The governor of the Bank of England said Tuesday that the international rules-based trading system that underpinned decades of economic growth has been severely damaged — largely as a result of Donald Trump’s trade wars.
Andrew Bailey told MPs on the UK Treasury select committee that the multilateral framework built up since World War II has been “blown up to a considerable degree” by recent US actions, undermining key principles that have long governed global commerce.
“I’m afraid that system has now, really been blown up to a considerable degree by all of this,” said Bailey, referring to Trump-era trade policies and their aftermath.
The governor pointed to the erosion of the most-favored nation (MFN) principle, a cornerstone of global trade enshrined in the World Trade Organization (WTO).
Under MFN, countries agree to treat all trading partners equally, offering the same terms across the board.
But the US imposition of unilateral tariffs during the Trump administration — in clear contradiction of MFN rules — has disrupted the structure.
“That has now gone, it just isn’t part of the current picture,” said Bailey. “That has very serious implications.”
Bailey explained that the post-war trade system was initially founded through the General Agreement on Tariffs and Trade (GATT), which later evolved into the WTO.
Over the decades, the framework helped facilitate widespread tariff reductions and fostered international economic cooperation.
He acknowledged that some of the Trump administration’s criticisms of the system were valid, but how it had been challenged risked serious economic fallout if not addressed.
“We can’t say the US administration is just wrong-headed,” he said. “There are things that have gone on in this whole trade picture which, I think, do point to the stress that that system has been under,” he said.
Bailey emphasized the need for policymakers to return to the negotiating table and rebuild a credible multilateral system. “If we abandon it, we’re into a much more difficult world,” he added.
