By
Professor Michael Mainelli
Published by London Business Matters, London Chamber of Commerce & Industry (July/August 2025), page 11.
Where Angels Fear To Trade
President Donald Trump transfixes global trade. He flies in the face of business and economic norms by appearing to believe that trade is of minimal benefit, tariffs are beautiful, and trade should be strongly managed.
For decades, international business thinking has been influenced strongly by three traditional ethical liberal values - individual rights, freedom of speech, and protection of property. Those three ethical values imply three practical values - limited government, open markets, and free trade. All six liberal values affect industry, but let’s focus on free trade.
President Trump disagrees that trade reaps economic benefits from specialisation and comparative advantage, creates prosperity, distributes success and wealth, and collectively enriches our societies and communities. In London, one of the world’s great trading centres, we know the importance of trade for progress. The 2023 value of global trade was equivalent to 59% of global GDP. That’s up from 25% back in 1970, but unfortunately, with deglobalisation taking hold, down four points from 63% in 2022.
President Trump ignores that free trade is a force for good and has lifted billions of people out of poverty in the past half century. In 1930, the US Smoot-Hawley Tariff Act significantly raised tariffs on imports, aiming to protect US industries from foreign competition. This protectionist measure triggered retaliatory tariffs and exacerbated the Great Depression. President Trump seems to want to re-run the 95 year old Smoot-Hawley experiment.
If we all believe that recent US moves towards tariffs will backfire on the US, then shouldn’t we be moving ever more strongly towards free trade? We are not perfect free traders. We can do much more to be clear about zero tariffs, tear down trade barriers, standardise free trade agreements, expand free trade agreements to services, and simplify trade processes.
In December 2024, the UK made the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) a dozen with Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Ironically, CPTPP was begun by the US. We can support CPTPP expansion, new members, EU observer status, or Commonwealth observer status.
Sadly, we have the opportunity over the next 3.5 years to re-run that Smoot-Hawley experiment, testing a closed US against an open world. Enough transfixed hand-wringing. If we believe our own game, let’s double-down with some real cards on the free trade lab table.