The False Dilemma Between Protectionism and Free Trade

Donald Trump's second administration seems to have changed the global trade landscape. The Trump administration focused on free trade because it understands it as a practice that has damaged US hegemony by generating trade imbalances with its partners (especially China). From this perspective, high tariffs could help recover some of the industrial and economic power lost through globalization. "The most beautiful word in the dictionary is tariff," Trump said in 2024, and since his inauguration in January, we have understood that he was not exaggerating.

In this article, we aim to examine Trump's tariff policies from a critical perspective, transcending the predominant interpretations that present them as a radical break with the previous global economic order. Our research is structured around three fundamental objectives. First, to develop a rigorous analysis of the nature, scope, and historicity of the transformations generated by Trumpist tariff policies, situating them in the broader trajectory of the relationships between State and capital in contemporary capitalism.

Second, to critically problematize the dominant conception of "free trade," questioning whether current protectionist policies represent a true break with the free trade paradigm or whether they constitute, rather, a reconfiguration of the mechanisms of accumulation within the same systemic logic. Third, to examine the implications of these transformations for social movements that have articulated their strategies around the critique of free trade during the last three decades, evaluating the challenges that this new scenario poses for their interpretative frameworks and political practices.

We maintain that a critical reading of the current moment is fundamental for rethinking the strategies of social movements, particularly with respect to their relationship with nation-states and the ways of building effective transnational solidarities. The ongoing transformations require reconsidering both the political subjects who are protagonists of resistance and the scales at which these must be articulated to confront a system whose contradictions manifest simultaneously at multiple levels.

Trump's protectionist policies are not a historical anomaly but a return to fundamental strategies in the construction of the United States as an industrial power. Contrary to the dominant liberal narrative, this country developed its economy under intense protectionism during the 19th century, with tariffs that exceeded 40% until the Second World War1. Far from representing a "deviation" from free trade, this measure was a tool for managing asymmetries of economic power, allowing emerging powers to accumulate industrial capacity before competing globally. The Great Depression of 1930 intensified protectionism with the Smoot-Hawley Act, which raised tariffs to historic levels. This crisis represented more than an economic recession: it was an organic crisis of capitalism where protectionism functioned as an emergency mechanism to contain the cataclysm within national borders and facilitate the restructuring of capital-labor relations.

Roosevelt's New Deal involved massive state intervention, with investments in infrastructure, industrial subsidies, and financial regulation, while the Second World War justified centralized economic planning that consolidated the US military-industrial complex. After the war, US-based capital was internationalized, slowly but steadily. The reconstruction of Europe and its process of regional integration with the new European Community promoted the increase of foreign direct investment in that territory2. In the same period, the first maquiladoras with US capital were created in Mexico when, in 1965, the Mexican government implemented the Border Industrialization Program. By 1970, there were already 132 maquiladoras in the border zone with the United States3.

Parallel to this, during these years, union protests increased in industrialized countries (with events such as the French May 68 and the Italian Hot Autumn in 1969-1970), expressing workers' insubordination to the dictates of capital and contributing to the fall in the rate of profit at the beginning of the 1970s. To this process must also be added the processes of struggle in Latin America, such as the Argentine “Cordobazo”, the strikes of the Brazilian industrial region known as the ABC paulista, or the Tlatelolco student massacre in 1968, all in the context of the Cuban revolution as a horizon of possibility for systemic change.

Trade liberalization intensified with the Kennedy Round of GATT (1964-1967), which included not only tariffs but also non-tariff barriers, expanding the regulatory scope to satisfy the needs of capital that was slowly becoming transnational. This trajectory culminated with the Uruguay Round (1986-1994) and the creation of the World Trade Organization (WTO), which radically extended the regulatory scope to areas such as intellectual property rights, foreign investments, services, and government procurement.

In this process, the United States acted as the principal architect, driving liberalization in sectors where its corporations had certain advantages (like services, intellectual property, and finance)4 while preserving protections in sensitive areas (agriculture, textiles, steel). This dual strategy—"do what I say, not what I do"—allowed the North American country to position itself as a defender of free trade while maintaining protectionist elements in its domestic policy, such as concealed subsidies, discriminatory government procurement, and anti-dumping measures.

Navigating this duality, the United States positioned itself as the main defender and promoter of the discourse and practice of free trade on a global scale. The different governments employed their diplomatic, economic, and military influence to promote liberalization in those sectors where their corporations maintained competitive advantages5. The transformation of GATT into the WTO and the qualitative expansion of the regulatory scope that this implied responded fundamentally to this agenda driven by the United States and its transnational corporations, which sought stronger legal instruments to guarantee favorable conditions for penetration into new markets.

The 1990s did not represent the "birth" of globalization, but a new arrangement of the relationships between nation-states and the world market, characterized by the geographical expansion of capitalist relations, the increase in foreign direct investment, and the incorporation of new territories into the global circuits of accumulation. This period did not signify an absolute break with the past but rather expressed a reconfiguration of capitalist social relations in response to the contradictions of Keynesian welfare states6.

The collapse of the Soviet Union and the opening of China provided capital with access to extensive regions characterized by inexpensive labor, emerging markets, and strategic resources. These areas presented numerous benefits, including substantial reserves of disciplined, low-cost labor, potential markets for products and services, opportunities for fixed capital investments in infrastructure, and access to strategic natural resources. In response to these transformations, US capital employed various installation strategies in the newly incorporated territories within the global market. In China, this primarily involved direct productive investment in labor-intensive manufacturing sectors, establishing plants within Special Economic Zones.

This geographical expansion of US (and European) companies implied a qualitative transformation in the organization of global capitalism. It facilitated the formation of a transnational productive framework that deepened the process of industrial relocation initiated in the 1960s. Global value chains emerged as the dominant organizational form, allowing transnational corporations to fragment production processes and distribute them across multiple territories to maximize the comparative advantages of each territory.

This economic process was embedded within a specific legal framework, described as the "legal architecture of impunity" for corporations by Juan Hernández Zubizarreta. This framework comprises a set of international institutions and treaties that have created a normative asymmetry centred on the principle of protecting multinational business interests at all costs through an international legal order governed by trade and investment rules.

A lex mercatoria was established, composed of numerous norms: contracts, bilateral and regional trade treaties, investment protection agreements, adjustment policies and conditioned loans, arbitration awards, etc. This form of binding law has enforced business interests. Additionally, the WTO was created in 1995, as an institution that promotes the objectives of the free market and standardizes them for all member states.

In short, globalization is not determined only by economic integration (although it is a central element) nor by technological innovations (essential for internationalization) nor by the new legal framework (key to providing security for private property). All of this defines globalization, marking a specific phase of the struggle between capital and labor where capital sought to recompose its domination in the face of the workers' struggles of the 1960s that had increased the price of labor and reduced profit.

Likewise, all the economies that had remained semi-closed in the post-war period, during the welfare states, were connected in the global market7. There would no longer be room for autonomized national economies, but the rule of the market was now imposed. Globalization, then, represents an offensive strategy of capital to escape national restrictions and discipline the working class through the constant threat of relocation and precariousness. The global mobility of capital and the financial deregulation that characterize this stage are nothing more than expressions of the crisis of the traditional form of capitalist domination and its desperate attempt to restore profitability.

The economic policy of the Trump administration marked a significant break with the bipartisan "globalizing" consensus and in favor of free trade that dominated US policy for four decades. This "neo-protectionism" represents an explicit form of state intervention that selectively defends US-based companies, offering them protection against foreign competitors. This reveals the true nature of the Trumpist economic project: not a rejection of neoliberalism or free trade in themselves, but a reconfiguration of the relationships between the State, corporations, and the world market, developing an economic nationalism with a strong impact on the electoral base.

The Democratic and Republican parties had historically aligned in their support for free trade policies, spanning from the North American Free Trade Agreement (NAFTA) under President Clinton to the Transpacific Partnership (TPP) with President Obama. President Trump diverged from this tradition, referring to NAFTA as "the worst treaty in history" and prompting its renegotiation between 2017 and 2018. It is important to acknowledge that Trump's critique had some merit: NAFTA led to a reduction in jobs within key industrial sectors of the United States, particularly affecting states in the so-called "rust belt."

It is estimated that approximately 700,000 US industrial jobs were lost as a direct consequence of the agreement. This phenomenon highlights the inherent contradictions of the internationalization of capital, where the promise of widespread prosperity confronted the reality of an unequal redistribution of costs and benefits.

During his first administration, President Trump took actions that affected free trade institutions. In 2017, he opted not to participate in the WTO's Dispute Settlement Body and withdrew the United States from the TPP. Additionally, he imposed tariffs on China, Mexico, Canada, and the European Union, and began a trade dispute with China in 2018. President Joe Biden did not remove the tariffs imposed by Trump but maintained them and introduced new measures such as the Inflation Reduction Act, the Chips and Science Act, and Buy American policies, leading to a bipartisan approach to protectionism.

Trump's protectionist policies involve explicit state intervention to support companies headquartered in the United States by insulating them from international competition. The tariffs imposed serve as a protective barrier for significant segments of US capital that had lost competitive advantages to international rivals, particularly Chinese firms. The goal of Trump's policies is to strengthen the position of US corporations rather than restrict it.

Likewise, this protectionism is selective: while it defends traditional industrial sectors, it deregulates the financial sector and reduces taxes on big capital. It implements high tariffs to achieve a positive effect in traditional manufacturing sectors but simultaneously executes a financial deregulation agenda that dismantles the regulatory framework built after the 2008 crisis. In 2018, the Trump administration ended the Dodd-Frank Act that had been approved in 2010 to reinforce the capital requirements of banks, forcing them to carry out annual resistance tests to show their strength and prohibiting financial institutions from engaging in high-risk activities with their clients' money.

On the other hand, the Tax Cuts and Jobs Act of 2017 represented the largest tax reform in three decades and constituted the most significant legislative achievement of Trump's first term. The centerpiece of this legislation was the dramatic reduction of the federal corporate income tax from 35% to 21%, an unprecedented cut that transformed the US corporate tax landscape. Republican legislators argued that a more favorable tax environment would incentivize companies to expand their operations in the United States and make them more competitive in the global market.

The drastic reduction of the corporate tax revealed a deep contradiction at the core of Trumpist economic policy: while tariffs and trade restrictions were implemented under the discourse of protecting US workers, enormous tax benefits were granted to the same multinational corporations that had relocated jobs for decades. This apparent contradiction reveals the true nature of the project: it is not about a return to the integral protectionism of the 19th century or the import substitution period, but a reconfiguration of the state role within globalized capitalism to selectively defend certain sectors while maintaining and deepening the advantages for financial capital and large corporations.

What Trump achieved was to make evident the relationship between the State and corporate capital: he abandoned the neoliberal pretension of separation between the two, explicitly recognizing that state power remains essential to guarantee the profitability of US capital in a context of increasing international competition. Trumpist protectionism, in this sense, is not a limitation of US capitalism but an attempt to save it from its crisis of profitability and loss of competitive advantages, using state power as a shield to preserve privileged positions that could no longer be sustained through pure competition in global markets.

The fundamental contradiction of Trump's economic project lies in wanting to capture the benefits of globalization (extraordinary profits, technological dominance, geopolitical influence) while rejecting its inevitable consequences: productive relocation and negative impacts on the domestic labor market. The government aims to reconcile the economic nationalism of the 20th century with the reality of corporations whose power derives precisely from their ability to operate beyond national borders. This tension reveals that the strategy of America First cannot be materialized through a simple return of production but requires a radical transformation of the logics of global accumulation that these same corporations have built for decades and on which their dominant position in the world economy currently depends.

Social organizations that have historically opposed free trade agreements (FTAs) due to neoliberal critiques now face a dilemma: opposing Trump's trade policies could be seen as defending the neoliberal status quo, while supporting them would legitimize a project that favors US capital without addressing underlying social exploitation and inequality.

But Trump has appropriated anti-free trade rhetoric from a different focus than the campaigns against treaties. It is true that some points of his argument are similar: the critique of jobs relocation, the impacts of FTAs on workers, the opposition to agreements such as the TPP, and criticisms of NAFTA and the WTO. But he does this primarily from a nationalist-corporate matrix that does not question the fundamental asymmetries of the global economic order nor incorporate demands for international environmental or labor justice. On the contrary, what Trump vindicates is an exclusionary economic nationalism: his objective is not to rediscuss the role of US corporations, but to make them strong again. Rather than "Make America Great Again", his motto should be: "Make US Corporations Great Again."

This situation reveals a deeper crisis in the traditional interpretative frameworks that posed "free trade vs. protectionism." We need to develop a more sophisticated analysis that can operates on two levels: on the one hand, a critique of neoliberalism and free trade, but, on the other, a radical critique based on the understanding of how capitalism works as a whole, and how the issue of trade is interwoven with financial, environmental, digital, productive issues, etc.

What Trumpism has put in crisis is the view centered on economic nationalism that many social movements have maintained since the 1990s, when the focus was on the critique of neoliberalism. The vindication of the centrality of the State and its regulatory capacity became the articulating axis of progressive projects that sought to recover spaces of autonomy for national public policies in the face of the advance of neoliberal globalization. However, this political strategy has found its limit in the profound structural transformation that global capitalism has experienced.

The fundamental problem is that these policies centered on the recovery of national economic sovereignty inevitably clash against the reality of a global economic interconnection that has reconfigured the material bases of social reproduction. Neoliberalism was not simply a set of policies that can be reversed by state action, but a process of profound reorganization of production relations on a planetary scale. National economies were organically integrated into global value chains, transnational financial circuits, and technological networks that drastically reduce the room for maneuvering for autonomized economic experiments.

In this context, social movements that oppose free trade agreements face several challenges. Overcoming nationalism constitutes perhaps the most important and urgent, as it implies transcending a vision that has structured both the analysis and the political praxis of numerous popular movements for decades: the unquestioned centrality of the nation-state as an articulator of the utopian horizon and as a natural container of social processes.

This is not merely an ideological question or an infatuation with historical debates among the left about the role of the State in emancipatory processes. The crisis of this approach reflects the structural transformations in capitalism. Faced with this reality, the vindication of national economic sovereignty as the main strategic horizon is insufficient. However, recognizing the limits of nationalism does not imply embracing an abstract internationalism that ignores the asymmetries of power between nations and regions, or that disregards the importance that national-state spaces continue to have as terrains of political dispute. It is, rather, about developing analytical perspectives and political strategies that can operate simultaneously at multiple scales.

The creation of effective transnational alliances that overcome the temptations of economic nationalism without diluting the specificities of each context constitutes another significant challenge. Today, international solidarity requires identifying the main conflict within contemporary capitalism, which is often overlooked in traditional political analyses. Free trade is not simply a series of misguided policies; rather, it is a structural mechanism that inherently leads to the exclusion and precarization of significant social sectors. This exclusion is not merely an incidental effect but an intrinsic characteristic.

Communities affected by mining and oil extractivism constitute the territories that must be dispossessed to feed the global chains of production and consumption. Their displacement and the destruction of their ways of life are not "collateral damage" but operational requirements of the accumulation by dispossession that characterizes contemporary capitalism. Similarly, informal and autonomous workers who proliferate in peripheral economies represent the materialization of a process where formal, regulated work with labor rights becomes a historical exception, not the norm. The global economy requires this growing mass of precarious, available, and deprived of social protection work to maintain profit rates.

This understanding has significant implications for the formation of political solidarities. It suggests that social movements should focus on these sectors whose challenges are integral to the system, not incidental. Communities affected by extractivism, informal workers, migrants in precarious situations, indigenous and peasant communities facing large-scale projects: all of them highlight, through their specific struggles, the key contradictions that the system cannot address through partial reforms.

Political solidarity must be built, then, not from the illusory promise of full inclusion in global capitalism, but from the recognition that the emancipation of these sectors necessarily requires transcending the very logic of the system that sacrifices them. The task, in synthesis, is to transit from a critique of neoliberalism towards an integral critique of capitalism, understanding that free trade is not simply a "wrong policy" but an organic expression of the expansive tendencies inherent to capital as a social relation.

The question can be then posed as follows: can the movement transcend the free trade/protectionism dichotomy? Is it possible to develop an internationalist praxis that recognizes the structural limits of economic nationalism without falling into resignation before the power of global capital? This deeper critique does not imply abandoning the struggle against free trade agreements, but recontextualizing it in a deeper understanding of the dynamics of contemporary capitalism and in a project of radical transformation that simultaneously encompasses the multiple dimensions of capitalist domination.

An integrated perspective would open possibilities for a more effective praxis. It is not enough to oppose specific agreements; it is necessary to build alternative models of international economic relations that question the capitalist logic itself. This will make it possible to build bridges between different levels of analysis, connecting criticisms of specific clauses of FTAs with deeper questioning of the capitalist system, while allowing to go beyond reductionist debates between "economic nationalism" versus "neoliberal globalism," recognizing that both operate within the same systemic logic.