For decades, the United States led the charge for global trade liberalization, based on the belief that open, rules-based markets boost prosperity and expand Washington’s influence. In recent years, rising income inequality and the decline of the U.S. industrial base has led to growing skepticism about this model within both major parties. At the same time, U.S. policymakers have struggled with how to confront an increasingly assertive China, which they say is relying on unfair trade practices that include discrimination against foreign firms and intellectual property theft.

Experts say that trade has become contentious because its costs are concentrated and visible in specific industries, while its benefits are diffuse, in the form of lower prices for consumer goods. Americans have grown increasingly wary of the downsides of trade, especially its effect on jobs. Critics say that China’s 2001 entrance to the World Trade Organization, dubbed the “China shock,” has contributed to the displacement of millions of manufacturing jobs in the United States. New technologies also led to job losses, though an increasing number of jobs are now dependent on trade. Between 1992 and 2019, the number of trade-dependent jobs nearly tripled to forty-one million, or one-third of the private-sector workforce. 

Traditional proponents of free trade in both major parties, including President Joe Biden, have expressed support for expanding “guardrails” on trade and incentivizing domestic manufacturing, including through massive subsidies. Meanwhile, those left behind by globalization have turned toward populist politicians such as former President Donald Trump, who advocates for protectionist trade policies that he says will restore jobs. Some experts say Biden’s extensive subsidy regimes and restrictions on trade with China represent broad continuity with Trump’s approach and signal a shifting bipartisan consensus in Washington. Indeed, Biden’s flagship Indo-Pacific trade initiative includes commitments toward “cooperation,” but not access to the U.S. market. 

Nevertheless, U.S. trade flows with the rest of the world are as robust as ever, with the rerouting of supply chains to North America compensating for decreasing trade with China. Indeed, the U.S. trade deficit reached a record high in 2022, before narrowing slightly in 2023. The decrease in the overall trade deficit was led by a 27 percent decline in the deficit with China, which was complemented by a 17 percent increase in the deficit with Mexico, according to the U.S. Bureau of Economic Analysis.