This essay, written exclusively for Baku Network, comes from one of East Asia’s most respected analysts in international trade and global economic security — Japanese expert Kenji Mori. His research has long been featured and cited by leading American think tanks, including those within the orbit of Brookings, Carnegie, CSIS, and the Atlantic Council. Within policy circles, Mori is known for blending a deep understanding of U.S. and Asian strategic interests with rigorous formal modeling that anticipates how global markets behave under stress.
Invited by Baku Network, Mori here dissects the structural shifts reshaping world trade under the Trump administration’s revived tariff policy. His approach is not rhetorical or polemical; it’s grounded in institutional logic, systemic analysis, and the long-term consequences for global economic stability. He treats the current moment not as a string of policy decisions, but as the construction of a new trading order—one in which states must reassess their strategies, balance risk against opportunity, and redefine their place in the architecture of global commerce.
This is an independent study, analytically precise and consistent with the standards of top U.S. think tanks—a meaningful contribution to the ongoing debate over where the global economy is headed and what new fault lines are emerging in its evolution.
The Trump Shock: A Tariff Earthquake
Donald Trump’s return to the Oval Office has upended the global trade order. The rules that have anchored the system since World War II are giving way to a hard-edged bilateralism. In just one year, the average U.S. tariff jumped from 2 percent to nearly 16 percent — the steepest surge since the 1930s. The result is a landscape of turbulence: countless losers and only a handful of wary winners.
The world is entering a phase of tectonic movement in global trade, with several possible fault directions. Mori identifies three main trajectories: a détente between the U.S. and China; the formation of an “anti-China coalition”; and the “Fortress North America” scenario. In each, he examines how small, open economies — once reliant on the predictable order of the WTO — might navigate the violent clash of giants.
The harshest scenario envisions a unified global front against China’s export overcapacity. Modeling suggests that China’s GDP could shrink by 4 percent by 2030, while the U.S.—with the least external dependency among major powers—keeps its losses under 1 percent in every case.
Small open economies like South Korea, Singapore, and Switzerland fare best by staying neutral—avoiding retaliatory tariffs or binding themselves to rigid coalitions. If the U.S. and China sever much of their trade, and smaller economies manage to slot into the broken supply chains, some could even gain slightly compared with a pure free-trade baseline.
The End of Liberalization
America’s trade pendulum has swung fully from liberalization to hard protectionism. In some sectors, the tariff spikes are sheer cliff drops: 50 percent on Indian apparel and Brazilian coffee, 60 percent on Chinese aluminum. Brazil, India, and China have been hit hardest by additional surcharges layered on top of sectoral and mirror tariffs.
Yet the picture is uneven. Mexico and Canada remain almost fully shielded under the USMCA framework. The EU and Japan, despite running trade surpluses with the U.S., have secured conditions roughly on par with Britain’s—London compensating for its lack of surplus with political loyalty to Washington.
Smaller Asian exporters—Vietnam, Thailand, Malaysia—have signed bilateral deals with the U.S. but still face tariffs approaching 20 percent. South Korea obtained the most favorable terms, but only by committing to massive investment pledges. Switzerland, by contrast, landed among the hardest-hit, with average tariffs near 39 percent.
As of October 20, the new tariff mosaic means that by 2030, the U.S. will pay roughly 16 percent in duties on its import basket, compared with just over 2 percent in 2024. According to WTO-based trade modeling, that translates into an 18 percent drop in total U.S. imports and a nearly 70 percent collapse in imports from China. Canada and Mexico, cushioned by low tariffs, weather the storm far more smoothly.
For Canada’s energy sector, the shift is a stark reversal: a decade ago, oil sands faced a double squeeze from the shale boom and cheap OPEC crude. Now, tariff geography works in their favor.
Winners, Losers, and Adjustments
Global economies are adapting. Exporters are finding new markets, domestic demand is rising, supply chains are being rebuilt. Even with reduced exports to the U.S., China’s GDP loss by 2030 remains modest—about 0.3 percent. The U.S., retreating from global trade, risks becoming the biggest relative loser: a 0.7 percent GDP decline by 2030. Rising costs, pricier imports, and weaker competitiveness in services outweigh the gains in select manufacturing sectors.
Where the System Goes Next
The dice haven’t stopped rolling. Washington continues to negotiate with Beijing over the shape of future relations. The EU is seeking a delicate balance between protecting its market and addressing China’s overcapacity. A review of USMCA looms. The legal footing of many tariffs remains shaky, with ongoing sectoral investigations. Trump is wielding tariffs as a universal lever of foreign policy.
Mori outlines three plausible trajectories:
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Détente with China. The U.S. lifts the 20 percent “fentanyl tariff” but keeps the 10 percent sectoral and mirror duties intact. Other rates stay unchanged.
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China Against the World. A global coalition imposes coordinated tariffs on China’s overcapacity exports; Beijing retaliates in kind.
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Fortress North America. The U.S., Canada, and Mexico deepen integration, dropping internal tariffs but raising them for outsiders; the rest of the world responds in kind.
The economic fallout varies sharply. Under détente, U.S. GDP losses shrink to 0.5 percent, while China recovers most of its footing, losing only about 10 percent of exports to the U.S. In the “China versus the world” scenario, China takes a 4 percent GDP hit; the U.S. again limits losses to roughly 0.5 percent.
In the “Fortress North America” model, Canada and Mexico turn out to be the surprise losers, each down roughly 1 percent of GDP. China, meanwhile, loses its backdoor access to the U.S. market through the now-sealed USMCA bloc.
Surviving the Tariff Age: Small States in a Big Fight
For economies deeply embedded in global supply chains but lacking leverage over major powers, the new tariff era is an existential stress test. Mori models outcomes for ASEAN, South Korea, Taiwan, Switzerland, Norway, Iceland, and the U.K.
Today, small economies have less favorable terms than the EU or Japan, but low U.S. tariffs on electronics, semiconductors, and pharmaceuticals give them an edge. Losses are visible but manageable.
If Washington eases pressure on China by lifting the “fentanyl tariff,” it paradoxically hurts many small exporters ready to replace Chinese suppliers in electronics and adjacent industries.
In the “anti-China coalition” scenario, joining the bloc would shave nearly 1 percent off Asian GDPs—too costly given their reliance on Chinese demand. Neutrality, mediation, or serving as trade hubs offers a softer landing, even modest growth, though the risk of U.S. retaliation lingers.
Under “Fortress North America,” small states cushion the blows if they avoid direct participation in tariff wars and maintain free trade among themselves.
The central lesson cuts across all three paths: small open economies fare better when they lower mutual barriers and steer clear of the self-defeating spiral of tariff escalation. In the fractured new global order—where old rules have crumbled—these “orphaned children” of globalization will need flexibility, diplomatic ingenuity, and a measure of luck to survive.