Trade relations that leave the US out could outdo Trump's tariffs

The rest of the world could prosper from a multilateral free-trade arrangement while a self-isolated America would lose out

- SUDIPTO MUNDLE

Donald Trump rambles on in his second term as US president, disrupting institutions and policies both at home and abroad. Several months on, his behaviour reveals a pattern, even if it is somewhat fuzzy. He lays down his cards with outrageous announcements and then back-tracks, especially in bilateral negotiations. It is a pattern repeated in his domestic interventions in different fields as well as his dealings with US neighbours like Canada and Mexico, allies like the UK, EU, Japan and Korea, rivals like China and Russia, and other countries like India. But how much he will backtrack in a particular case, if he backtracks at all, remains uncertain. Indeed, uncertainty is the leitmotif of Trump's exercise of raw power. Given this, specifically in the context of trade and tariffs, I asked Professor C. Veeramani, one of India's leading trade economists, what the outcome would be if other members of the World Trade Organization (WTO) continued to trade in compliance with WTO rules but without the US. It is as if the other WTO members—or most of them—were to forge a massive free trade agreement (FTA) without the US.