The Retreat of Trade
- David Halseth
- Mar 30
- 2 min read
For the week ended 3/29/2025.
Let’s take a break from the daily headline chaos and talk about something that rarely gets the spotlight it deserves: trade. It’s not flashy, it’s not sexy, but it’s been the backbone of modern economic growth. After the Bretton Woods conference in 1944, global trade took off like a rocket—fueled by U.S. naval dominance, keeping the sea lanes safe and open. The result? Hundreds of millions, arguably billions, were lifted out of poverty. Thank you, container ships.
But that era may be winding down as populist and isolationist policies stage a comeback. Since 2008, the number of import restrictions among major economies has surged from roughly 500 to over 4,600 as of early 2025. That includes tariffs, quotas, and every flavor of anti-dumping action bureaucrats can dream up. In the U.S., the average tariff rate is now 8.4%—a level we haven’t seen since 1946. For context, it was just 1.5% in 2016. And if Trump’s latest tariff threats come to life, that number could balloon to 18%. Eighteen. Percent.
Globally, tariffs among industrialized nations had fallen from around 22% in 1947 to just 3% by the end of the 20th century. And while I won’t subject you to a dissertation on the economic arc of tariff policy (you’re welcome), the historical pattern is clear: raising trade barriers leads to less trade, higher prices, and slower growth. There are very few examples, if any, where tariffs delivered lower prices or better economic outcomes. Full stop.
Back in market land, the rhetoric around tariffs has ratcheted up uncertainty, and markets hate uncertainty like toddlers hate bedtime. Domestic stocks shed another 1.5% last week, and foreign shares weren’t far behind, down 0.9%. Bonds? Also sulking. But perhaps the most telling data point came from the Conference Board: expectations for income, business, and labor market conditions just dropped to their lowest level since 2013. The forward-looking index fell to 65.2, well below the recession-warning threshold of 80.
Looking ahead, keep an eye on Thursday’s nonfarm payrolls and unemployment report for March. Until then, stay caffeinated, stay skeptical, and here’s hoping your portfolio is better hedged than your average banana importer.
Have a prosperous week.
Interesting data point of the week.
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