Let’s start with the premise: “free trade is good for economies with excess production and trade surpluses.” That is a misunderstanding of how trade works. Free trade isn’t some rigged game that only benefits surplus countries. The US has run trade deficits for decades and still emerged as the most powerful economy on earth. That's not despite those deficits but in part because of the structure that allows them - namely FDI and the reserve currency status of the USD.
The US receives massive foreign capital inflows. Foreigners buy US Treasury bonds, stocks, real estate and invest in businesses. Those inflows keep interest rates low, fund domestic investment and support the dollar’s global role. In other words, the trade deficit is not some evidence of decline. It is the accounting counterpart of America’s central role in the global financial system. That is just how the balance of payments works. — Benkei
The position of the US economy in the world now is nothing like is was after the world war, or the seventies. Comparatively its advantage has declined steadily over time. It is still the most powerful for now, but if the trend continues it won't be for much longer.
You might say that's fine because a rising tide raises all boats, and so everybody gets more wealthy. But that's not what actually happened. Real wages of workers in the West haven't grow much since the seventies, it's Western elites and Asia that has benefitted from the growth predominantly.
The other problem is geo-political as Tzeentch pointed out. If you only look at the economic aspect this trend might not be that worrying, but the issue is that offshoring your production does mean you lose military industrial capacity and you will eventually not be able to keep up with China. In shipbuilding for instance China flew right past the US in the past decade.
You also claim that the US created the postwar global system because it used to run surpluses and that it should step away now that "the East" benefits more. But that ignores the actual historical logic behind the system. The US didn’t create the global economic order to rack up trade surpluses. It created the order to prevent another world war, contain communism and entrench a rules-based system in which it would remain the institutional and financial center, regardless of whether it was exporting more goods than it imported. That strategy worked. The US became the issuer of the reserve currency, the seat of global capital and the main power in the world. Walking away from that now doesn’t punish China. It vacates the field for them to take over as the second largest economy in the world . — Benkei
Well I'm not arguing that it was the only reason, but it was a reason... the dominant power will not build a system that doesn't work for them economically. Historically it has generally been the well performing established economies that advocated for free trade, and the less competitive economies that tried to protect their emerging industries. And that is what China has done, it has created the system that could maximally benefit from what the West had set up, i.e. protectionism not mainly by tariffs maybe, but by heavy subsidizing of industrial policy initiatives and erecting barriers to their internal market.
You say China should carry more of the burden. Fair enough. But then what? Are we handing them the keys to the system because the US is tired of leading it? Tariffs aren’t creating “space” for anything coherent. They’re just inflaming tensions and undermining trust in US stability. A real renegotiation of global institutions would require diplomatic capital and credibility; the very things a chaotic trade war destroys and Trump personally lacks. — Benkei
The issue is that China wouldn't necessarily want to fundamentally re-negotiate the system that was serving them reasonably well as it was. By threatening to plunge the entire thing into chaos you would think it will make them more amenable for talks about real change. They have the most to lose because their economy relies to most on exports. And finding other markets to sell their products is easier said than done because there aren't that many markets like the US that can buy up their surplus.
I don't know what Trumps plan is, or if they even have a set plan... And it could easily backfire for the US. But I do think you will have to eventually do something to re-adjust the system to a world that has changed fundamentally (the share of world GDP of the US having declined as much). It seems to me they are just throwing stuff at the wall now to see what sticks.
It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something. — Franklin D. Roosevelt
They are trying something alright, admitting failure frankly is another matter.
Your swipe at the left is a convenient distraction that makes me wonder why it's even in there. Yes, parts of the left were historically anti-globalist, but that was in defense of labour standards, environmental protections and democratic oversight: not nationalist economic isolation. And as a leftist I'm STILL in favour of tariffs but to force other countries to produce at the same level of regulations as the EU does so we have a level playing field between local and foreign producers and costs of production aren't unfairly externalised unto poor people abroad and the environment there. — Benkei
As a European myself I'm all in favour of those standards too, I like healthy food and and a clean environment. I would say the global system as it is now is a problem for that too because it typically encourages a race to the bottom. That's another reason a re-negotiation is in order. I'm thinking this probably won't happen under Trump, or at least not the way we would want it because he doesn't really care about these things, that's right. My swipe at the left is more an attempt at waking them from their dogmatic slumber. I think they should realize what moment we are in, and not waste the opportunity in little fights defending the status-quo against Trump... this is a transition period and so they should be working towards a real and new plan themselves.