Are Tariffs the “New Normal” in International Trade?

The landscape of global trade in recent years has changed in ways that are not so easily dismissed. The prevalence of tariffs as a leading policy tool appears, at least on the surface, to indicate that protectionism—more than free trade—is on the march. But appearances are deceptive, and it is only by excavating below the surface of economic, political, and social forces that created them that they can be rightly understood.

1. The Historical Context: Free Trade vs. Protectionism

For decades following World War II, the world economic order was supported by free trade principles. Bodies such as the World Trade Organization (WTO) and treaties such as NAFTA or the European Single Market pressured countries to lower tariffs, eliminate trade barriers, and establish a system of interdependence. The assumption was simple: open markets create efficiency, innovation, and general growth.

But even in times of free trade, protectionism did not vanish. Tariffs were intermittently applied to nurture nascent industries, to protect ailing industries, or to offset discriminatory trade practices. What has changed now is the number and frequency of these actions, and why they are being levied.

2. Why Tariffs Are Rising Today

A few linked forces are propelling tariffs to the rise:

• Economic Nationalism: Governments are placing greater emphasis on independence, particularly in key sectors such as semiconductors, energy, and pharmaceuticals. The COVID-19 pandemic and geopolitical rivalry exposed weaknesses in global supply chains, and nations are now adopting caution in overdependence on imports.
• Geopolitical Tensions: Business is no longer economics but also diplomacy and leverage. The classic example is U.S.-China trade tensions in which tariffs were leveraged to address issues about technology theft, intellectual property, and access to markets.
• Political Pressure: Some feel that they are left behind by globalization. Factory jobs are disappearing in many places, and politicians react with tariffs or protectionist trade measures as a means of defending domestic workers and industry.
• Strategic Industries: Tariffs are targeted rather than broad-brush. Governments are likely to apply them to strategic industries such as steel, aluminum, or technology products to protect strategically significant industries but are less likely to engage in across-the-board protectionism.

3. The Consequences: Protectionism or Pragmatism?

Tariffs tend to be caricatured as an outright switch to protectionism, but the reality is more nuanced:

• Short-term Suffering: Tariffs drive up the cost of foreign goods to consumers and businesses. Firms subsequently experience supply line disruption, and everything from electronics to apparel can become more costly.
• Home Advantage: Subsequently, tariffs can shield home industries, save jobs, and energize domestic manufacturing. Tariffs are even used as a bargaining tool by some nations to pressure trading partners to sign on for better terms.
• Global Ripple Effect: When a large economy puts tariffs on another, their trading partners can retaliate in a ripple effect. This can cause world trade patterns to break down, causing supply chains to be longer and more costly.

4. Are Tariffs the “New Normal”?

It is tempting to say yes, but it is more realistic to see tariffs as a tactical readjustment and not an enduring substitute for free trade principles.

• Hybrid Strategy: The majority of nations are adopting a hybrid strategy of opening up a blend of means—open commerce in certain industries, protectionist intervention in others. Technology, defense, and strategic infrastructure are examples of the former coming under tariffs or subsidies and consumer products being relatively open to international trade.
• Strategic Flexibility: Governments are using tariffs as negotiable tools of policy, instead of ideological statements resisting globalization. Tariffs are, as it were, becoming a precision instrument rather than a sledgehammer implement of protectionism.
• Global Pushback: Organisations like the WTO, and regional free trade areas, continue to advocate lower trade barriers. So although tariffs are on the rise, they haven’t yet turned the overall trend of world liberalisation on its head—yet.

5. Looking Ahead

In the future, there will be selective free trade and targeted protectionism:

• Temporary tariffs will be imposed by countries to protect industries in times of crisis or geopolitical instability.
• Green technology, medical equipment, and semiconductors will receive permanent strategic protection.
• Greater sectors will still enjoy free trade agreements as a testament that interdependence worldwide continues to power growth.
• Essentially, tariffs are more transparent, palatable tools, but they’re not free trade’s death knell—that’s being rewritten, not eliminated. The goal appears less to combat globalization than to shield it, make it safer, fairer, and prioritized on the grounds of national interests.

If you would like, I can also include a graph chart illustrating how tariffs have shifted around the world over the past decade—so you can more easily view the “new normal” trend in action.