The United States, once the champion of a liberal economic order, has decisively embraced protectionism, altering global trade’s trajectory. As of May 2025, the average effective U.S. tariff rate has reached its highest level since 1936. Tariff revenues surged to $24.2 billion in May alone, while imports from China plunged 43% year‑on‑year.

In May 2025, U.S. tariff revenues surged to $24.2 billion, their highest level in over 80 years.

These aggressive measures, rooted in national security and economic resilience, have produced a geopolitical trade map skewed toward “friend‑shoring” and ideological alignment, quarantine-style economics that threaten to unravel postwar global cooperation.

Initiatives like the Inflation Reduction Act and CHIPS & Science Act have further reinforced this trend, subsidizing domestic energy and semiconductor manufacturing while erecting “Buy American” walls. Allies such as South Korea and Japan have openly criticized the exclusionary nature of these incentives. Friend‑shoring, while politically expedient, injects inefficiencies into supply chains, raises prices, and undermines economic rationality. Indeed, the Organisation for Economic Cooperation and Development (OECD) warns that U.S. GDP growth is projected to slump to around 1.6% for 2025-26, down significantly due to tariff strain.

These disruptions are not contained but ripple outward. Global trade increased by $300 billion in H1 2025, yet that growth was primarily fueled by U.S. imports and EU exports. Meanwhile, global merchandise volumes are forecasted to fall 0.2% in 2025, recovering only modestly to 2.5% in 2026, as WTO officials observe. Germany, Canada, Australia, and Mexico are responding with their trade diversification measures or new trade pacts to reduce dependence on U.S. markets. The result: a practiced move toward regional blocs and parallel trade systems.

Friendshoring injects inefficiencies and entrenches exclusion in global trade systems.

The consequences for the Global South are stark. Developing economies rely disproportionately on open market access; yet as U.S. protectionism intensifies, they face exclusion. The World Bank warns that emerging markets, especially outside Asia, risk stagnation or contraction amid weakening demand and reduced trade access, creating “development‑free zones,”. Simultaneously, private equity funds, approximately $1 trillion, remain frozen amid U.S. policy uncertainty.

This policy does not merely change trade volumes; it reshapes global power dynamics. With U.S. allies forced to navigate around American walls, China’s comparative openness becomes attractive. Countries are sealing new deals with Beijing, further entrenching economic bifurcation.

To avoid bifurcation, a recalibrated strategy is needed. The U.S. must reaffirm its commitment to multilateralism by revitalizing the WTO and reforming trade governance. It should balance strategic subsidies with reciprocity and transparency, ensuring allies and emerging economies are not sidelined. Private‑public frameworks for global infrastructure and standards, covering semiconductors, energy, and critical minerals, can reinforce resilience without fragmenting trade systems.

The Global South risks becoming a development-free zone amid rising U.S.-led trade fragmentation.

Market certainty is essential. Emerging bipartisan legislation, such as the Trade Review Act (2025), seeks to re-empower Congress in trade decisions and limit unilateral tariff increases. This is a promising sign that U.S. trade policy may recalibrate toward accountability and strategic sacrifice over ideological rigidity.

Ultimately, the U.S.’s retreat from multilateral trade is a choice, not an inevitability. Protectionist walls may momentarily serve domestic political ends, but they imperil a century’s worth of global economic integration. In an era of climate crisis, pandemics, and great-power competition, a divided world economy will embolden competitors and weaken collective resilience. America must choose whether to solidify economic spheres of influence or rebuild the bridges of global commerce that benefit all.

Disclaimer: The opinions expressed in this article are solely those of the author. They do not represent the views, beliefs, or policies of the Stratheia.