Chantal Thomas* and Robert Wai**
David Kennedy’s many leading contributions to the critical analysis of global governance have notably included attention to transnational economic relations. This work straddled the period of liberal market orientation in the era of the Washington Consensus and the much more contested period of economic relations of the 2010s onward. In Of Law and the World, Kennedy and Martti Koskenniemi, another leading figure of critical legal analysis of international law, reflect on their past and continuing work that highlights the relevance of a critical legal sensibility for dealing with questions of law, power, and political economy.
Of the many themes in David Kennedy’s work and in Of Law and the World, one that seems of particular relevance at the current moment is the relation of contradiction within legal texts and institutions to conflict and contestation in the broader political economy. Early critical work by Kennedy and Koskenniemi revealed and analyzed overlooked gaps, contradictions, and ambiguities within legal regimes related to public international law, international trade law, and law and development. Kennedy’s analytical efforts, particularly in later work, have increasingly emphasized the relation of legal text to underlying political and economic struggle among individuals, groups, and states. Throughout the most recent volume, as in earlier work, Kennedy and Koskenniemi continue to articulate an account of law that is productively and rigorously realistic about the continued use and complex effects of law on strategic power, including economic power.
This article explores how the focus of critical legal analysis on analyzing ideational and material contestation in global law and policy is all the more relevant in what has been described as a “rupture” in the rules-based international order, including in economic relations. In particular, we explore how a critical legal perspective is particularly valuable for the analysis of the role of law in constituting the terrain of strategic bargaining/coercion between both open rivals and purported allies. The article will then briefly suggest how the critical view can highlight not only new challenges but also new possibilities that are opened up by a changed terrain of law and political economy.
This article employs tools of critical legal analysis that reflect decades of community among David’s students and colleagues in multiple formations, from New Approaches to International Law (NAIL) to the Institute for Global Law and Policy (IGLP), with some other variations in between. These conversations have occurred in tandem with other conversations among multiple overlapping critical communities, ranging from critical legal studies to critical race theory to feminist legal theory and “up against family law exceptionalism” to Third World Approaches to International Law (TWAIL). For us these conversations and communities across a span of decades bear out one of the themes in Of Law and the World: how engagement among critical scholars, including debate among allies and friends, is one of the great legacies of the politics of friendship.
In these various iterations, and in our studies with and alongside David and these broader critical communities, techniques that have come to the fore include legal-realist analysis of the distributional effects of law and the organizing role of coercion by state and non-state actors in affecting those effects; discursive analysis of the role of legal consciousness in mediating and justifying legal outcomes; and historical analysis of the role of global economic power and inequality in structuring how actors and issues interact with each other through laws and institutions. The application of these techniques allows for an understanding of how the law structures material effects and normative frames; how these consequences may or may not be acknowledged in the representations available from the legal system itself; and how the legal terrain is continuously subject to movement across these various dimensions. Yet another aspect of a critical analysis is that it tends to highlight the ways in which moments of change in legal systems often share continuity with previous eras, not so as to downplay the historical significance of changes that arise in fields like international economic law, but rather so as to more accurately situate them in relation to current and previous institutional moments. We show how these various approaches can illuminate the new terrain of international economic law.
(1) The New Normal of Economic Coercion
(a) Trade Relations and Trade Law After Cooperation?
In a high profile recent speech at the Davos World Economic Forum on January 20, 2026, Prime Minister Mark Carney of Canada openly identified the “rupture” in contemporary international relations in particular in the economic realm, and the end of the “rules-based international order.” Speaking one day in advance of, and not surprisingly in significant contrast to, President Trump’s address, Carney touched on a number of current global doubts. The Davos meeting occurred, for example, at a moment when Europe faced significant Trump administration pressures on the sovereignty of Greenland, including references to use of tools of economic pressure to gain advantages in Greenland. Carney emphasized parallel pressures for a state like Canada, including the doubts from the US president about Canada’s sovereignty, but more concretely in the face of implementation of new US tariff and other barriers on Canadian trade, including in many sectors significantly covered by both the multilateral agreements associated with the WTO, but also by the preferential agreement renegotiated as the USMCA during the first Trump administration. This shared experience of new tariffs imposed or threatened by the Trump administration extended to many geopolitical allies of the US, and arose in conjunction with multiple claims by the US, including not just those that highlighted economic policy concerns, but also those that construed national security to include economic security, as well as pressure on control of illegal drugs and military and defense spending. The Canadian prime minister commented that Canada and many other similarly situated sovereign states now had to stop “living within a lie” and openly admit that the rules based international order after a series of crises faces a “rupture, not a transition.” International relations, even among long-time allies like members of NATO, were increasingly marked by strategic conflict, and the use of instruments of “economic coercion” by hegemonic states in the system. In that climate, whether dealing with old rivals or powerful allies, “You cannot live within the lie of mutual benefit through integration, when integration becomes the source of your subordination.” A new “value-based realism” was needed for middle powers (basically all non-hegemonic powers) to see that the rules-based order has been extensively changed by regular use of “hegemonic economic coercion.”
What does critical legal analysis suggest about a new condition of rupture, or at least a foregrounded awareness of coercive power, in international trade relations? Critical analyses of law have revealed overlooked gaps, contradictions and ambiguities within both domestic and international law. Less often appreciated, such approaches also have been productively realistic and analytical about the complex relationship of law in general and particular regimes of law to strategic power, including economic power. These links and effects reflect what Kennedy and Koskenniemi argue includes both (a) the more mechanically strategic way that legal institutions or processes could be instrumentally used by a strategic alert actor; but also very much (b) the constitutive role of legal institutions and concepts in creating the facts of political and economic power, including through the framing role of concepts such as sovereignty, national interest, citizenship, or intervention/non-intervention.
(b) Strategic Behavior in the Rupture and Normal Coercion in Trade Relations
For David Kennedy and other critical legal analysts, viewing law as significantly about coercion is not a rupture from a norm of non-coercion. A common starting point for critical legal analysis is to view legal fields as involving struggles among individuals and groups over distribution of effects, including material and symbolic, through both legal and non-legal mechanisms. For critical lawyers, law is not placed at some purely normative plane as only about the conceptual coherence of doctrine or the legitimate sovereign expression of the democratic polity, or of a mutual interest that remains stable and coherent. Rather, it is a complex mechanism of politics that distributes power and resources among states, groups, and individuals.
Law reflects distributional and bargaining struggles between sovereign actors. In the international trade context, international trade law instruments such as treaties and domestic trade legislation reflect distributional struggle within each sovereign entity. Trade theory supports critical legal analysis by emphasizing that any sovereign interest, such as the US national interest, aggregates the interests of many individuals and groups. Any piece of domestic legislation, such as trade remedy legislation or tariff legislation, reflects distributional settlements. Some groups (such as importers including end consumers or input importers, or exporters to foreign markets who face tariffs) benefit and others (such as domestic producers in sectors without comparative advantage) do not. These interests are all the more complex in the new production configurations of global supply chains, which Robert Reich already played off in the 1990s when he asked, “Who is Us?” For example, US-headquartered auto manufacturers have transnationalized their production chains to take advantage of changes in technical conditions but also reduced trade barriers to reengineer” underlying cost and production advantages of different segments. Such vertical integration features are then actualized through longer term investments in production, transport, and input arrangements.
The same is true of intra-sovereign settlements such as those between different regions of the state, especially when those interests align with different legal jurisdictions within, for example, a federal state. A bargaining position of the sovereign state on tariffs with other sovereign states reflects an intra-state distributional struggle and bargain among local actors; e.g. an agricultural exporting local state with new foreign market possibilities (e.g. in soybeans) versus an industrial state facing new competition from foreign producers. A domestic statute such as the International Emergency Economic Powers Act also reflects how international trade positions are based on domestic legal settlements between different branches of sovereign governments operating under a constitutional separation of powers, for example with respect to taxing authority between the Executive and Congress.
This strategic and distributional understanding of law, including all fields of domestic, international, transnational, and public and private law translates into a more agnostic approach to issues of coercion. As Robert Hale memorably expresses it, “But were it once recognized nearly all incomes are the result of private coercion, some with the help of the state, some without it, it would then be plain that to admit the coercive nature of the process would not be to condemn it.”
Is coercion best viewed as normal in international trade? Each of us in previous work has found helpful to an understanding of international trade law the analytical framework adopted by Daniel Tarullo in his 1987 article, Beyond Normalcy in the Regulation of International Trade. Tarullo’s departure point was the conception of “normal” market transactions that provided both the regulatory and the ideological justification for governments’ deployment of trade restrictions, such as antidumping duties and countervailing duties. The United States, in particular, has been a robust user of these kinds of “remedies” for putatively “unfair” or “abnormal” trade. Yet the definition of the “normal market”, and implicitly of what constitutes an abnormal market, has been criticized by many economists and critical legal analysts like Tarullo as incoherent and subject to political manipulation. Nonetheless, the use of trade remedies has not abated – indeed, the efforts of the WTO to rein in US use of trade remedies constituted an important source of eventual US opposition to WTO dispute settlement, leading to its ultimate shutdown.
Tarullo’s analysis encourages an opening up of those concepts and an understanding of the role of legal and market ideology in justifying as “normal” some arrangements over others despite an analytically unstable basis. Applying this concept at a very broad and transhistorical level to the trading regime, we can see how the trading system has understood itself and how that understanding has been subject to all sorts of contradictions.
Take, for example, the understanding of the world trading system as having achieved a remarkable level of trade liberalization in the period since the establishment of the General Agreement on Tariffs and Trade (GATT) in 1947. The fact often cited is the decline of weighted average tariffs on industrial goods to under 5%. Yet this statistic obscures a number of important countervailing realities. First, consider the ongoing use of “distortionary” measures in non-industrial economic sectors. Developing state governments have long criticized the use by industrialized state governments of trade restrictions ranging from much higher tariffs, to non-tariff quantitative restrictions and tariff rate quotas, to various kinds of subsidies. These measures by rich countries have blocked the ability of poor countries to realize their comparative advantage in these sectors of production. In the period of post-World War II decolonization, economists in developing states mounted critiques showing how the trading system was not a level playing field but was designed to maintain dependency of poor countries on rich countries by relegating them to non-industrial forms of production. Yet for much of the life of the trading system, these kinds of protective trade measures existed more or less “off the books” of the GATT, in parallel universes unreachable by trade disciplines. (The centrality and persistence of GATT-inconsistent textile quotas forms another example.) In the negotiations leading up to the Uruguay Round, developing state governments pressed for an extension of liberalizing disciplines to agricultural production, but the process that was supposed to play out over the life of the WTO quickly stalled during the Doha “Development Round” of negotiations. Subsequent negotiations have underscored how stubborn and complex the conflicts over agricultural trade liberalization are.
Second, even in the area of industrial goods, the decline of regular “MFN” tariffs has seen a concomitant rise in the use of the trade remedy processes that Tarullo identified. The consensus is that the use of these measures has constituted a reaction to the decline of regular tariff levels. Yet the existence of these kinds of “irregular” tariffs is much less transparent – another form of “off-books” trade restriction that allowed the trade regime to continue to proclaim a relatively unproblematic or uncomplicated trajectory toward liberalization.
(c) Trade Instruments as Coercive Instruments
We can turn a similarly critical eye on the rise of trade instruments that are openly described as “anti-coercion” as a signal of a new common sense about the relation of trade to coercion. Notably, the European Union adopted its “anti-coercion instrument” (ACI) in 2023. The events that motivated the adoption of the ACI had to do with the seeming increase in aggression and assertiveness by geostrategic powers using trade and investment pressures to achieve non-trade, national security ends. The ACI states that “economic coercion exists where a third state applies or threatens to apply a third-state measure affecting trade or investment in order to prevent or obtain the cessation, modification or adoption of a particular act by the Union or a Member State, thereby interfering in the legitimate sovereign choices of the Union or a Member State” (Art. 2).
For scholars of developing countries in the international economic order, the EU’s objection to the use of market access and market pressure to influence governments’ policy choices might have seemed somewhat surprising. After all, during the period of the ascendant Bretton Woods system, both the EU and the US supported the use of conditionalities exerted by international financial institutions (IFIs) to bring about policy reform in developing-country borrower states. IFIs such as the International Monetary Fund, the World Bank, and others conditioned access to financing for developing states on acceptance of commitments to particular kinds of trade, investment and monetary policy reforms, including adoption of fiscal austerity, privatization of state-owned assets and firms, trade liberalization, and monetary “stabilization”. It must be emphasized that, to render these deployments of market power legitimate under international economic law, a pronounced reinterpretation of applicable international instruments was often required. In the case of the World Bank, for example, because Article IV of the World Bank’s Articles of Agreement provided that “[t]he Bank and its officers shall not interfere in the political affairs of any member,” the Bank adopted the position that these sorts of conditionalities did not constitute political interference but rather more neutral terms necessary for good “governance.” In a similar vein, the IMF’s policy of conditionality came to rest on the provision in Article IV of its Articles of Agreement requiring members to “seek to promote stability by fostering orderly underlying conditions… for financial and economic stability.”
And after the establishment of the WTO in 1994, the WTO DSB Appellate Body rejected earlier interpretations of the use of unilateral trade sanctions to achieve “non-trade” objectives such as environmental conservation, instead opting for a carefully calibrated “balancing” analysis that permitted such measures as long as they were applied in an even-handed way. At the time that these “trade linkage” debates were raging, many developing countries denounced them as coercive and intrusive on their sovereignty. Yet the perspective that ultimately prevailed in the WTO’s jurisprudence is that a government’s use of unilateral trade sanctions to condition access to its own market was an appropriate exercise of its sovereignty rather than an intrusion on the sovereignty of other governments.
In addition to IFI conditionality and WTO trade “linkage,” another example of the deployment of market power to achieve political ends can be found in the longstanding usage of export controls, sanctions, embargoes and boycotts to underscore geopolitical or military objectives. While these kinds of measures were often authorized by authoritative multilateral organs of the international community, e.g. the UN Security Council, they were not always. In fact, in US law. there has been an entire body of legal practice, running parallel to the “normal” trade regulation that flows from the GATT/WTO system, which pertains to the navigation of various forms of military security-based export controls. This body of regulations has operated through the US Treasury Office of Foreign Assets Control (OFAC) and involves the prohibition or other control of transactions involving Blocked Persons, Specially Designated Nationals, and other watchlists.
One could argue that what distinguishes the measures that the EU has reacted to in recent years – China’s use of market power to reinforce its assertion of territorial control over Taiwan; Russia’s use of market power to reinforce its aggression against Ukraine; the US’s use of market power to establish a new regulatory understanding of national security as economic nationalism – is that they fall outside areas of “legitimate” national policy space, and indeed the concept of legitimacy is the analytical crux of the regulation as promulgated. The use of unilateral trade sanctions to achieve environmental, labor or human rights measures has been justified on the basis that such measures are the only way that principles which have been multilaterally endorsed, including by the offending governments through treaty ratification, will actually be enforced, owing to the absence of enforcement mechanisms in the treaties themselves. At the same time, one could counter that the sovereign determination of the ratifying governments was to adopt the treaty principles without enforcement mechanisms, so that adding unilateral enforcement still constitutes an encroachment on sovereignty. As one contemplates these different mechanisms, one moves further away from any kind of multilaterally endorsed principles and closer to pure geopolitics. Considering this continuum at least raises the question that what the EU truly finds objectionable is not the use of market based coercion – but rather its use against the EU as opposed to other territories.
(d) Coercion, Conflict and Cooperation in Normal Trade Relations
The analysis applied above – showing gaps, contradictions, and ambiguities – should be accompanied by a legal-realist understanding of coercion itself. Hale’s analysis of coercion and distribution in a supposedly non-state is key here. The liberal-legal valorization of the market rests on the notion that it is a manifestation of individual freedom and choice. The “normal” is a free market – if market transactions are coerced, they are “abnormal” and often illegal for that reason. Hence in areas ranging from private law (duress as a basis for voiding contract) to public law (the abolition of slavery and the outlawing of trafficking), the existence of coercion is a categorical basis for distinguishing abnormal and illegitimate market transactions. Yet Hale showed uncontrovertibly that coercion is in fact a central feature of how markets operate – and that liberal-legal rules are central to carrying out those operations.
What made Hale’s analysis of coercion so particularly distinctive was the way in which it was offered in a clinical and analytical vein. It was not that employers exercised coercion against workers and therefore that coercion was illegitimate. Should workers be able to organize and withhold their labor to demand better terms, they would successfully be exercising market-based coercion against employers. Consequently, the existence of coercion did not carry with it a particular political or moral valence – it was simply a description of the terrain across which economic actors operated, each deploying legal rules and market conditions in an effort to apply coercion in furtherance of their own interests.
The application of Hale’s analysis produces a second general set of observations. In addition to the fact that there is nothing particularly new about governments using market based “coercion” in international trade, as shown above, there is the realization that the existence of coercion is itself a background feature of the way that markets operate. It is analytically and perhaps even politically unhelpful to think about coercion as “abnormal.” This observation in turn forces more precision in articulating why certain forms of coercion are bad or undesirable – whether they promote politically desirable outcomes or not – as opposed to a simplistic categorical condemnation.
The non-moralizing approach to coercion described above – analyzing it as a result of interaction among agents endowed with both legal and non-legal bases of bargaining power – also permits critical analysis to identify the nuance of conflict and strategy, including through law. Coercion is clearly not about simple harmony and agreement, but neither is it a ceaseless Hobbesian war of all against all, resulting in bare lives, brutish and short.
Instead for legal realists like Hale and for critical legal analysts more broadly, conflict over distribution can be true of most legal regimes, and yet also be consistent with various mechanisms of cooperation and coordination. There are many varieties of law as of conflict. Unlike some versions of structural realism in international relations, critical legal analysis recognizes that not all conflict is the same, and not all forms of bargaining power when deployed lead only to unceasing conflict. A neo-realist account of international relations might suggest that an anarchic international structure means that no state, no matter how big or small, should or would ever trade off losses in terms of relative power for gains in absolute power or welfare. But other realistic accounts of social theory seek to avoid a simplistic or fetishistic attachment to the idea of conflict uber alles. Many inter-sovereign relations are not of any broader geopolitical or military significance. Nuclear war is not the same as traditional armed conflict. Economic sanctions are not the same as armed conflict. Discursive moralism is not the same as economic sanctions. A simple reversal of the Clausewitzian slogan about war as politics by other means, that politics is war by other means, or law is war by other means, is too simplistic.
To use the language of bargaining power, and in particular the early insights of Thomas Schelling about game theory (including in international relations), there can be a rational strategy of conflict, in which sovereign actors in an anarchic structure without a hierarchical leviathan ensuring order and cooperation, can nonetheless seek and achieve a structure of cooperation and coordination. Competitive conflict can lead to rational strategies that enable cooperation. These can range from tit-for-tat retaliation across time to institutional settlements such as contracts/treaties/institutions. Not all anarchic structures, in other words, lead to zero sum conflict; many situations of sovereign interaction can lead to an emergent order, including institutions of law. As Schelling observes, “most conflict situations are essentially bargaining situations.”
Instead, while power is relational and constantly bargained for, it need not end cooperation. Law plays a particular role in institutionalizing such cooperation, especially between actors who across time can see that even in bargaining between horizontally positioned sovereigns, cooperative gains could be important. Such views about the empirical reality but also the structural coherence of cooperation is supported by work in new institutional economics on cooperation in conditions of structural anarchy. Importantly, these analytics have long been established in mainstream analyses including the existence of “order without law.” This is a general account but clearly relevant to the structural anarchy of international relations, including economic relations.
Legal instruments and institutions can stabilize expectations among trading partners who do not always want to strategize out every single episode of interaction, every good crossing a frontier. This can simply be for reasons of transaction costs. But stabilizing expectations and planning also is needed for the larger planning purposes of private actors considering state policies (e.g. related to taxation and spending) and individual business planning (e.g. about investments in supply chains and distributional partners).
The critical view emphasizes this relational-distributional and therefore power dimensions of economic measures, and the legal institutional arrangements that influence economic measures and distribution of outcomes. It would seem to be especially good at moments, like the current rupture, where the doxa of “common sense” contained within stabilized institutional relations has become more dynamic and complex.
Critical legal analysis is unsurprised by the emergence of contradictions and conflict. As David Kennedy notes, international law has continued to operate in divided times, for example during the 1970s. Indeed, the capacity of legal reasoning to “resolve contradictions by elision, transformation, denial or deferral was … the ‘subtle secret of its success.’ That didn’t make it a good thing, but it explained something of how it worked.”
One important place where this critical analysis was deployed was against the common sense of liberal policy analysis identified with the era of the Washington Consensus in the late 1980s and 1990s. The accepted background common sense built on the mutual interest – among individuals but also among sovereign states – of economic relations based on principles such as absolute and comparative advantage was clearly a target for critical analysis. The assumptions about the naturalness or the necessity of the market was especially important for legal analysis given the rise of important new trade treaties and institutions, notably those of the Uruguay Round and the World Trade Organization, but also of increasing numbers of preferential trade agreements. Critical work challenged the darker sides of the new consensus at the distributional level, identifying rules such as IP protections during the essential medicines debate, or the differential approach to agricultural subsidies, as ill-founded for reasons of social justice and distribution, and also comparatively disadvantageous for many developing countries.
But critical understanding includes an awareness that most background consensus or “common sense” is not necessary by nature, but rather contingent, and subject to dynamic variation and change. “After neoliberalism”, critical legal analysis can continue to shed light on the continued use of law, its blindnesses and the strategic consequences of different legal texts and arrangements for various competing interests, but also competing values. In the global trade relations described in the Carney speech, are we not at such a moment?
(2) Pluralization of Policy Objectives in an Openly Strategic and Distributional Order
Being critically alert then might help in the task of analyzing the continuing or new ways in which legal instruments are deployed after the “rupture”, even in the face of more open strategic bargaining and coercion. For example, the new “open” embrace of realist and coercive power in trade relations does not create trade relations “beyond the law”. The critical lens also is helpful in thinking of alternative and perhaps superior conceptual and legal frames appropriate for trade relations in the new configuration, in which the goal is not simply a return to the era of the Washington Consensus but rather an effort to “build back better.”
A key central insight includes the pluralization of policy objectives that are within the domain of regular trade law analysis. A treaty text, such as treaty provisions addressing subsidization, such as de facto specificity (for example, under Article 2 of the WTO Agreement on Subsidies and Countervailing Measures (the SCM Agreement)), de facto prohibited subsidies (under SCM Agreement, Article 3), adverse effects and serious prejudice for actionable subsidies (in SCM Agreement, Part III) or injury and causation of injury by subsidization for countervailing duties (in SCM Agreement, Part V) has been revealed by critical theory to be filled with contradictions and ambiguities. But critical analysis also highlights that legal instruments, combinations of text but also common sense and policy assumptions, can be more or less successful in narrowing the plausible zone of interpretation and application of any particular text. The analysis of the treaty text components of the general exceptions under Article XX and security exceptions under Article XXI, show how a textual opening through an exception is deeply integrated with the normalcy or applicability of commitments on trade measures like tariffs or quotas.
The new terrain features not only new legal arrangements but also new legal analysis of existing trade law texts, whether those be international treaty texts or domestic instruments such as the International Emergency Economic Powers Act (IEEPA) (with the significance of the latter being all too evident in the recent SCOTUS decision in Learning Resources, Inc. v. Trump (February 20, 2026). This terrain does not feature only trade policy, but rather exists in a more open zone of plural policy objectives impacted by trade law, and therefore in need of policy decisions on priorities and preferences. For example, the US trade policies under the Trump administration but also the Biden administration reflect, in different ways, the return of inter- and intra-state distributional issues as central to trade law legislative reform and legal interpretation. The policy consensus or common sense that bracketed such distributional issues were based on a background theoretical faith that overall gains could justify concrete distributional losses for particular industries or groups (including through potential Pareto compensation through tax and transfer).
This sense also makes critical awareness that different kinds of effects might travel together. The Trump administration’s vigorous nationalism might be condemned by some social justice perspectives, but in other respects the effects are multivalent, even for social justice. So the renegotiation of the NAFTA in USMCA did, through a combination of executive nationalism, democratic congressional pressure in the US and in Mexico, a government led by President Obrador willing to try to secure some labour reforms, lead to significant new attention to labour issues in the new PTA. The significant reform, including virtual elimination in US-Canada relations, of the controversial Investor State Dispute Settlement procedures of NAFTA Chapter 11, a major target of social progressive critique is another example of the multivalent, plural effects of trade law in times of the rupture. This last also shows the link between weakening trade liberalization and the potential expansion of space for regulatory autonomy and experimentation of sovereign states.
Even with respect to trade competitiveness, let alone social regulation or distributions, a sense that national trade policies now have moved very much beyond liberal common sense has been confirmed. A sense of building back better, or at least differently, can acknowledge blind spots revealed in the rupture. Most obviously, basic elements of the development state, including state ownership, have now spread so that policies of Asian states notably of China have increasingly been openly embraced by purportedly market oriented developed states. . The Trump administration is continuing the various spending and protection policies of President Biden’s industrial policy initiatives such as the Infrastructure Investment and Jobs Act and the Inflation Reduction Act – policies related to strategic support for sectors such as technology. And the Trump administration has now included a number of proposals to expand direct US government ownership in private companies based in the United States (such as a 10% federal government stake in the chip maker Intel) and abroad (such as the investments in Canadian critical minerals companies Trilogy Metals Inc. and Lithium Americas).
The new terrain makes the instrument of tariffs not simply a cynical bargaining tool of the Trump administration. The combination of the Trump administration’s open embrace of new tariffs on a wide range of trade including with trade partners, often close geopolitical allies which the United States had preferential agreements, is a clear manifestation by the former hegemonic stabilizer that this old common sense or policy consensus around the level and direction of tariffs has changed. This perhaps only generalizes the piecemeal, de facto pockets of significant areas where tariffs were in play, such as against Russia because of sanctions justified under international and national security exceptions, or trade remedies of antidumping and countervailing duties.
This revival of tariffs as an open and active aspect of international bargaining returns to the new common sense instrument that historically was central to sovereign states’ repertoire of trade measures. GATT 1947 did not include a commitment to tariff elimination or any common tariff binding, but instead made tariff levels subject to processes of bargaining. But through and after the eight rounds of negotiations, this text became surrounded and secured by a policy common sense of a telos to lower tariffs.
In the new environment of 2026, trading states must constantly be alert to the idea that negotiated tariff commitments might not only not be lowered further, but may be actively raised or threatened to be raised. This new strategic realism affects not just states but also various private actors strategizing their approach to sales and distribution strategies, but also investment planning including for transnational supply chains of production. For states and diplomats, rising tariffs and threats of increased tariffs become a dynamic field of struggle, constantly in need of reinforcement including by threats of reciprocal retaliation whether through counter-tariffs or other measures, such as the potential added export quotas on critical raw materials that were identified by the Chinese government in the course of its strategic bargaining with the Trump administration.
Beyond pure instrumental purposes, however, a critical analysis will reveal that the new normal of tariffs as trade instruments opens up a wide range of plural policy objectives that may justify tariffs. So tariffs geared towards generating national revenue including for valuable and economic social purposes. Or tariffs based on strategic trade theory or infant-industry based protection for particular sectors. Or tariffs to internalize social costs such as environmental damage caused by weakly regulated production of imported goods in their state of origin, such as the EU carbon adjustments. An openly critical legal sensibility may not just only help diagnose more accurately a regrettable descent into realpolitik, but it may also help identify partial openings to a wider range of alternative pluralisms in international trade.
*Chantal Thomas is Vice Dean and the Radice Family Professor of Law at Cornell Law School, where she also serves as the Director of the Cornell Center for Global Economic Justice, and as Faculty Director for the Clarke Initiative for Law and Development in the Middle East and North Africa.
**Robert Wai has been a member of the faculty at Osgoode Hall Law School since 1998, where he researches and teaches in various areas of international economic law including International Trade Regulation and International Business Transactions.