored.<fnref n="3" /> In fact, he even threatened to leave the WTO altogether.<fnref n="4" />

Early on following his return to the White House (Trump II), on 13 February 2025, President Trump released a memorandum announcing his intention to impose “reciprocal tariffs” under the Fair and Reciprocal Plan (FRP).<fnref n="5" /> This memorandum left no doubt as to its rationale: lack of reciprocity as interpreted by the new US administration. The memorandum stated that this lack of reciprocity “is one source of our country’s large and persistent annual trade deficit in goods.”<fnref n="6" /> The basic idea was that the US had been subject to various trade practices that it did not employ. The memorandum referenced a wide range of measures ranging from tariffs to taxes to import volumes which had supposedly caused US trade deficits. Reciprocal tariffs were intended to counteract these measures, eliminating the trade deficit.

Liberation Day, when viewed in this context, should come as no surprise at all. Two days after he announced it though, President Trump pressed the “pause” button. Except for China that was hit with the highest duties ever in US history,<fnref n="7" /> a flat 10% duty was imposed on imports from all countries<fnref n="8" />. In subsequent announcements, the Trump Administration exempted semiconductors and chips from the payment of duties,<fnref n="9" /> whereas imported cars were hit with a 25% rate.<fnref n="10" />

In this paper, we propose a discussion of the offered rationale, the intended effectiveness, and the legality of the new US tariff policy. In Section 2, we explain the measures as adopted on 2 April 2025, and as modified two days later. In Section 3, we first question the appropriateness and effectiveness of the measures before briefly discussing their legality. In Section 4, we move to discuss their impact on trading nations and the world trading system itself. Section 5 concludes.

<footnote n="1">This publication is partly inspired by a text that I published before Liberation Day: Petros C Mavroidis, “‘Reciprocal’ tariffs: what’s in a word?” (27 February 2025), online: <bruegel.org> [perma.cc/3WZ8-VAUR] [Mavroidis, “‘Reciprocal’ tariffs”].</footnote>

<footnote n="2">The White House, “Executive Order 14257—Regulating Imports With a Reciprocal Tariff to Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits” (2 April 2025), online: <presidency.ucsb.edu> [perma.cc/353A-SURY].</footnote>

<footnote n="3">Gary Clyde Hufbauer, “Managed trade: Centerpiece of US-China phase one deal” (16 January 2020), online: <piie.com> [perma.cc/46SY-B2TU].</footnote>

<footnote n="4">Paul Blustein, *Schism: China, America, and the Fracturing of the Global Trading System*(Waterloo: Centre for International Governance Innovation, 2019) at 224.</footnote>

<footnote n="5">The White House, “Reciprocal Trade and Tariffs” (13 February 2025), online: <whitehouse.gov> [perma.cc/27DC-BZLW] [The White House, “Reciprocal Trade and Tariffs”]; Mavroidis, “‘Reciprocal’ tariffs”, *supra* note 1.</footnote>

<footnote n="6">*Ibid.*</footnote>

<footnote n="7">The White House, “Modifying Reciprocal Tariff Rates to Reflect Trading Partner Retaliation and Alignment” (9 April 2025), online: <whitehouse.gov> [perma.cc/NCQ4-76V5] [The White House, “Modifying Reciprocal”]; Bown and Irwin provide the most accurate statement regarding the state of bound duties before “Liberation Day”, see Chad P Bown & Douglas A Irwin, “The GATT’s Starting Point: Tariff Levels Circa 1947” in Manfred Elsig, Bernard Hoekman & Joost Pauwelyn, eds, *Assessing the World Trade Organization: Fit for Purpose?* (Cambridge: Cambridge University Press, 2017) 45.</footnote>

<footnote n="8">The White House, “Fact Sheet: President Donald J Trump Declares National Emergency to Increase our Competitive Edge, Protect our Sovereignty, and Strengthen our National and Economic Security” (2 April 2025), online: <whitehouse.gov> [perma.cc/4WDE-QJA8] [The White House, “Fact Sheet: National Emergency”].</footnote>

<footnote n="9">The White House, “Clarification of Exceptions Under Executive Order 14257 of April 2, 2025, as Amended” (11 April 2025), online: <whitehouse.gov> [perma.cc/YKH6-WTNR].</footnote>

<footnote n="10">The White House, “Adjusting Imports of Automobiles and Automobile Parts into the United States” (26 March 2025), online: <whitehouse.gov> [perma.cc/2PMD-CD68].</footnote>
# II. Liberation Day and Then Pause

To understand the current US measures, we need to first explain the formula used to calculate the original duties.

## A. The Formula

The United States Trade Representative (USTR) announced the formula:<fnref n="11" />

Here is the explanation:

In a nutshell: assume the US imports $100 million worth of goods, and exports $50 million. This should lead to a tariff of 50% adjusted though. Following adjustment, the country enjoying trade surplus with the US will see its duties brought downwards by a coefficient of .5, that is, it will be paying 25% duties on all its exports to the US.<fnref n="13" /> The rationale hence for the duties is to re-establish reciprocity. Is this a laudable goal within the WTO-context?

## B. Tariffs are Necessary to Re-establish Reciprocity

Reciprocity is a feature of the WTO arsenal. It is embedded in Article 22.4 of the *Dispute Settlement Understanding* (*DSU*)<fnref n="14" /> where it provides the benchmark for calculating authorised tariff retaliation if the author of an illegal act refuses to bring its measures into compliance with is obligations following a ruling by a WTO adjudicating body.

Reciprocity is also the basis for a trade agreement in the first place and is the legal benchmark for calculating the compensation to be paid in case a WTO member wants to re-consider the agreement.<fnref n="15" />

Nevertheless, it is not “specific” reciprocity, as Keohane put it,<fnref n="16" /> that forms the basis of agreements in a multilateral forum like the WTO. It is “diffuse” reciprocity. Specific reciprocity is best suited to bilateral agreements where equivalent treatment can be better measured. Diffuse reciprocity is better suited to multilateral agreements, like the WTO. Various trading nations participate, and one country’s tariff reductions positively or negatively affect nations other than the one that negotiated the tariff reduction. This is why rules including “most-favoured-nation” and “national treatment” exist and are applied generally. These rules are hard to reconcile with specific reciprocity and are quite similar to diffuse reciprocity.

So, while reciprocity is a fundamental principle of the world trading system,<fnref n="17" /> it is never understood in terms of total numerical equivalence. As the former Director-General of the General Agreement on Tariffs and Trade (GATT), Arthur Dunkel, put it: “[i]t cannot be determined exactly, it can only be agreed upon.”<fnref n="18" />

This was as true when the original *GATT* was negotiated (1946—1947) as it is now. Irwin, Mavroidis and Sykes recount an episode between the US negotiator, Bill Clayton, and his UK counterpart, Sir Stafford Cripps.<fnref n="19" /> The key request of the US during the *GATT* negotiation was for the UK to abandon its Imperial Preferences (a system of tariff reduction across the British Commonwealth) as a quid pro quo for the military aid it received during WWII under the US Lend-Lease program. Cripps refused to concede.<fnref n="20" />

An exasperated Clayton kept sending messages to Washington DC, claiming that reciprocity was not being respected. The response was unambiguous: the signature of the *GATT* was the priority, because the *GATT* was not just a trade agreement, but a security agreement. Its architects saw reciprocity not only in the tariff agreement, but also in the establishment of the liberal trade order.<fnref n="21" />

Current tariffs embedded in WTO law were agreed on during the 1986—1994 Uruguay Round of multilateral trade negotiations.<fnref n="22" /> These tariffs continue to differ across countries because of differing sectoral sensitivities and interests. It would be quite remarkable for the US, the entity with the most bargaining power, to claim that it was coerced into signing to an unfair agreement. The US received not only (reciprocal) tariff concessions, but also non-tariff concessions in return for its tariff reductions. During the Uruguay Round negotiations, developing countries agreed to a common minimum protection of intellectual property, a net welfare loss for them as Srinivasan noted,<fnref n="23" /> as well as new multilateral rules regarding trade in services.

We can conclude from the above that reciprocity has always had an *ex ante* functionality: reciprocal concessions would be entered, and it is against this background that trade would occur. The Trump Administration sees an *ex post* function in reciprocity: we must all end up without trade deficit. This latter understanding is tantamount to throwing comparative advantage, the quintessential element for explaining the welfare maximizing character of trade liberalization, to redundancy.

The intentions of the FRP seem neither fair nor reciprocal even if one were to apply a bilateral and solely tariff-based standard of fairness. The fact sheet does not convey the impression that the Trump Administration intends to reduce its tariffs where third countries have a lower tariff than the US.<fnref n="24" /> For instance, the US tariff on pick-up trucks is 25% *ad valorem*, whereas the European Union (EU) tariff on the same product is 10% and the Japanese tariff 0%.<fnref n="25" /> While the US would raise its tariffs to match its trading partners’, it will not lower them when required to arrive at perfect reciprocity.

We would be remiss by not mentioning that the practices that the US administration intends to punish include non-discriminatory measures. The memorandum references value-added tax (VAT) as an unfair practice,<fnref n="26" /> despite the fact that this is an indirect tax applied by over 170 countries.

In short, the US administration’s plan has nothing to do with reciprocity in either the sense in which it was applied in past multilateral trade negotiations—as a broad give and take involving many product lines and sectors—or in the sense of establishing equality of tariffs for all products.

## C. Liberation Day and Pause

There is no explanation why by dividing the trade deficit that the US incurs vis-à-vis its trading partners by two, it will be running trade deficits no more. But then, probably because of the manner in which markets reacted to the manifesto of April 2<sup>nd</sup>, President Trump pressed on the “pause” button,<fnref n="27" /> and except for China, imposed a flat 10% duty on imports from most WTO members<fnref n="28" /> (Canada and Mexico continue to pay 25% as per a prior announcement that has not been revoked). The “pause” button expires in 90 days. During these 90 days, apparently negotiations will take place. Will the duties announced resume if no agreement is reached? We do not know. And what will be the basis for reciprocity? A three-four-five-year horizon? And what if deficits persist?

President Trump equates presence of deficits with absence of reciprocity. This is simply not right for the reasons discussed in what follows.

<footnote n="11">USTR, “Reciprocal Tariff Calculations” (2025) at 2, online: <ustr.gov> [perma.cc/7AYD-N8JT] [USTR, “Reciprocal Tariff”].</footnote>

<footnote n="13">Kevin Corinth & Stan Veuger, “President Trump’s Tariff Formula Makes No Economic Sense. It’s Also Based on an Error” (4 April 2025) at 2, online: <aei.org> [perma.cc/7BA2-89HV] noted that, besides the lack of economic rationale, the rate is inflated: ε, φ cancel out, as tariffs are passed almost fully to US import prices, whereas there is mixed evidence regarding retail prices which the Trump Administration takes into account in the cited formula.</footnote>

<footnote n="14">*Understanding on Rules and Procedures Governing the Settlement of Disputes*, 15 April 1994, 1869 UNTS 401 (*Marrakesh Agreement Establishing the World Trade Organization*, Annex 2); Gabrielle Marceau, “The primacy of the WTO dispute settlement system” (2015) 23 Questions Intl L 3 at 5.</footnote>

<footnote n="15">*General accord on Tariffs and Trade*, 30 October 1947, 58 UNTS 187 art 28 (entered into force 1 January 1948) [*GATT*].</footnote>

<footnote n="16">Robert O Keohane, “Reciprocity in International Relations” (1986) 40:1 Intl Organization 1 at 4.</footnote>

<footnote n="17">While some economists may argue that countries that cannot affect terms of trade should liberalize unilaterally, the creators of the system understood that similar thinking was not popular with politicians and their trade delegates; see Kenneth W Dam, “Cordell Hull, the Reciprocal Trade Agreements Act, and the WTO: An Essay on the Concept of Rights in International Trade” (2005) 1:3 NYJL & Bus 709.</footnote>

<footnote n="18">GATT, *Address by Mr Arthur Dunkel, Director-General, General Agreement on Tariffs and Trade, at “Ostasiatisches Liebesmahl”*, GATT/1312 (Hamburg: 5 March 1982) at 6, online: <docs.wto.org> [perma.cc/N7VS-TULA].</footnote>

<footnote n="19">Douglas A Irwin, Petros C Mavroidis & Alan O Sykes, *The Genesis of the GATT* (Cambridge: Cambridge University Press, 2008) at 27.</footnote>

<footnote n="20">*Ibid* at 27.</footnote>

<footnote n="21">Simon Lester, “Some GATT Negotiating History” (18 October 2017), online (blog): <ielp.worldtradelaw.net> [perma.cc/5HP5-MNP3].</footnote>

<footnote n="22">Mavroidis, “‘Reciprocal’ tariffs”, *supra* note 1*.*</footnote>

<footnote n="23">*Ibid*; Thirukodikaval Nilakanta Srinivasan, *Developing countries and the multilateral trading system: from the GATT to the Uruguay Round and the Future* (Boulder: Westview Press, 1998) at 52—53.</footnote>

<footnote n="24">See The White House, “Fact Sheet: President Donald J Trump Announces ‘Fair and Reciprocal Plan’ on Trade” (13 February 2025), online: <whitehouse.gov> [perma.cc/59B7-P39E].</footnote>

<footnote n="25">Mavroidis, “‘Reciprocal’ tariffs”, *supra* note 1*.*</footnote>

<footnote n="26">The White House, “Reciprocal Trade and Tariffs”, *supra* note 4.</footnote>

<footnote n="27">The White House, “Modifying Reciprocal”, *supra* note 6.</footnote>

<footnote n="28">The White House, “Fact Sheet: National Emergency”, *supra* note 7.</footnote>
# III. Evaluating the US Measures

We will first offer a few remarks on the appropriateness of the announced measures (higher tariffs) to achieve their intended objectives, before we move on to discuss their legality.

## A. Appropriateness

The Trump Administration has offered a litany, a Christmas tree indeed of reasons to justify its measures:

There are problems with this line of argument. Trade instruments are “blunt”. One instrument cannot achieve multiple targets as the “Tinbergen rule” has made clear: achieving the desired values of a certain number of targets requires the policy maker to control an equal number of instruments. You cannot hit six birds with one stone in other words.<fnref n="30" />

First, the US trade deficit has little if anything to do with foreign tariffs or other trade practices that the US intends to punish—a point repeatedly made by economists since the first Trump administration.<fnref n="31" /> Trade deficits are due to excess of spending over income. It is through macro-economic instruments that they are best addressed. The biggest determinant for them is the US huge federal fiscal deficit, which hovers around 6% of gross domestic product (GDP) nowadays. If the Trump I 2017 tax cuts were to become permanent, then it is quite likely that the current trade deficits will persist, the new tariff duties notwithstanding.

Border controls and intelligence about trafficking networks are instruments much better tuned to reduce the amount of fentanyl to the US market. President Biden’s subsidies worked well and attracted foreign semiconductor manufacturers on US soil.<fnref n="32" /> Why replace an instrument of proven effectiveness with an untested one? Furthermore, tariffs (unlike subsidies) do not address the differences in the regulatory cost of producing in the US and elsewhere. There are good reasons to doubt that they will prove to be effective.

It is equally doubtful that tariffs can replace taxes. The extent of the social state in the US is such that it is simply overly optimistic to think otherwise, as Table 1 below shows.

<figure><img src="image_1.png" /><figcaption>Table 1<fnref n="33" /></figcaption></figure>

As we have already discussed reciprocity, the only remaining question is whether these tariffs can improve the US terms of trade. Amiti, Redding and Weinstein have already demonstrated that costs were passed on to consumers during Trump I when tariffs had been raised.<fnref n="34" /> There is no reason to believe that this will change this time.

The natural conclusion is that the tariff increase will hardly achieve the intended result.

## B. Legality

At the end of the Uruguay round, the US promised to cap its duties at a certain level (having received reciprocal concessions from its trading partners) and to apply the capped duties in non-discriminatory terms to goods regardless of their origin.<fnref n="35" /> Both the duties announced during Liberation Day, as well as the duties finally implemented (the 10% flat rate) exceed the bound duties. The US thus violates its obligations under Article 2 of the *GATT.*<fnref n="36" /> By imposing a higher duty on imports originating in China, the US also violates Article 1 of the *GATT*,<fnref n="37" /> the non-discrimination clause.

<footnote n="30">Compare Jagdish N Bhagwati & VK Ramaswami, “Domestic Distortions, Tariffs, and the Theory of Optimum Subsidy” (1963) 71:1 J Political Economy 44.</footnote>

<footnote n="31">Joshep E Gagnon, “We Know What Causes Trades Deficits” (7 April 2017), online: <piie.com> [perma.cc/MGG6-FVC7]; and more recently, Maurice Obstfeld, “Trump’s tariffs are designed for maximum damage—to America” (4 April 2025), online: <piie.com> [perma.cc/A8XT-NLKZ].</footnote>

<footnote n="32">Petros C Mavroidis, *Industrial Policy, National Security, and the Perilous Plight of the WTO* (New York: Oxford University Press, 2024) at 22.</footnote>

<footnote n="33">Chad P Brown & Douglas A Irwin, “Is Trump right when he tweets that tariffs bring in government revenue? Here are 5 things you need to know”, *Washington Post* (16 July 2019) at Figure 1.</footnote>

<footnote n="34">Mary Amiti, Stephen J Redding & David Weinstein, “The Impact of the 2018 Trade War on US Prices and Welfare” (2019) National Bureau of Economic Research, Working Paper No 25672.</footnote>

<footnote n="35">And of course, the outcome of the Uruguay Round was not limited to a tariff bargain, as it included a number of agreements dealing with behind the border regulation.</footnote>

<footnote n="36">*GATT*, *supra* note 14, art 2.</footnote>

<footnote n="37">*Ibid*, art 1.</footnote>
# IV. The Effect of US Tariffs

We distinguish between effects on the US, the other nations, and the world trading system.

## A. Effects on the US

Irwin has provided the definitive statement on this front.<fnref n="38" /> Reciprocal tariffs mean outsourcing tariff sovereignty, as the US will be deciding its level duties in function of what others have decided to do. If eventually, the US administration moves to totally reciprocal tariffs, they will prove costly to implement instrument. The US tariffs also represent a damage to US goods, because of the emergence of GVCs (global value chains). Think of it this way:

The latter will be exempted from customs duties, but it also represents the lower US value added. Trump II reciprocal tariffs do not consider the “effective rate of protection” at all.

China has already reacted by imposing its own high tariffs against goods of US origin, and it remains to be seen what happens next at the negotiating table between the US and its many partners.

And of course, the stock market fell immediately after the announcements of Liberation Day. Finally, economic history teaches that tariffs are “sticky”, as Table 2 below shows.

<figure><img src="image_2.png" /><figcaption>Table 2<fnref n="39" /></figcaption></figure>

## B. Effects on the Rest of the World

Evenett used a series of indicators approximating the criteria for retaliation embedded in the FRP and ranks targets through a system of flags: the higher the number of flags, the more likely it is that the US will raise tariffs against them.<fnref n="40" /> Korea topped the list with five flags, followed by Canada, China, India and Japan with four flags each, Brazil, the EU, Indonesia, Kenya, Malaysia, Mexico and Thailand follow with three. Thirty-five more countries were awarded two flags each, and 68 were awarded one flag.

His original estimations were proven right, as no one was spared. The damage is of course, substantially lower following Trump’s pressing of the “pause” button but it is far from being infinitesimal.

## C. Effects on the World Trading Regime

Handley and Limão have argued that the essential purpose of trade agreements like those of the WTO is to provide certainty regarding the conduct of future transactions.<fnref n="41" /> When the WTO was established, one of its foundational ideas was to constrain unilateral punishment.<fnref n="42" /> The Trump administration clearly does not see these constraints as relevant.

Even with the pause button pressed, there is still considerable uncertainty as to what comes next. We now know that the Trump Administration has used the tariffs as ploy to negotiate “deals”. Two “deals” have been negotiated so far, one with the United Kingdom, and one with Vietnam<fnref n="43" />. This is far cry from the “90 deals in 90 days” that the Administration had announced<fnref n="44" />. What do these “deals” have in common: they are non-transparent; they violate the US duty to respect the capped level of its tariffs; and they are discriminatory. In short, they violate the heart and soul of the WTO.

Furthermore, those who sign them should be aware that their “deals” are here to stay. For the trade deficit to decrease, the Administration should be employing macro-economic tools as already argued. But President Trump berates the Head of Fed Jerome Powell, for not reducing interest rates<fnref n="45" />. Reduction of rates will lead to increased consumption, less savings, and new deficits. “Deals” might have to be re-negotiated soon. This is probably one reason why they are non-transparent and non-binding. And of course, there is no room for these “deals” in the WTO. They cannot take the form of a waiver (not that the US has asked for one) as there are no exceptional circumstances justifying them, and they are not of transitional nature either.

Trump II tariffs are a direct assault on multilateralism, giving the US the right to impose tariffs on any country based on its perception of what is fair. The architects of the world trading regime provided for a multilateral process to be followed in order to unilaterally provoke a re-negotiation of an agreed upon outcome upon the payment of compensation.<fnref n="46" /> They equally provided for the possibility to initiate a new round of (tariff) negotiations in order to address shortcomings from the previous rounds.<fnref n="47" /> This form of establishing or restoring reciprocity clearly does not interest President Trump.

This is not the first time a US Administration has taken a “reciprocitarian” approach. Bhagwati and Irwin reference the influence of William S Culbertson, a reciprocitarian and US diplomat, during the term of Cordell Hull as Secretary of State in the Roosevelt administration.<fnref n="48" /> Reciprocitarianism then made a return during the Reagan years. The targets of the US rhetoric at the time were the successful Southeast Asian nations, particularly Japan. Eventually this dissipated, following the signature of the 1985 *Plaza Accord*, which appreciated the value of the Japanese yen.<fnref n="49" /> Now the target is global (the world trading system), and the rhetoric of Trump II shows no signs of abating.

The resilience of the WTO framework is being severely tested. Some analysts have expressed very pessimistic views. In a forthcoming paper, Carvalho, Monte and Ornelas argue that, unlike a hegemon, as understood by Kindleberger,<fnref n="50" /> the country that is willing to assume the requisite cost to establish and preserve a rules-based system, dominant players who face competition have no incentives to behave as a hegemon.<fnref n="51" /> They might want to free-ride on others’ efforts (in the unlikely scenario that one dominant player goes ahead and behaves as hegemon) but this is as far as it goes.

It has been a long time since the US has acted as a hegemon. We cannot realistically expect the US to lead an effort to bring order to today’s crumbling international infrastructure. Post WWII, the US was responsible for almost half the world’s GDP. This is no longer the case.

<figure><img src="image_3.png" /><figcaption>Table 3<fnref n="52" /></figcaption></figure>

China is approaching the US in terms of GDP, and the EU is not that far behind. If Carvalho, Monte and Ornelas<fnref n="53" /> are proven right, we might be witnessing the last days of the post-WWII international liberal order, as we can discount a scenario where the major global powers including the US, EU and China join forces and work together to establish a mutually acceptable order. Trump II has shown no signs of wanting to collaborate with the EU, much less with China. The current policies are incoherent<fnref n="54" /> as they are dangerous for the world trading system.

<footnote n="38">Douglas A Irwin, “‘Reciprocal’ Tariffs Make No Sense”, *The Wall Street Journal* (13 February 2025), online: <wsj.com> [perma.cc/N4DS-4WG4].</footnote>

<footnote n="39">Douglas A Irwin, “New Estimates of the Average Tariff of the United States, 1790—1820” (2003) 63:2 J Econ History 506; US, Historical Statistics of the United States, series U211—212, 1971—2023 (Washington, DC: Bureau of the Census); US, “US imports for consumption, duties collected, and ratio of duties to value, 1891—2023” (Washington DC: International Trade Commission, 2024).</footnote>

<footnote n="40">Simon Evenett, “Attracting the Ire of the Next US Administration: A Red Flag Analysis based on recent policy & market outcomes” (4 November 2024), online: <globaltradealert.org> [perma.cc/F4CM-5T3W].</footnote>

<footnote n="41">Kyle Handley & Nuno Limão, “Policy Uncertainty, Trade, and Welfare: Theory and Evidence for China and the United States” (2017) 107:9 Am Econ Rev 2731 at 2736.</footnote>

<footnote n="42">Wilfred J Ethier, “Punishments and Dispute Settlement in Trade Agreements: the Equivalent Withdrawal of Concessions” (2005) 42:1/2 Keio Econ Studies 1 at 4.</footnote>

<footnote n="43">The White House, “Fact Sheet: Implementing the General Terms of the US—UK Economic Prosperity Deal” (17 June 2025), online: <whitehouse.gov> [perma.cc/B7Z9-AZXD]; Emer Moreau, “Trump announces trade deal with Vietnam”, *BBC* (2 July 2025), online: <bbc.com> [perma.cc/4R8C-RD3D].</footnote>

<footnote n="44">David Lawder & Andrea Shalal, “Trump trade team chases 90 deals in 90 days. Experts say good luck with that”, *Reuters* (12 April 2025), online: <reuters.com> [perma.cc/DR4L-A8JG].</footnote>

<footnote n="45">Andrea Shalal & Steve Holland, “Trump castigates Fed’s Powell for not cutting rates, downplays inflation risk”, *Reuters* (8 May 2025), online: <reuters.com> [perma.cc/GST2-XGNX].</footnote>

<footnote n="46">*GATT*, *supra* note 14, art 28.</footnote>

<footnote n="47">*Ibid*.</footnote>

<footnote n="48">Jagdish N Bhagwati & Douglas A Irwin, “The Return of the Reciprocitarians—US Trade Policy Today” (1987) 10:2 World Economy 109 at 113.</footnote>

<footnote n="49">*Announcement the Ministers of Finance and Central Bank Governors of France, Germany, Japan, the United Kingdom, and the United States (Plaza Accord)*, 22 September 1985, online: <g7.utoronto.ca> [perma.cc/2YLU-TEL2].</footnote>

<footnote n="50">Charles Poor Kindleberger, *The World in Depression, 1929—1939* (Berkeley: University of California Press, 1973).</footnote>

<footnote n="51">Cecilia Carvalho, Daniel Monte & Emanuel Ornelas, “Equilibrium Trade Regimes: Power- vs Rules-Based” (2025) Working Paper, online <dropbox.com> [perma.cc/R2LQ-HNN2].</footnote>

<footnote n="52">Govind Bhutada, “The US Share of the Global Economy Over Time”, *Visual Capitalist* (14 January 2021).</footnote>

<footnote n="53">Carvalho, Monte & Ornelas, *supra* note 50.</footnote>

<footnote n="54">Gabrielle Marceau, “A Call for Coherence in International Law—Praises for the Prohibition Against ‘Clinical Isolation’ in WTO Dispute Settlement” (1999) 33:5 J World Trade 87 at 103 provides an excellent contribution underscoring the merits of coherence.</footnote>
# —

At this stage, it is anybody’s guess as to what comes next. And this is precisely the issue. As we have argued above, the key insight behind singing trade agreements is to remove uncertainty regarding transaction costs for doing business worldwide. This feature is about to perish it seems.