A Separate American Freedom Bloc?

A surprising fact amid the past decade of rising economic populism in America and other Western countries is that, so far, global trade flows have not declined in any meaningful way and, in fact, remained near record highs as of the end of 2024. Shockingly, even though the Biden administration retained most of the tariffs on China levied during Trump’s first term, U.S.-China trade volumes hit an all-time high in 2023. Overall, global trade has increased more than 40 percent since 2016. Pat Buchanan’s aversion to international trade might be in vogue in certain precincts of the Right, but international trade has not been so obliging. Even in 2025, after the Trump administration’s tariffs were imposed in April, the United Nations Conference on Trade and Development observed that global trade grew compared with 2024, with total value rising about seven percent to a record of approximately $35 trillion.  

Much of this growth was driven by price effects and front-loaded trade ahead of tariff changes rather than by underlying volume increases. But we also know that after the damaging effects of Trump’s tariffs immediately emerged, the administration substantially reduced or eliminated its rates, exempting nearly 40-50 percent of imports from tariffs. The Trump administration has continued to lessen the effects of tariffs on various goods, including Argentine beef. To say the least, Trump’s tariffs have been a moving target.

Global trade isn’t ending; it’s dividing into separate trading blocs. What could be happening, as economist Neil Shearing observes in his recent book The Fractured Age (2025), is the emergence and likely hardening of distinct U.S. and China trading blocs. The era of endless globalization has likely stalled, but the world isn’t deglobalizing either, according to Shearing. What Trump forced into the argument in 2016 was a re-evaluation and the resituating of America’s course toward China. A new posture that was due since Xi Jinping became ruler for life in 2012, pursuing his goals “to reassert the primacy of the Communist Party in domestic life and to advance China’s position as a global superpower.” Shearing notes that has translated into more repression in China and more aggression on the world stage. Curiously, the idea of forming a separate trading bloc, the so-called Trans Pacific Partnership led by America, with other Asian nations but excluding China, was a conclusion reached near the end of the Obama administration, but the anti-trade contingent in both parties eliminated it as a possible course of action.  

The China that emerged intended to become self-sufficient in cutting-edge technologies with the “Made in China 2025 Project,” and use the Belt and Road Initiative to project power around the world in infrastructure investments in Africa, Latin America, and Asia. Countries on the receiving end would be greatly indebted to China and thus at their mercy with key pieces of national projects, natural resources, and property. At the same time, China manifested a much sharper opposition to America, causing the United States to reconsider its ongoing effort to engage China within the global trading system, as defined by China’s membership in the World Trade Organization (WTO). The WTO is currently unable to enforce its rules against members, Shearing notes, because America began blocking appointments to its Appellate Body in 2019, preventing it from mediating trade disputes. With the fraying of the WTO, so goes the hopes for a flat, international trading system.

Shearing’s book was released before the 2025 Trump tariffs were implemented, but he still persuasively argues that the future course of trade between China and America will largely shift away from trading goods that center on security, medical, and technological needs, i.e., semiconductors, critical minerals, pharma, and electric vehicles, with each other. But trade between the two countries will likely not cease, as other goods will still be traded, including many consumer goods. Shearing’s main argument that international trade isn’t going away, despite some fractures, raises as many questions as it provides answers. The real question is how hard it breaks and what the range of consequences will be for each nation.  

Shearing predicts that the fracturing of trade will lead to the emergence of separate trading blocs, split between a U.S.-led Western bloc and a China bloc, which should help America maintain its economic hegemony in the best-case scenario. Trade flows between the blocs will decline, and Shearing notes that they have been flat between 2021 and 2024. In addition, Shearing points out that China faces problems in its domestic economy, and that the trading bloc it is likely to lead will be poorer, less economically diverse, and dependent on autocratic countries for its long-term trade. The China bloc, he explains, will be composed of autocracies, commodity producers, or both: Russia, Iran, Venezuela (although this is doubtful after the Maduro raid), and large parts of Sub-Saharan Africa. China’s growth model has been to invest domestically for the past three decades, 40-50 percent of its gross domestic product. This investment process has given China, Shearing states, an advanced capital stock. But where to invest now? Can its gains continue under this state-driven investment model? China's working-age population will also shrink by 0.5 percent each year over the next two decades.

The U.S. bloc will be far larger economically and much more diverse, with complementary relationships abounding amongst its trading partners: Canada, Japan, Korea, and most countries in Europe. Vietnam, Saudi Arabia, and India are likely to tilt toward the American bloc but could be lost under various circumstances. Shearing predicts that such a bloc would comprise 70 percent of global GDP, while the China bloc would only control 25 percent. In anticipation of this scenario, China has signed bilateral agreements and regional free trade agreements with 30 countries, where 40 percent of China’s exports can be traded. None of the signatories includes the EU nations or the United States. The Regional Comprehensive Economic Partnership, of which China is a signatory with other Asia-Pacific nations, accounts for one-third of global trade.  

China’s bigger problem is that America remains the only country that could absorb its excess production, and a sizable portion of the goods produced by the China bloc will need to be purchased by the U.S.-led bloc. Overall, Shearing notes, “the China bloc derives around 10-15 percent of its GDP from exports that are ultimately consumed in the U.S.-bloc. In contrast, the U.S.-bloc derives less than 5 percent of its GDP from exports that are ultimately consumed in the China-bloc.” Chinese exporters have much to lose from severing trade with America.

Shearing, though, describes how what could be a workable, indeed positive arrangement for the U.S. and its aligned nations could also fail to coalesce. Much of this failure would hinge on American leadership abnegating responsibility for charting a workable course that would attract other nations. How? The obvious one, Shearing states, is for America to increasingly isolate itself, leaving would-be coalition members on their own. Part of this rejection could include alienating long-standing allies on military support and commitments to protect them. The four-part calculation Shearing presents is “whether China changes course and reforms; whether fracturing can be contained to sensitive areas; whether the U.S. remains a leader that the rest of the West coalesces around; and whether the two come into conflict.” Shearing concludes that such a stunning failure of American leadership is highly unlikely. Nonetheless, with the benefit of hindsight, we should carefully read Shearing’s warnings.

During 2025, have we not observed the Trump administration imposing tariffs on allies, including in the Asian region, on nations that America needs to be in its bloc rather than China’s? This list includes Japan, Taiwan, and Vietnam, among others. Tariffs that America imposed on India, a country that could join the China bloc, and to which many nations are relocating their production lines from China, make no sense. Australia is also integral to containing China, yet our tariff rate on this country is 10 percent, rising to 25 percent for cars and light trucks and 50 percent for steel and aluminum products.  

America has treated two of its largest trading partners, Canada and Mexico, as if they resemble North Korea, with insulting rhetoric from President Trump and imposing steep tariffs despite nearly 40 years of free trade among the three countries. The weighted average tariff rate on Mexican exports to the U.S. is approximately 23-24 percent, accounting for exempt and tariffed products. Adding to these errors have been Trump’s tariffs leveled on Canada and humiliating comments about the country as the 51st state, and calling its Prime Minister Mark Carney, Governor Carney. So intense has been the Canadian reaction that the nation rejected electing the favored conservatives and their prime minister candidate because of presumed closeness to Trump in the recent national election. After repeated insults and tariffs, and seemingly open to reneging on the U.S.-Mexico-Canada Agreement, which is really Trump’s agreement, Canada’s prime minister announced to the world that it would enter into a trade agreement with China. Canada’s reaction to arbitrary behavior doesn’t have to be a complete severing of trade with America, which is impossible, but finding new outlets for its goods.

Rather than signal support to European Union members, the Trump administration has imposed tariffs on EU imports capped at about 15 percent for most goods under the U.S.–EU framework deal of 2025, although certain goods like aircraft and aircraft parts, critical raw materials, certain chemicals, agricultural products, and natural resources are at zero percent. The EU has not reciprocated with similar tariff rates on American goods. There are also repeated U.S. belittlements and insults of European states, some of which are deserved, none of which are prudently voiced publicly, without also praising and encouraging our European allies to help them resume the rightful course as members of the great Western alliance of nations.  

Do nations act based on self-interest, pride, and hatred? The European Union is smarting not only from tariffs but also from Trump’s belligerence towards Denmark over Greenland's sovereignty and his seeming willingness to invade it. Of course, Trump never followed through on his threats, but his actions were perceived as humiliating not only by Denmark but also by much of Europe, including leaders of conservative populist parties on the continent, Trump’s dear friends. The EU then announced that it has entered into an agreement with India that will reduce or eliminate tariffs on 96-98 percent of goods traded between the EU and India.  

America’s GDP is 25 percent of global GDP, yet America throws its weight around in such a heavy-handed fashion as if nothing untoward could happen. Should we be surprised, as journalist and political observer Mark Helprin recently describes, that the “25% tail can’t wag the 75% dog.” The rest of the world will take the initiative to secure their own trading futures, leaving us, if we persist in this course, to deal with the long-term effects of protectionist trading policies, which inevitably result in higher domestic prices in protected goods, reduced quality of same goods, less efficient and competitive companies in protected sectors, declining domestic wages, and reduced returns on capital. This is the scenario Shearing warns against, but that America is seemingly courting in many ways.

Does America believe that China is a threat? Strident moves by the U.S. in Latin America would indicate that the answer is yes. The Trump administration is pushing against Chinese influence in Venezuela, Cuba, Panama, Peru, Bolivia, and Argentina. And this is mostly for the good. But then, how does that reconcile with actions in other countries where we have imposed tariffs, spurned allies, or omitted forming alliances with the nations that are our natural allies? As Helprin writes, “President Trump has pitted his objectives against allies, enemies, rivals, and friends, not as a matter of miscalculation but, in the glaring absence of calculation, amid a tsunami of haphazard impulses.”  

Would now not be the time to build an alliance of freedom bloc nations in opposition to China, Russia, and Iran? The answer is yes, but the policies of this administration twist and turn in many different directions. One wonders where it will go next.

Richard M. Reinsch II is the Editor-in-Chief of Civitas Outlook.