Two years later, the world is learning what it does mean. In the past few months the U.S. has abruptly pulled most of its troops from northern Syria, secured a promise from China to buy more U.S. goods, likely at the expense of others, and allowed the World Trade Organization's authority to lapse by blocking the appointment of judges to its top appellate panel.
It has also killed a top Iranian, completed a new trade deal with Mexico and Canada, and struck a modest trade deal with Japan. The U.S. is not turning isolationist, but unilateralist: It is rewriting the rules of engagement to prioritize its narrowly defined interests and maximize its leverage. Other nations, companies and investors must adjust to a global arena where the U.S. is no longer the referee, but another player-the biggest and most aggressive.
The starkest example of this shift is in Britain's three-year odyssey to leave the European Union. The U.S. had long supported European integration, believing a more unified and prosperous Europe served U.S. economic and strategic goals. But Mr. Trump sees the EU as hostile to American commercial interests and egged on Brexit with the promise of a free-trade agreement once Britain had left.
The U.S. now will seek concessions from Britain that the EU would never agree to. It will likely insist that Britain forswear a free-trade agreement with China, scrap a planned tax on U.S. digital
giants such as
Facebook
Inc. and
Alphabet
Inc.'s Google, and accept imports of American chicken disinfected with chlorine, currently barred by EU law. Having wrested control over Britain's trade relations from Brussels, Prime Minister Boris Johnson may end up surrendering some of that control to Washington.
While America's shift to unilateralism most clearly reflects the priorities of Mr. Trump, who has long believed others take unfair advantage of the U.S., it also reflects deeper trends in the U.S. and elsewhere. Obama administration officials were skeptical of engagement with China by the end of the Democratic president's second term, and were frustrated with WTO overreach. Mr. Trump's treatment of Chinese companies such as Huawei Technologies as security threats, meanwhile, has won bipartisan support. Many of the president's Democratic rivals share his aversion to endless wars, and see trade pacts as giveaways to corporations that sacrificed the livelihoods of working-class Americans.
Some countries believe that the shrinkage of the U.S. military footprint abroad started under President Obama, most notably with his decision not to punish Syria for its use of chemical weapons. In an interview with the Economist, French President Emmanuel Macron said Mr. Trump sees NATO as a commercial arrangement in which Europeans buy American products in exchange for American military protection. "France didn't sign up for that," he said. Europe, Mr. Macron said, needs to "take responsibility for more of our neighborhood security policy."
American clout in diplomatic, military and economic matters has long tamped down intra-Asian rivalries and counterbalanced China's growing presence. Presidents George W. Bush and Obama promoted the 12-country Trans-Pacific Partnership as an alliance of like-minded countries linked through American-style trade and investment rules to serve as an economic bulwark against China.
But the Trump administration saw the TPP as inherently flawed because it was multilateral, not bilateral. In multilateral deals, "We give up a lot of our leverage," Robert Lighthizer, Mr. Trump's U.S. trade representative, told Congress in 2018. "You're in an agreement with five countries, you have a problem with one of them. What do you do? You don't get out of the agreement." The U.S., he said, "is far better off in bilateral deals. We have the biggest market; we have more leverage...You're the United States of America, you can enforce your rights under that agreement."
So Mr. Trump pulled out of the TPP in 2017 and last year struck a modest bilateral deal with
Japan. His renegotiated North American Free Trade Agreement increases U.S. access to Canada's dairy market and limits Mexico's appeal as a place to assemble autos.
By prioritizing its own narrowly defined interests, the U.S. is less inclined to broker disputes between others, such as an intensifying fight between South Korea and Japan over sensitive exports and military intelligence sharing. The Trump administration's focus is on extracting significantly higher payments to support U.S. troops stationed in the two countries. Japan did not even want U.S. mediation-a sign of diminished U.S. clout in the region.
Meanwhile, Mr. Trump's threat of tariffs and demands for more military burden sharing have prompted the South Korean government to "hedge," for example by demonstrating to China, its largest trading partner, greater independence from the U.S., says Woo Jung-Yeop, an expert on U.S.-Korean relations at the Sejong Institute, a South Korean think tank. Last November, South Korea was one of 15 signatories to the Regional Comprehensive Economic Partnership, an Asian trade pact that unlike the TPP includes China.
While the unifying umbrella of U.S.-sponsored rules is disappearing, this has not unleashed a destructive global descent into protectionism, as some feared. Except between the U.S. and China, trade disputes have been too tiny to register much impact on U.S. and global growth. Other countries continue to pursue trade agreements and the WTO continues to adjudicate disputes.
The long-range effects are another matter. Multilateral rules fostered complex supply chains spanning multiple borders and markets. As global rules are replaced by hub-and-spoke pacts, and as unresolved disputes lead to rising barriers, supply chains will shrink and trade will be less important to global growth. Meredith Crowley at the University of Cambridge and two co-authors
found that after Britain's vote to leave the EU, the uncertainty of future trade arrangements dissuaded more than 5,000 British companies from exporting to the EU.
Hyun Song Shin, head of research at the Bank for International Settlements, recently noted that the ratio of global trade to global gross domestic product has been falling since 2010, which might be evidence that products aren't crossing borders as often.
Through its new unilateralism, the U.S. is getting a bigger say in how the world's economic pie gets divvied up. The risk is that the pie itself will be smaller.
Mr. Ip is The Wall Street Journal's chief economics commentator. He can be reached at [email protected].
Corrections & Amplifications
An earlier version of the graphic accompanying this article included an incorrect version of New Zealand's flag. (Jan. 20, 2020)
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