The book Global Trade and Conflicting National Interests by Ralph E. Gomory and William J. Baumol provides a theoretical framework that can help us understand former President Donald Trump’s approach to trade and the broader context of trade policy in America during his administration and beyond. The book’s core argument—that modern global trade, characterized by economies of scale and acquired advantages, leads to multiple possible trade outcomes, some of which benefit one country at the expense of another—offers insights into Trump’s protectionist policies, his focus on revitalizing American industries, and the polarized trade debates in the United States. Below, I outline how the book’s key ideas relate to Trump’s trade approach and the current American moment as of May 17, 2025.
Key Insights from the Book Relevant to Trump’s Trade Approach
- Multiple Trade Outcomes and National Interests:
- The book argues that unlike classical trade models, which predict a single, mutually beneficial outcome driven by comparative advantage, modern trade with economies of scale and high startup costs results in many possible outcomes. Some outcomes favor one country’s economic welfare over another’s, creating inherent conflicts in international trade (pp. 5, 7-9, 23-40).
- Relevance to Trump’s Approach: Trump’s trade policies, particularly his imposition of tariffs on countries like China, Canada, and Mexico, reflect a belief that the current global trade system does not automatically produce outcomes favorable to the United States. His administration argued that free trade agreements like NAFTA allowed other countries to gain industries (e.g., manufacturing) at the expense of American workers, aligning with the book’s idea that trade outcomes can harm one country’s overall welfare (pp. 24-26). Trump’s renegotiation of NAFTA into the USMCA (United States-Mexico-Canada Agreement) aimed to shift trade outcomes to favor U.S. industries, such as automotive manufacturing, by imposing rules like higher local content requirements.
- Current Moment: The book’s emphasis on conflicting national interests resonates with ongoing U.S. debates about trade policy. Many Americans, particularly in Rust Belt states, feel that globalization has led to job losses in manufacturing, a sentiment Trump capitalized on. The book’s framework suggests that these concerns are not merely localized pain (e.g., job losses in specific industries) but reflect broader national welfare losses when trading partners gain industries that the U.S. could retain (pp. 4-5, 21).
- Economies of Scale and Retainable Industries:
- Gomory and Baumol highlight that modern industries, such as automobiles, semiconductors, and aircraft, require large-scale operations and high startup costs, making them “retainable” once established. These industries are hard to enter due to entrenched advantages, and their retention is critical to a country’s economic prosperity (pp. 6-7, 16-17, 21, 42).
- Relevance to Trump’s Approach: Trump’s trade policies targeted industries with significant economies of scale, such as steel, aluminum, and manufacturing. His tariffs on steel (25%) and aluminum (10%) in 2018 were justified as protecting critical industries that underpin national security and economic strength. The book supports this logic by arguing that retaining such industries is vital for national welfare, as their loss to competitors can reduce a country’s share of global income (pp. 19-21). Trump’s focus on bringing manufacturing back to the U.S. (e.g., through tax incentives and tariffs) aligns with the book’s idea that countries can actively shape trade outcomes to retain high-value industries (pp. 62-68).
- Current Moment: The emphasis on retainable industries connects to current U.S. efforts to reshore manufacturing, particularly in semiconductors and green technologies. The CHIPS and Science Act (2022) and the Inflation Reduction Act (2022) reflect a bipartisan recognition that losing key industries to countries like China undermines national interests, a concern the book formalizes (pp. 67-68). Public support for protecting industries like semiconductors, seen as critical for both economic and security reasons, mirrors the book’s argument about the strategic importance of retainable industries.
- Conflicts Between Developed and Developing Nations:
- The book distinguishes between trade with less developed countries, which can benefit developed nations like the U.S., and trade with other industrialized nations, where competition can harm U.S. interests. It suggests that the U.S. benefits from helping countries like India or Indonesia develop but must compete vigorously with peers like China, Japan, or Germany to maintain its economic edge (pp. 4, 41-42, 53-55).
- Relevance to Trump’s Approach: Trump’s trade policies were notably harsher toward China, a rapidly industrializing nation, than toward less developed countries. His administration imposed tariffs on over $360 billion of Chinese goods, citing unfair trade practices and the loss of U.S. manufacturing to China. This aligns with the book’s argument that when a trading partner reaches a significant level of development (e.g., China’s manufacturing prowess), its gains can harm the U.S. economy (pp. 41-42, 100-101). Trump’s relatively softer stance on trade with countries like Vietnam or India reflects the book’s view that trade with less developed nations is less threatening and can even be mutually beneficial (pp. 69-71).
- Current Moment: The U.S.-China trade rivalry remains a defining issue in 2025. The book’s framework explains why tensions persist: as China advances in high-tech industries like AI and electric vehicles, it competes directly with U.S. industries, creating a “zone of conflict” (pp. 37, 60). Meanwhile, the U.S. has sought to deepen trade ties with less developed nations (e.g., through the Indo-Pacific Economic Framework), consistent with the book’s suggestion that such partnerships can yield mutual gains (pp. 59-60).
- Role of Government in Shaping Trade Outcomes:
- The book argues that because trade outcomes are not predetermined, governments can influence them through policies like tariffs, subsidies, or infrastructure investment. It cites examples like Japan’s support for its auto industry and suggests the U.S. could adopt similar strategies to retain industries (pp. 8, 62-68, 176).
- Relevance to Trump’s Approach: Trump’s use of tariffs, trade negotiations, and “Buy American” policies reflects an active government role in shaping trade outcomes, challenging the classical free-trade dogma that markets always produce optimal results. His administration’s interventions, such as bailing out farmers affected by Chinese retaliatory tariffs and supporting industries like steel, align with the book’s view that governments can protect retainable industries to improve national welfare (pp. 67-68). Trump’s rhetoric about “America First” echoes the book’s assertion that countries should prioritize outcomes that maximize their own economic prosperity, even if it means conflict with trading partners (pp. 40, 57).
- Current Moment: The book’s advocacy for government intervention resonates with the shift toward industrial policy in the U.S. under both Trump and Biden. Policies like subsidies for domestic manufacturing and restrictions on technology exports to China reflect a recognition that market forces alone may not secure favorable trade outcomes. The book’s warning that inaction can lead to undesirable equilibria (pp. 19-21) underscores the urgency of these policies in a competitive global economy.
- Empirical Evidence and Public Sentiment:
- The book includes empirical evidence by Edward N. Wolff showing persistent specialization in industrialized countries, supporting the idea that trade outcomes are stable and retainable industries matter (pp. 163-176). It also notes public intuition that foreign competition can harm domestic industries, which economists often downplay (pp. 3-4).
- Relevance to Trump’s Approach: Trump’s trade policies were driven by public frustration with job losses in manufacturing, a sentiment the book validates as reflecting real national welfare concerns rather than just localized pain (pp. 3-5). His appeal to blue-collar workers in states like Ohio and Pennsylvania leveraged this intuition, framing trade deals as “bad” for American workers. The book’s evidence of persistent specialization supports Trump’s argument that once industries are lost to competitors, they are hard to regain due to economies of scale (pp. 171-173).
- Current Moment: Public skepticism about free trade remains strong in 2025, particularly among working-class voters. The book’s alignment of public intuition with economic theory helps explain why Trump’s protectionist stance continues to resonate, even as economists debate the costs of tariffs (e.g., higher consumer prices). The persistence of specialization also underscores why rebuilding industries like manufacturing is a slow, costly process, fueling demands for government action.
Broader Context: The Current Moment in America
The book’s framework illuminates several aspects of the current American moment in trade policy and economic debates as of May 17, 2025:
- Polarization Over Trade: The book’s argument that trade outcomes can harm national welfare challenges the free-trade consensus, explaining why trade policy is a divisive issue. Trump’s supporters view tariffs as protecting American jobs, while critics argue they raise costs and disrupt global supply chains. The book suggests both sides have merit: protection can secure retainable industries, but it risks escalating conflicts with trading partners (pp. 24, 57).
- Reshoring and Industrial Policy: The U.S. is increasingly focused on reshoring critical industries, driven by concerns about reliance on China and supply chain vulnerabilities exposed during the COVID-19 pandemic. The book’s emphasis on retainable industries and government intervention supports these efforts, framing them as strategic moves to secure favorable trade outcomes (pp. 62-68).
- Geopolitical Tensions: The book’s distinction between trade with developing vs. developed nations explains the U.S.’s dual approach: competing aggressively with China while fostering ties with less developed allies. This aligns with current U.S. strategies to counter China’s influence through tariffs, export controls, and alliances like AUKUS and the Quad (pp. 41-42, 100-101).
- Economic Nationalism: Trump’s “America First” rhetoric reflects the book’s view that countries should pursue trade outcomes that maximize their own welfare, even at the expense of others. This economic nationalism remains a potent force in U.S. politics, influencing both Republican and Democratic policies (pp. 40, 57).
Limitations and Nuances
While the book provides a compelling lens for understanding Trump’s trade approach, it has limitations:
- Simplified Models: The book’s two-country models (pp. 77-81) oversimplify the complexity of global trade, which involves many countries and nontraded goods (pp. 125, 138-140). Trump’s tariffs affected global supply chains, creating ripple effects the book’s framework doesn’t fully address.
- Empirical Gaps: The book’s empirical evidence (pp. 163-176) focuses on specialization, not the direct impacts of tariffs or protectionism. Trump’s policies had mixed results—some industries like steel saw gains, but farmers and consumers faced costs, which the book doesn’t analyze.
- Political Context: The book doesn’t account for the political motivations behind Trump’s policies, such as appealing to his voter base or using trade as a geopolitical tool. Its focus on economic theory misses these pragmatic dimensions.
Additionally, the book explicitly avoids advocating protectionism, emphasizing that it analyzes free-trade outcomes (pp. ix, 72-73). Trump’s tariffs, however, were overtly protectionist, suggesting he applied its insights selectively to justify policies that aligned with his political goals.
Conclusion
Global Trade and Conflicting National Interests offers a theoretical foundation for understanding Trump’s trade approach by highlighting the competitive nature of modern trade, the importance of retainable industries, and the role of government in shaping outcomes. It explains why Trump’s protectionist policies resonated with voters concerned about industrial decline and why the U.S. continues to prioritize reshoring and competition with China. The book’s insights into conflicting national interests and multiple trade outcomes illuminate the current American moment, where economic nationalism, industrial policy, and geopolitical rivalries dominate trade discussions. However, its theoretical focus requires careful application to the complex, politically charged reality of U.S. trade policy in 2025.
