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From “Free and Fair Trade” to MAGA: US-Trade Unilateralism in Perspective

by Martin Utsch

Since the return of Donald Trump to the White House, trade tariffs have been a recurring theme in the news. Tariff-proclamations have been issued at a frantic rate, each week bringing new changes since the initial sweeping tariffs on April 2, 2025, so-called “Liberation Day”.

The United States was the beating heart of the international trade system it created in the aftermath of WWII and shaped its evolutions during the Cold War and beyond. In his “Liberation Day” Speech, Donald Trump claimed that: “For decades, our country has been looted, pillaged, and plundered by nations near and far, both friend and foe alike.” (Trump, 2025)

This, however, is not the first time the U.S. has acted unilaterally in the name of “leveling the playing field” or opposing “unfair” trade practices, and even at the cost of destabilizing the international trade system. Between 1985 and 1995, the U.S. repeatedly resorted to unilateral tools and domestic laws to address perceived imbalances in world trade. At the time, international trade was structured around the “General Agreement on Tariffs and Trade”, short GATT, an agreement originally signed after the Second World War by 23 countries. It acted as a multilateral forum for negotiation rounds aiming to reduce tariffs and liberalize trade, and kept expanding its membership over the Cold War and beyond, reaching 128 contracting parties in 1994. On January 1, 1995, the GATT became one of the pillars of the newly birthed World Trade Organization (WTO).

Understanding this previous episode of U.S. trade unilateralism is crucial to recognize the shift represented by current trade policy. This essay will give an overview of 1980s American unilateralism, compare it to the Trump II trade policy, and highlight key differences between the two periods. But first, it is important to set the scene and to explain how US trade policy is organized.

US Trade Policy: Constitutional arrangements

U.S. trade policy, due to the constitutional division of powers, emerges from the interplay between Congress and the Executive: In short, the Executive negotiates trade agreements and Congress ratifies them (VanGrasstek, 2019: 89f). This means that U.S. trade negotiators have to manage two negotiation tracks: they must reach an agreement with trade partners that will also be approved by Congress — and must thus take into account the influence of partisan politics in the process. This has never been a simple ordeal, and U.S. history is filled with agreements doomed by congressional disapproval, such as the Havana Charter in 1949, which was intended to create an International Trade Organization (ITO) (VanGrasstek, 2019: 19).

To facilitate trade negotiations, Congress started in the 1930s to delegate negotiation authority to the President, starting in 1934 with the Reciprocal Tariff Act, allowing then President Roosevelt to negotiate tariff reduction with foreign nations (VanGrasstek, 2019: 100). In the 1970s Congress created the trade promotion authority, also called fast track authority. This created a procedure that allowed to pass trade agreement through Congress on an accelerated timeframe, by a simple up or down vote. In return, Congress became involved in defining the objectives of negotiations and was regularly consulted during the negotiations. (Casey, Cimino-Isaacs, 2024: 1). On the one hand, this process allowed US negotiators greater flexibility in trade negotiations which, starting in the 1970s, had stopped to focus purely on tariffs to tackle a variety of so-called non-tariff barriers, for example regulations or standards. On the other, it gave US partners some reassurance that the final agreement would pass through Congress and would not be amended in the process.

To sum it up: US trade policy is supposed to emerge from a cooperation between the two branches, with Congress usually having the upper hand. Presidents have always had to bargain with Congress over the content and scope of their negotiating authority and congressional support was never a certainty.

A changing trade environment

In the 1970s, the United States faced emerging economic rivals and a tougher, more competitive global trade environment, while undergoing profound changes in the structure of its economy, creating both opportunities and distress.

New trade powers appeared, most notably Japan and, in its wake, the so-called four little dragons (or four tigers in the western world). The term is used for four countries, Hong-Kong, Singapore, Taiwan, South Korea, which experienced rapid growth in the 1960s and 1970s, turning into industrial and trading powers. (Solomon, 1999: S. 139) Japan directly challenged American technological dominance and threatened firms such as the Big Three automobile companies – General Motors, Ford, and Chrysler — to the point of being seen as the main challenger to U.S. hegemony, years before China came into the picture (VanGrasstek, 2019: 204). Meanwhile, the European Communities (EC) had turned from a fledgling customs unions in the 1950s into a powerful trading power, expanding its exports throughout the 1980s and beyond (Zeiler, 2012: 110). At the same time, a new wave of globalization, driven by technological advances (telecommunications, robotization) also affected the U.S. economy, which started transitioning from manufacturing towards services (GATT, 1980: 2). This transition, coined “Creative Destruction” by Schumpeter (Caballero, 2017: 1), led to the emergence of new sectors and opportunities. At the same time, it also contributed to the disappearance of others, inflicting economic and social pain on American regions, such as the Rust Belt (Neumann, 2016: 3). Finally, globalization contributed to the emergence of multinational firms, which furthered the integration of national economies through international production chains. (Giese, Mossig, Schröder, 2011: 150)

This rapidly changing trade environment contributed to a deterioration of the U.S. Balance of Payments (BOP) or trade balance – the difference between imports and exports. Starting in 1971, the US trade balance turned into a 1,3 Billion deficit (more imports than exports), after almost a century of surplus (VanGrasstek, 2019: 49f). The deficit continued to widen in the 1980s, passing the 100 Billion mark in 1984. Combined with a growing federal budget deficit and economic difficulties in the wake of both oil crises, the seemingly ever-growing deficit raised concern among American politicians.

Recalibrating the Trade Policy Cocktail

The U.S. did not abandon their previous multilateral commitment; rather it doubled down on trade liberalization by initiating the Uruguay Round of trade negotiations in 1986, aiming to reform the system that had served them well in the past. However, they also started to rely on domestic laws to address situations not adequately covered by existing trade rules.

U.S. trade policy is based on a complex legal framework. For the purpose of clarity, this essay will only mention the latest, and most relevant for the 1980s period, update to trade laws, the Trade Act of 1974 (Pub. L. No. 93-618, 88 Stat. 1978). Through this act, Congress delegated to the Executive new powers to influence trade flows and put procedures in place designed to enhance the functioning of the system, such as the “Trade Promotion Authority”. Some sections, called trade remedy laws, allow to shield U.S. industries from import surges (Section 201) or safeguard sectors critical for U.S. national security (Section 232). Others, such as Section 301, allow the U.S. government to investigate and to counteract alleged foreign unfair trade practices. This section became a staple of U.S.-unilateralism, avoiding the perceived weaknesses of the multilateral dispute settlement system by being faster and better for U.S. interests. Dr. Clayton Yeutter, during his confirmation hearing to become Ronald Reagan’s second United States Trade Representative (USTR) in 1985, stated:

I would say, too, that were the GATT dispute-settlement process more effective and satisfactory, more satisfactory to the United States, more timely, more expeditious, and more decisive, there would be much less need to have section 301 provisions in the law. (U.S. Senate, 1985: 82)

Section 301 investigations typically begin with a petition, usually from a U.S. industry. The USTR has 45 days to review the case and initiate an investigation. Once initiated, the USTR consults with the concerned country in parallel. If the investigation determines that a foreign practice negatively affects U.S. trade, and negotiations do not settle the issue, the USTR has 30 days to take action. The level of action must match the injury, but the exact measures are at the President’s discretion, with Congress delegating authority to the President to raise tariffs or impose quotas (Trachtenberg, 2025: 1).

US Administrations tried to present these unilateral actions as “important steps to make our trading system freer and fairer” (Reagan, 1985). This rhetoric, however, failed to convince trade partners such as the European Communities:

The Community wished to initiate a discussion on threats to the multilateral system embodied in GATT. GATT was, in fact, in mortal danger due to the increasing recourse to unilateral and discriminatory measures. Today, this fear was illustrated by the measures taken by the United States. Such unilateral and discriminatory measures should be disavowed without ambiguity. (GATT, C/163: 1)

The American readiness to resort to aggressive unilateral methods damaged its image. It casted doubt on American commitment to the very trade system it had built, a system already struggling and in dire need of reform. Forcing partners to negotiate with a sword hanging over their head undermined the credibility of the U.S. as a partner, and the idea of “Empire by Invitation” (Lundestad, 1999: 190) that had so far made the success of a U.S. hegemony based more on attraction than on coercion.

The subjective nature of American unfairness claims only heightened tensions. In 1988, the European Communities banned the use of growth hormone for meat production, due to consumer concerns about the unknown effects of such hormones on humans. The U.S. challenged this decision, as it negatively affected its meat exports, arguing that the European measure lacked sufficient scientific evidence proving the harmful effects of hormones on human health (Hanrahan, 2000: 2f). The U.S. filed a formal complaint to the WTO and retaliated against the perceived barrier to its meat exports, using a Section 301 investigation. Despite U.S. retaliations the EU has upheld its ban to this day, asserting its right under WTO rules to determine what constitutes acceptable risk in matters of health and safety. In such cases, American claims of unfairness could be perceived as attacks on the sovereignty of their trading partners, which further heightened tensions.

It is important to nuance this episode of unilateralism. First, it was part of a transition from a previously uniquely multilateral trade policy to a new trade policy cocktail combining multiple avenues — in other words, unilateralism was neither the only path, nor the dominant one. Second, the Executive Branch, being in charge of implementing unilateral actions, was very much aware of the effects and limits of unilateral tools. As such, it tried to show restraint, in an attempt to not endanger U.S. diplomatic relations and long-term U.S. goals by needlessly angering its partners – and in the long run triggering a trade war. For example, the Clinton Administration postponed trade sanctions against the EU in March 1993 to open the way for a successful conclusion of the Uruguay Round of GATT Negotiations (1986-1994) (LaFranchi, 1993). In this case, the U.S. favored a long term solution to the dispute through multilateral channels, instead of heightening tensions by retaliating against alleged trade barriers.

The “Domestic Diplomacy” of Trade

As seen in the first section of this essay, US trade policy emerges from the cooperation between the Executive and Congress: in the 1980s, the relationship soured in the face of economic upheavals. Congress under pressure from its constituencies, in turn pushed the Executive to take action. In response, the free trade oriented Reagan administration pushed for the start of a new round of multilateral trade negotiations in the GATT, leading to the start of the Uruguay Round in 1986. However, to satisfy a Congress disappointed with the current state of the multilateral trading system and its inability to adequately protect U.S. interests, the Reagan Administration also had to increasingly resort to trade remedy laws and unilateral actions. The President, like his two successors, was forced to indulge Congress, as it needed the negotiation authority to conduct the negotiations in the Uruguay Round: the use of unilateral tools became part of the bargaining over the scope and content of the Presidents authority.
However, the Reagan administrations did not manage to satisfy Congress, leading Congress to strengthen Executive obligations to use unilateral tools in 1988, through the Omnibus Trade and Competitiveness Act (Omnibus Trade and Competitiveness Act, 1988. Pub. L. No. 100-418, 102 Stat. 1107).

It is important to nuance the so-far brushed picture, especially when it comes to the seeming contradiction of Congress supporting both multilateral negotiations and unilateral actions. While a small minority in Congress did support protectionist policies at the expense of the GATT-system, many saw unilateral actions as quicker solutions to the failings of the multilateral system, pending more fundamental reform through the Uruguay Round.  For example, Section 301 cases were seen as an alternative to a GATT dispute settlement, considered to prone to deadlocks or leave disputes unsolved – thus shared the sentiment of then USTR-nominee Clayton Yeutter. In sum, large parts of Congress still supported the idea of a multilateral trading system, as well as its reform through the Uruguay Round, but recognized the need for a more proactive trade policy for the U.S. to retain its preeminence in the system. In the words of House Representant Dick Schulze:

At the turn of the century or after, I view a worldwide trading order in which the United States of America is the leading Nation. If we are going to do that, we have got to be in a position from time to time to call the tune. (House of Representatives, 1989: 23)

Conversely, the Executive did not always shy away from unilateral methods, especially when they directly or indirectly supported policy objectives. Exaggerating “helplessness” in face of congressional pressure was a recurring tactic of U.S. negotiators, to incentivize partners into accepting U.S. offers — framing the possibility of congressionally pressured unilateral actions as the alternative (European Commission, 1989: 13). The menace of US unilateral actions also increased pressure on GATT trading partners to reform e.g. the GATT dispute settlement mechanism. (GATT, C/163: 1)

To sum up, the rise in unilateral actions that started in the 1980s was a byproduct of a tougher economic environment and the resulting polarized domestic environment. Unilateralism stood as a swift, short term solution to the failings of the multilateral trading system and as a way to protect US interests. It could also serve as a bargaining chip to gain congressional support for trade agreements, securing the crucial trade negotiation authority, and thus opening the way for long-term multilateral solutions. Both actors, however, were cautious not to let the domestic side of trade policy interfere with U.S. interests: while seeking toughness, they remained wary of U.S. commitments and did not wish for the country to go rogue. Both branches still recognized the need for an open world trading system and the economical, as well as political interest of the US in being a leading part of it – just like they recognized the economic and political costs of protectionist excesses.

The Trump II Trade Policy

Trump II trade has abandoned, both in content and in form, more than 80 years of American commitment to free trade and multilateral liberalization in favor of a purely unilateral approach. In terms of content, the second Trump Administration has elevated tariffs as the primary trade policy tool. It has brought American tariff levels to those of the 1930s, before the shift towards liberalization following the Great Depression and matching the previous peak in tariffs under the infamous Smoot-Hawley Tariffs.

In terms of form, the Trump Administration has forsaken the tools defined by the Trade Act of 1974, such as Section 301 investigations. It has instead chosen to mainly rely on the emergency powers granted by the International Economic Emergency Powers Act of 1977 (Pub. L. No. 95-223, 91 Stat. 1123.), short IEEPA, which give the President broad economic powers after declaring a national emergency. Where the already fast Section 301 cases stretched over weeks or months, including thorough investigations and negotiations, the powers granted by the IEEPA allow for much faster and blunt unilateralism. This has allowed the frantic rate of tariff proclamation seen since April 2., with sometimes tariff proclamations every week. Another key difference is that, while Section 301 investigation tackle one, allegedly unfair, barrier of one trading partner, the Trump Administration has used the IEEPA powers to proclaim tariffs on all trading partners at once, claiming unfair practices from all US trading partners. (Trump, 2025).

The legality of relying on emergency powers granted by the IEEPA has been challenged by the U.S. Court of International trade on May 28, arguing that current events did not meet the legal threshold for an emergency — a ruling confirmed on August 29 by an appeals court. At the time of this writing, the case has landed before the Supreme Court and proceedings are currently underway. The oral arguments earlier last week have seen the judges similarly question the use of emergency proclamations as a justification for tariffs. It is however important to nuance the reach of those rulings, as they affect the form of the trade policy, not its content or motivations. In other words, the courts have challenged the legal tools used by the Trump Administration, not the turn towards unilateralism and protectionism.

Additionally, tariffs have seen increased use in US foreign relations as a whole, still based on the broad powers offered by IEEPA when declaring national emergencies. On August 6, the Trump Administration imposed 25% additional tariffs on India, while threatening other countries with similar additional rates, because of their imports of Russian oil. This move aimed to increase economic pressure on Russia in the context of the war in Ukraine. Tariffs have also become a way for Donald Trump to express his displeasure. On July 30, the U.S. imposed 40% tariffs on imports coming from Brazil over the prosecution of former president Jair Bolsonaro. The administration had a few days before personally targeted Brazilian Supreme Justice Alexandre De Moraes and his wife with so-called Magnitzky Sanctions, so far mainly used against Russia for human-rights violations, freezing their assets and barring them from using American credit cards. More recently, the Trump Administration has ended trade negotiations with Canada and threatened 10% additional tariffs on the country, over an ad showing former President and free-trade supporter Ronald Reagan advocating against tariffs.

For the first time in U.S. history, Congress has retreated from the trade policy arena. While Congress has since the 1970s delegated out of pragmatism some to the Executive, it retains its constitutionally defined powers (VanGrasstek, 2019: 19f): Presidents have had to lead difficult negotiations and compromise with Congress over their negotiation authority. Since the start of the year, however, the center of trade policy power seems to have shifted to the Oval Office, with Congress only playing a marginal, supportive role – aside from a measure on April 2. by the U.S. Senate revoking certain tariffs on Canada. The so far negotiated mini-deals, such as the one between the United States and the EU, are not comprehensive free trade agreements, but focus on changing tariff rates and commitments for further negotiations (Akhtar, 2025:1). As they also rely mainly on the IEEPA powers used the Trump administration, they are not formal trade agreements that explicitly need to be ratified by Congress and thus evolve in a sort of grey area (Akhtar, 2025: 2).  Finally, the current American political landscape, with a Republican Party in control of both houses of Congress, and still firmly supporting the President, plays a significant role in the absence of congressional challenge to the Presidents authority.

Conclusion

This essay has shown how the two periods of U.S. unilateralism differ significantly. On the one hand, the 1980s phase reflected a tactical shift caused by a changing trade environment and the resulting domestic tensions: unilateral tools, tailored for trade disputes, stood alongside, and sometimes complemented, American multilateral efforts. This phase also ended after the WTO was created: the U.S. eschewed trade vigilantism and committed to pursuing grievances through multilateral channels, e.g. establishing the WTO Dispute Settlement as the primary way to solve Section 301 cases (Trachtenberg, 2025: 1).

On the other hand, Trump’s trade policy represents a broad shift back towards tariffs and unilateralism as the main way to conduct trade policy: the Administration has yet to engage in any multilateral negotiations, or signify the will to do so. The more surgical, unilateral tools, such as Section 301, have been eschewed for the expansive IEEPA powers, leaving sweeping discretion to the President. Finally, whereas unilateralism in the 1980s was largely a byproduct of the conflictual relationship between Congress and the President, the current situation has unilateral trade policy solely emerge from the White House and Congress, somewhat voluntarily, relegated to the sidelines.

“Liberation Day” tariffs rates have proved to not just be a tactic: first agreements with Japan and the EU set tariff rates at 15%. The new normal seems to be the uncertainty of regular tariff proclamations, changing tariff rates at the whims of the Administration – a situation that may yet be challenged by a Supreme Court ruling restraining executive tariff setting powers.

The economic effects of tariffs have yet to fully materialize: The Yale Budget Lab estimated on August 7. a 0,4% loss of GDP, translating into an annual loss  of $2400 for U.S. households. So far, the damage has been inflicted on U.S. credibility, a consequence of unilateralism that the administrations of the 1980s and 1990s understood and sought to avoid. Reneging on agreements and raising tariffs have harmed U.S. relations, especially when combined with abusive rhetoric, in the case of Canada and evocations of annexation.

The use of tariffs, not only in trade conflicts with partners such as the Penguins of McDonald Island or the EU, but also as a tool of foreign policy — or as a way for Trump to express his anger, as seen with Brazil — will further erode confidence, affecting U.S. relations as a whole and in the long run, the position of the United States on the world stage.

 

About the Author

Martin Utsch is a Doctoral Researcher at the Chair for Contemporary History of the University of Mannheim. He currently receives a doctoral fellowship from the Gerda Henkel Stiftung. Martin studied History in Strasbourg, Bamberg and Mannheim and holds an M.A. in History from the University of Mannheim.

 

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OpenEdition suggests that you cite this post as follows:
Martin Utsch (November 20, 2025). From “Free and Fair Trade” to MAGA: US-Trade Unilateralism in Perspective. HCA Graduate Blog. Retrieved May 11, 2026 from https://doi.org/10.58079/156ca


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