America’s Allies are Essential to Economic Security.

The United States trade policy has overcorrected. In 2015, a bipartisan consensus formed around the idea that America’s trade agreements were too intrusive. Agreements such as the World Trade Organization and NAFTA were seen to overly restrict the U.S.’s ability to defend itself from anti-competitive behaviors, including subsidies and dumping. A new generation of trade deals was established, typically focused on just one sector in one country (e.g., steel and aluminum with the EU or rare earths with Australia).  These deals forgo the binding commitments that had become so controversial and lack the enforceability of past agreements.

But in shifting policy so far, we’ve lost sight of what the postwar trade regime got right. Namely, the understanding that America’s economic security depends on stable partnerships with like-minded countries. Recent agreements are too easily reversible to build lasting trust or to integrate supply chains. Rather than relying on nonbinding frameworks, which lack the strategic glue that once bound its economic alliances together, the U.S. should renew a rules-based model that builds on what worked in the postwar trade template. That strategy must involve three things: re-committing to trade openness through stable frameworks; reaching consensus on subsidy disciplines; and meaningful policy harmonization to strengthen partnerships.

1. Make credible bargains instead of quickfire framework deals

The recent wave of sector-specific frameworks lacks firm legal grounding and, more importantly, erodes trust on the part of trading partners, as well as potential investors. Many of these deals rest on executive MOUs that may conflict with existing obligations under the USMCA and the WTO. This means that U.S. counterparts, quite understandably, discount U.S. commitments. The uncertainty created by these looser deals does not provide a basis for durable cooperation or, more importantly, for supply-chain alignment.

The old system, while certainly flawed, was grounded on the understanding that partners need incentives to work with the U.S. Effective trade agreements lock in access to U.S. markets. In exchange, members (including the U.S.) get clearer, firmer rules on subsidies, state-owned enterprises, data security, and safeguards. All these are backed by enforceable remedies. Without an exchange of market concessions, through which the U.S. offers assurance that it is open for business, partners hedge their bets. They divert trade through other markets, sign side deals with other countries, and cut the U.S. out of critical supply chains.

Rather than discarding the existing trade playbook altogether, the US should return to the WTO’s scalable rules and club logic, restore binding appeals (or employ interim arbitration), advance open plurilaterals where consensus is feasible, and embed periodic review so rules keep pace with technology.  Additionally, the U.S. would benefit from pre-arranged contingency plans. These may include:

• Permissible Trade Diversion: In the event of coercive action, the U.S. and its allies may wish to temporarily relax barriers, including strict rules-of-origin agreements, to allow goods to flow more freely within an allied bloc. This would lessen the economic harm done to a country facing export restrictions, for example, and ultimately reduce the leverage of the discriminating market. The other club members would, of course, incur some costs, but the long-term goal would be to send a powerful signal that coercive actions do not have the adverse impact a non-competitive country desires.
• Coordinated Retaliation: The coalition should also agree in advance on a shared set of reciprocal trade or investment actions that the entire group can deploy against the coercing state. This ensures that a threat against one ally is treated as an attack on the entire bloc, exponentially increasing the cost of aggression and deterring future attempts.

2. Use trade alliances to balance against distortionary practices

Subsidies and other state interventions in the market, including heavy reliance on state-owned enterprises, remain one of major threats facing the U.S. and its allies. America’s new generation of looser, more flexible trade deals have failed to adequately address this threat. That’s because the sheer scale of these subsidies and the ubiquity of state-owned enterprises in key industries (solar panels, steel, and automotives) means the U.S. cannot confront the danger on its own.

There is strength in coordinated efforts. They could involve intelligence sharing among the U.S. and its core partners on foreign practices, including joint investigations into the magnitude of the market-distorting effects. Trade remedies are controversial partly because countries disagree over the evidential basis for action. But combining data and legal resources can better justify remedies that are implemented in response to dumping, price fixing, preferential lending, energy supply manipulation, or many other forms of non-competitive practice.

A stronger basis for remedies lays the foundation for joint action. For years, efforts to address subsidies were ad hoc, unilateral, and subject to claims of discrimination. The U.S. and its core partners face the same exposure to these practices, and a joint response plan would provide a robust response to non-competitive behavior.

Of course, coordinating trade remedies is difficult, and the U.S. disagrees with its core allies just as often as with non-market economies. But even if countries cannot act jointly, the U.S. and its partners should at a minimum prioritize new rules that target key sectors, such as the U.S.-EU Global Arrangement on Sustainable Steel and Aluminum. That agreement is currently too narrow to cover the entire fabricated metals supply chain, but it does lay a foundation for recognizing shared exposure to non-competitive behaviors and setting specific barriers in place. Similar arrangements should be formed with other partners, and extended to more industries, to resist concerted efforts to corner global markets in critical industries such as metals, pharmaceuticals, and rare earths.

3. Harmonize policy at scale, not bilaterally

Remedies aside, the U.S. still needs policy harmonization—and at scale. One-off bilateral deals cannot deliver. Firms route around patchwork rules by gaming rules-of-origin, transshipment, and tariff engineering. Supply chains then reconfigure to the most permissive node in the trade network. The aim should be common, enforceable baselines across a club large enough to matter, not a fragmented, case-by-case approach that raises costs.

Here, too, we can learn from the past. Critiques of the WTO, NAFTA/USMCA, and other agreements often miss the work these systems did to converge legal and regulatory practices. Divergent, weakly enforced standards create costs, disrupt supply chains, delay production, and raise prices. As markets evolve, it is necessary to update rules, but the U.S. should do this with core partners, not by acting alone. Priority domains include advanced technologies (semiconductors, AI, quantum) and clean-energy standards, where scale and interoperability drive investment.

And “harmonization” does not have to mean locking the U.S. into a single prescription. Instead, it sets the boundaries within which policies should operate. It means shared definitions for emerging technologies, joint risk taxonomies, and mutually agreed-upon tests for market failures. For example, in AI, partners should align on cybersecurity, data governance, and auditability so firms can build to one rulebook and defend against evolving threats.

Done well, harmonization can lower regulatory burdens. Mutual recognition and single certification can replace duplicative testing; shared environmental impact methods can streamline permitting; common conformity assessment can speed cross-border movement. In electric vehicles, aligned battery content standards and charging protocols can cut costs while keeping labor, materials, and pricing within agreed-upon bounds.

Harmonization improves supply-chain interoperability with key partners and supports onshoring that still depends on critical imports. Semiconductors, pharmaceuticals, and shipbuilding all require inputs from abroad; it is better to source from open economies bound by shared rules. Locking in those relationships increases the bloc’s market power and resilience, and it works only through a club model with enforceable commitments, not through a series of bilateral exceptions.

Moving forward

As the U.S. trade policy pendulum swings away from traditional trade agreements, it leaves America on an island, too far from the allies and partners its needs to protect itself. Going it alone worsens economic security by weakening the strength in numbers that comes from coordination and cooperation. The U.S. needs to capitalize on shared vulnerabilities and shared interests. Furthermore, if the objective is to influence autocracies and non-allies, an attractive, functioning club has been a cost-effective U.S. instrument. That means three things:

1. Rebuilding credibility and long-term business relationships through a return to what worked in the rules-based trade regime;
2. Coordinating threat response through shared information and mutually acceptable boundaries around subsidies and other non-tariff barriers; and
3. Harmonizing policies with core partners to strengthen collective market power and bargaining leverage

Ultimately, the 10-year experiment with bilateralism isn’t making America more secure. Together, the U.S. and its allies can blunt market distortions and respond to the non-competitive behaviors that drove policy change a decade ago.