The Evolution of the U.S. Trade Regime: From New Deal to Neoliberal, 1971 – 2001

Abstract

Prevailing wisdom maintains the transformation of U.S. trade policy initiated under President Donald Trump disrupted a continuous seven-decade project to construct a liberal international economic order and attributes the reversal to the China Shock and a populist backlash against globalization. Drawing upon original archival and interview data, this thesis complicates dominant interpretations by remodeling patterns of change to recover the endogenous sources of major reconfigurations of the U.S. trade regime. I develop a holistic analytical framework that, in place of micro-foundations and exogenous shocks, illuminates the interactivity of internal ideational and institutional processes with the evolution of the domestic and global political economies. In doing so, the thesis illuminates the radical, contingent, and contested nature of the regime’s underappreciated neoliberal restructuring and the deeper antecedents of the contemporary rupture.

I argue a feedback loop emerged between the Bretton Woods system and the postwar New Deal trade regime in the 1960s that incited a critical juncture by precipitating their concurrent unraveling. The crisis altered the regime’s trajectory by opening space for policy entrepreneurs to reconfigure trade institutions and coalitions premised on a reimagined strategic vision and catalyzing new patterns of trade by unleashing financial globalization in the context of the global dollar system. The rise of the neoliberal order further shaped the regime’s reorientation through the ascendance of new ideas, the rebalancing of political power, and the intercurrent clash between neoliberal trade and macroeconomic policies, which catalyzed a second major crisis in the 1980s. In this landscape, U.S. officials employed commercial and monetary power to deflect import and balances of payments adjustment and revive industrial dominance by remaking the international trading system as a legal-institutional arrangement to reform the domestic economies of trade partners and support global production networks. The neoliberal regime’s crystallization in the 1990s embedded new fault lines that helped produce the current reconfiguration.