Response to Bryan Mercurio's Caveat Emptor

Abstract

Bryan Mercurio's brief accurately describes the inflection point of the global trading system as world governments retreat from free and fair trade. Chief among them is the United States, whose recent reversal is sending shockwaves throughout the rules-based economic world order. The United States' conflation of trade policy vis-à-vis China and national security, as well as the use of trade policy to garner political support from voters disenfranchised by the global trading system, have given way to industrial subsidies and protectionist tendencies. This article aims to build upon Mercurio's points and identify the underlying causes and long-term consequences of the current US direction. In addition, this piece differs from Dr Mercurio's assertions on three critical aspects of today's trade landscape. Firstly, industrial policy and economic security measures were first undertaken by China, and the United States and allied nations only followed suit. Secondly, the current US economic policy regarding China is severely constrained by today's political landscape, and the Biden administration's approach is moderate given these confines. Lastly, despite challenges, low-income countries can gain from the diversification movement as production shifts away from China.