We are now living in the ‘new normal’ where the US presence is absent in maintaining the international trade order. The US played a major role in building and maintaining the open and rules-based world trade order from the latter half of the 20th century to the first decade of the 21^st century. During the first Trump administration (2017-2021), world trade was exposed to US protectionism involving unilateral tariffs, withdrawal from the Trans-Pacific Partnership (CPTPP) and the renegotiation of the North American Free Trade Agreement (NAFTA). The Biden administration (2021-2024) revised the US’ unilateralism by promoting international cooperation with its strategic allies in areas of US interest, such as G7 work on economic security and the Indo-Pacific Economic Framework for Prosperity (IPEF). Yet, its inward-looking approach remained basically the same as the previous Trump presidency. For example, President Biden retained most of the unilateral tariffs, especially those on Chinese imports, that were imposed during the Trump administration. The Inflation Reduction Act (20220) and CHIPS and Science Act (2022) prioritised domestic industry by providing subsidies and other financial incentives.

The ‘new normal’: The absence of the US in the international trade order

With Trump back as President of the US, we are going through the era of Trump 2.0 ‘Make America Great Again (MAGA)’ trade policy. The US’ controversial position is that trade policy with threats (e.g. unilateral high tariffs to the rest of the world) will reduce its trade deficits and bring back its manufacturing base. Furthermore, Donald Trump neglects international norms and threatens its democratic allies with his ideas of territorial expansion. Whether a country is the US’ closest ally or not does not matter in Trump 2.0.

Is Trump 2.0 going to be another four years of exceptionalism where the US neglects the open and rules-based world trade order and uses threats to its trade partners without international cooperation? The ‘America First’ approach combined with protectionism will not change even after Trump 2.0 although there might be some fluctuations in terms of foreign diplomacy. This is mainly because the US’s fundamental problem lies in economic and societal divides inside the US.

There has been a significant shift of wealth from the middle class to the wealthiest families over the past 60 years. While the wealthiest families had 36 times the wealth of the middle-class families in 1963, the gap has increased to 71 times in 2022. This reflects the American electorates’ negative attitude toward international trade. A survey shows 59% majority of the US public say the US has lost more than gained from increased trade. This view is stronger among supporters of the Republic party (73 %) than those of the Democrat party (47%). What is more, the survey shows societal divides in terms of demography, income, education and ethnicity in supporting international trade.

Furthermore, China will remain a major threat for the US both in terms of economics and security. For example, although China’s nominal GDP ($19.53 trillion) is currently 64% of that of the US ($30.34) according to the IMF. However, some projections for China’s economic growth anticipate that China will surpass the US in the 2040s-2050s. A survey shows that 58% of Americans view China’s development as a critical threat to U.S. interests, the highest level recorded since 1990. China’s growing power in the world will continuously drive the US towards protectionism.

A role for middle powers: defending the open and rules-based international trade order

In the age of the ‘new normal’, protecting an open and rules-based international trade order becomes more salient than ever. The UK can play a central role in this respect. Other than the UK, there are some democratic and highly industrialised economies, which are conventionally close US allies on economic and security grounds such as Australia, Canada, Japan and South Korea. They are also facing economic and political uncertainties created by the Trump administration’s ‘reciprocal tariffs’ and other unilateral threats.

These countries are widely considered to be ‘middle powers’ although there is no agreed definition of the term.  The World Economic Forum White Paper explains that the term, ‘middle power’ is “imprecise and contested” and “has until recently been confined to Western countries, shifts in the global balance of power mean that this function extends beyond the West to “rising” powers elsewhere”. Middle powers are not superpowers as are the US, China and (possibly) the EU in the global context – encompassing the economy, political and security matters – but they become influential if they form collective power by acting together for a common policy goal.

The value of such a ‘middle power’ alliance in the ‘new normal’ becomes critical. First, middle powers should act together to protect an open and rules-based trade order. Even without the US, they should support the WTO’s institutional reforms and rulemaking. For example, middle powers can create a critical mass through plurilateral agreements at the WTO, such as the WTO Joint Statement Initiative on E-commerce, which contributes to updating the WTO rules for 21^st century trade. Second, they should play a role in mediating differences in a multipolar world order and provide leadership in addressing key global agendas such as climate change, renewable energy, green technologies, digitisation and development. The UK should actively form a collective power of ‘highly industrialised democratic middle powers’ in global economic governance on every front.

Challenges for the UK and its middle power allies

Using the existing bilateral and plurilateral trade forums is a rational way to regenerate momentum for the open and rules-based international trade system. For example, strengthening the CPTPP as a forum of the open and rules-based trade forum cooperating with Australia, Canada and Japan seems promising since the UK became a new member of the CPTPP.

However, the fundamental challenge is how to maintain the liberal norm. We cannot neglect the fact that the governments of these highly industrialised democratic middle powers are inclined towards managed trade. For example, they are enhancing industrial policy and economic security (e.g. subsidies, investment screenings, export controls) to cope with intensifying geopolitics, the US-China hegemonic rivalry and green technologies. Such a paradigm shift from ‘efficient’ to ‘resilient’ trade sits in contrast to existing trade agreements that stand on neoliberal norms like the WTO agreements and the CPTPP.

Furthermore, public support for open trade at the domestic level is becoming crucial in the era of “new normal” yet studies show that public support for liberal order and globalised economies declined as social protections and guarantees were reduced in Western countries. Indeed, foreign policies are deeply entangled with domestic matters. In terms of trade policy, transparent communication with the general public about the benefits and negative consequences of international trade during the policymaking process and the results of international trade deals does matter.

In conclusion, democratic middle powers, such as the UK, can play a pivotal role in the ‘new normal’. They should play a role in defending an open and rules-based international order by forming a collective power, and with a role as mediators in the multipolar world, they can together reshape the multilateral and regional institutions fit for the 21^st century. The UK can take a lead in developing such cooperation at the plurilateral and multilateral level. However, there is a risk that middle powers’ efforts will be shallow and fragile if they do not address the discrepancy between their domestic policy shifts towards managed trade and the existing neoliberal trade institutions.

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