Book review: Richard Baldwin,The Great Trade Hack: How Trump’s Trade War Fails and the World Moves On

Setting the Stage: Context and Purpose

Chapter 1 outlines the book’s purpose, structure and context within the volatile geopolitical and economic landscape of 2025. Baldwin reviews 40 years of US trade policy, from the George W. Bush era to Trump’s second term, tracing shifts from Roosevelt’s rejection of laissez-faire capitalism to Reagan’s tax cuts and the impacts of globalisation, automation and the 2008–2009 financial crisis. These factors eroded middle-class living standards, fuelling Trump’s tariff-focused agenda. Aimed at policymakers and those affected by trade policy, the book critiques tariffs’ failure to provide economic relief.

The Middle-class Malaise and Tariff Missteps

Chapter 2 examines domestic economic drivers of Trump’s trade policies, arguing they fail to meet US middle-class needs. Baldwin highlights that only 9% of middle-class workers are in manufacturing, the focus of tariffs, while most work in services, unaffected by tariffs. This renders tariffs ineffective against stagnant wages and declining living standards. Unlike Canada and Germany, which have strong social safety nets, the United States offers little support, exposing workers to globalisation and automation. Baldwin critiques Trump’s anti-trade stance as politically symbolic, not economically sound, ignoring structural issues and exacerbating middle-class struggles, unlike other nations that combine open trade with robust worker protections.

Chaos and Theatrics in Trade Policy

Chapter 3 depicts Trump’s trade policy as chaotic and performative, akin to a reality TV show fuelled by unpredictability. Shaped by his real estate background, Trump’s approach relied on bluffing, abrupt reversals and loyalty over strategy, exemplified by a 145% tariff on Chinese smartphones lifted after Apple’s CEO lobbied. His dismissal of evidence-based, export-led strategies undermined US interests. Driven by gut instinct from New York’s real estate market and a rejection of institutional expertise, Trump’s policies lacked coherence, disrupted supply chains and eroded trust among trade partners. Baldwin argues that tariffs served as tools for rewarding allies or punishing foes, not achieving economic goals, ultimately damaging the US economy and global standing.

The Limits of Protectionism

Chapter 4 critiques tariffs as an ineffective response to middle-class economic distress. While the 2008–2009 financial crisis fuelled protectionist sentiment, tariffs primarily impact manufacturing and do little for the service sector—where most middle-class jobs lie. Instead of addressing core issues like wage stagnation or weak social safety nets, tariffs raise consumer prices and reduce purchasing power. Baldwin describes a vicious cycle: tariff failures worsen economic conditions, driving further political demand for protectionism. He contrasts the pre-2008 pro-trade consensus with the post-crisis shifts towards economic nationalism, exemplified by the Trump administration. Ultimately, Baldwin argues that the real causes of middle-class strain are domestic, and tariffs are a politically convenient but economically misguided fix.

The Decline of US Manufacturing

Chapter 5 attributes the decline of US manufacturing to globalisation and technological advancements, not unfair trade. The rise of ICT enabled G7 firms to offshore labour-intensive production to low-wage ‘I6’ countries, boosting China’s manufacturing share from 3% in the 1990s to over 20% by 2020, driven by profit-seeking corporations, not theft. Post-Reagan, the United States abandoned strategic industrial policies, unlike other high-income countries, leaving it exposed to supply chain risks, as seen during COVID-19. Critical sectors such as semiconductors, shipbuilding and pharmaceuticals now depend on foreign producers, with Taiwan leading in semiconductors and China controlling rare earths and generics, threatening national security. Baldwin argues tariffs cannot restore capabilities or drive innovation, reviving US manufacturing demands’ investment in infrastructure, skills and stable regulation.

Macroeconomic Miscalculations

Chapter 6 debunks the myth that tariffs can fix the US trade deficit, framing it as a macroeconomic issue caused by overspending. Baldwin’s ‘two-lever theory’ shows tariffs only raise import costs without reducing the deficit and risk triggering a recession. He warns that Trump’s erratic tariff policies weakened the dollar, stirred forex instability and stoked stagflation fears. A village fable likens tariffs to shopping at an expensive store—treating symptoms, not causes. Baldwin cautions against ideas like the ‘Mar-a-Lago Accord’ to devalue the dollar, arguing that trade deficits shrink in recessions—not through tariffs—but at the cost of economic growth.

US–China Systemic Clash and Post-American Trade Order

Chapter 7 depicts the US–China trade war as a clash between state-led and market economies, with no clear winner due to deep interdependence and political constraints. China’s resilience makes it a stronger rival than past challengers like Japan. Baldwin likens decoupling to ‘unscrambling an omelette’, calling instead for strategic coexistence.

Chapters 8–10 describe the global shift triggered by Trump’s tariffs. Chapter 8 outlines a ‘post-American’ trade order, where US protectionism fuels new FTAs and trade realignment, shaped by Baldwin’s ‘two-level political economy’ of domestic and international forces. Chapter 9 warns that US disregard for WTO rules weakens global leadership, but coalitions such as the European Union and Japan are upholding the system. Chapter 10 urges rule-based retaliation and shared global leadership, as the United States—with just 15% of global trade—is no longer central to the world economy.

The Fragile Future of Global Trade

Chapter 11 warns that Trump’s tariffs threaten the WTO’s rule-based framework, risking a collapse akin to the 1930s. Baldwin outlines scenarios where trade could falter or survive through managed multilateralism and regional trade blocs. He urges other nations to uphold trade rules and cooperate to sustain the system without US leadership. The book concludes with a call for new leadership to redefine the global trading system, emphasising resilience and cooperation over recklessness. Baldwin’s metaphor of the United States as a former rule-setter stepping away underscores the need for other countries to safeguard global prosperity.

Strengths and Weaknesses

Baldwin’s The Great Trade Hack excels in its clear, engaging narrative and robust economic analysis, making complex trade dynamics accessible to non-specialists. The use of metaphors, like the village fable in Chapter 6, simplifies macroeconomic concepts, while the historical context—from Reagan’s policies to China’s rise—provides depth. Comparisons to past trade conflicts, such as with Japan, enrich the analysis, offering valuable lessons for navigating current tensions. The book’s focus on policymakers ensures its relevance to those shaping trade policy, and its warnings about the fragility of the global trade system are timely and compelling.

The book, however, has some limitations. Its dense economic analysis may challenge non-expert readers, and its policy focus may not resonate with broader audiences. While Baldwin effectively critiques Trump’s tariffs, he offers limited concrete solutions for rebuilding the US industry. The book also misses an opportunity to delve deeper into the perspectives of emerging economies such as India and Brazil, which are key players in the evolving global trade landscape.

Conclusion

The Great Trade Hack is a sharp critique of Trump’s tariff-driven trade policies, revealing their failure to support the middle class, their economic disruption and the weakening of US global leadership. Baldwin argues that tariffs are a politically driven but ineffective response to deeper structural issues. As other nations form new trade alliances, the United States risks isolation without a shift towards evidence-based, strategic policymaking. His call for global cooperation to uphold the rules-based trade system is timely and compelling, making this an essential reading for those concerned with the future of global trade.