Tariffs and Realignment:

What this suggests for the US, the RCEP, and the Global South

As a metaphor, “Pirate Jenny” is the Global South: waiting, watching, imagining, and preparing to overturn the system that for too long demanded obedience and offered too little in return.

This is a two-part response to Trump’s tariffs. The first, perhaps an inconvenient primer on the history of tariffs in the US, and the second, a brief examination of lawfare around trade and how Trump’s tariff policy provides a convenient opportunity for the Global South.

When Donald Trump first took office in 2017, I had an article published in American Quarterly called TPP at the End of the Line: A Briefing on Economic Cooperation and Capacity Building. While framed within the context of Trump’s withdrawal from the TPP, the article was actually a deeper inquiry into the architecture of postwar economic cooperation—a theme that recurs throughout much of my work. In tracing the genealogies of Bretton Woods, Postwar organization, the Marshall Plan, and trade liberalization narratives, I often find myself at odds with policy experts because my analysis challenges the assumption that international cooperation is rooted in benevolent or neutral legal principles. Instead, I view these frameworks not as fixed or sacrosanct, but as instruments of lawfare—strategically constructed legal architectures designed to advance geopolitical interests, consolidate economic hierarchies, and encode compliance under the guise of multilateralism. What is often framed as rule-based order is, in practice, deeply contingent and politically manufactured.

Economic cooperation, particularly in its postwar iterations, has served as an ideological extension of the Truman Doctrine. The same conceit that unilaterally dropped atomic bombs on civilian populations had bullied the world into neocolonial hegemony. In this context, “capacity building” is not evidence of solidarity but a strategy of incorporation—one that correlates with the free trade system of capitalist compliance, favoring the most extractive, financialized, and governance-restrictive models of development. It is in this context, that I want to address tariffs, U.S. debt, and the realignment of global trade

The Hidden Role of Tariffs in Fiscal Policy

Trump’s recent U.S. tariff announcements have been widely presented as flawed responses to trade imbalances or efforts to restore domestic industry. While I agree that this unilateral action will have profound consequences, behind this justification and rhetoric lies a subtler economic function: tariffs, historically and presently, serve as a revenue-generating mechanism for the federal government—especially in times of fiscal stress. With national debt now surpassing $36 trillion, it's worth asking whether tariffs are quietly reemerging as a form of government revenue, deflecting public attention from the reality that our national economy is in need of structural reform. And to be clear this is not a fault between Democrats or Republicans, if anything the partisanship is only a distraction, as the onus of the debt should fall on Neoliberals and Neocons, no matter what side of the aisle they stand on.

Since the financial collapse in 2008, we were led to believe that the US economy was recovering by treating stock market indicators as evidence of our economic strength, or that our economy could be saved with NFTs and crypto-currencies; or that the mind-numbing delusion of Modern Money Theorists promoted the idea that government deficits are a myth and all we need to do is print more money. None of those were good indicators as long as the bottom was dropping out of the middle-class.

Yes, some people made millions of dollars, but when you consider that a trillion is a million-million, and our national debt is $36 trillion, those millions or even billions may inspire confidence in some, but they don’t correlate with the real public health of our economy.

Tariffs have long played a foundational role in American revenue. Before the creation of the federal income tax amendment in 1913, customs duties were the primary source of federal income. And while the use of tariffs declined over the 20th century in favor of income taxes and “free trade”, tariffs remain an easy, less visible tool for revenue collection. After retaliatory tariffs, the recent spate of Trump-era tariffs is not likely to net a trillion dollars in government revenue, but there is something about his tariffs that are likely to provide some investor confidence.

In today’s context—where Congress remains gridlocked over tax reforms and spending cuts—tariffs have reemerged as a means to raise revenue without formally enacting new taxation. While framed as protective or retaliatory economic measures, tariffs effectively shift the fiscal burden onto importers and, by extension, domestic consumers. This sleight of hand, wrapped in the rhetoric of economic nationalism, draws on a long tradition of using indirect taxation to obscure regressive fiscal policy.

As fair trade campaigners, we recognize the urgent need for the wealthiest—particularly the top 1%—to contribute a fairer share of the tax burden. Yet when we consider that the federal government takes on trillions of dollars in debt annually, a deeper question arises: what financial institution could realistically furnish the U.S. with such vast credit? The answer reveals the unique structural privilege of the U.S. economy. These so-called loans are not conventional in the commercial banking sense—they are largely monetized through Treasury securities and sustained by the perceived security of U.S. assets. As I elaborated in my previous post, the heart of this system lies within the military-debt nexus with asset managers like Blackrock and Vanguard, which underwrites the dollar’s global dominance and enforces trust in U.S. sovereign debt. In this light, U.S. debt is not merely a financial mechanism, but a geopolitical one—anchored in military power and backed by a global security apparatus that renders American liabilities uniquely marketable.

Cleveland, Surpluses, and the Ideology of Free Trade

In the late 19th century, President Grover Cleveland became a pivotal figure in shifting U.S. government revenue over to free trade. In his 1887 State of the Union address to Congress, he addressed the issue of federal budget surpluses—an unusual concern in today’s debt-ridden era. Industrialists at the time, concerned that tariff-generated surpluses gave the federal government too much economic power, argued that "the business of government is not to make money." Cleveland agreed and moved toward a policy of free trade, aligning with corporate interests that sought access to cheaper raw materials and foreign overseas markets.

However, the move toward free trade had consequences. As tariffs were reduced, the federal government’s main source of income dwindled. With the onset of deficits, Congress turned to new forms of revenue: first the income tax—which shifted the burden onto individuals rather than industries—and later, sales taxes, which further burdened ordinary consumers.

Tariffs as Regressive Tools of Fiscal Austerity

The contemporary re-embrace of tariffs must be seen through this longer historical lens. While they may be framed as corrective tools for trade fairness, they also function as regressive taxes, disproportionately affecting lower middle-income citizens who spend a larger share of their income on cheaper imported goods. They also sidestep the political challenge of increasing taxes on corporations or the wealthy, offering revenue without structural change.

In this way, tariffs become part of a larger pattern of fiscal obfuscation—where revenue is raised in politically palatable but economically unjust ways. As calls for climate finance, infrastructure repair, and social services grow louder, so too does the need to rethink how and from whom governments collect their revenues.

So rather than viewing tariffs merely as a tool of economic Trumpism, we must ask who they benefit and who they burden. History shows that when governments move away from taxing corporations, they often compensate by taxing the consumption and incomes of everyday people. In this light, the return of tariffs is not just about trade policy—it’s about class and power.

WTO Exit: Legal Mechanisms and Global Implications

In a move that would shake the rules-based global economic order, the prospect of the United States withdrawing from the World Trade Organization (WTO) has surfaced once again, especially in the context of renewed interest in unilateral tariff impositions. When President Trump mentioned withdrawal, as he did in his first term, should such a withdrawal occur, it would not only dismantle remnants of post-war multilateralism but simultaneously elevate regional and plurilateral trade frameworks like the Regional Comprehensive Economic Partnership (RCEP), which is favorable because it would downgrade ISDS arbitration and move towards a more just and fair mediation process. In this potential geopolitical and economic reordering, RCEP emerges as a key platform for reimagining regional sovereignty, more equitable trade governance, and Global South realignment.

Under Article XV of the WTO Agreement, a member state may withdraw by giving six months' notice. If Trump withdraws, the U.S. would also likely require Congressional repeal of the Uruguay Round Agreements Act of 1994 to complete the withdrawal because of how WTO obligations were implemented into U.S. domestic law. Even before a formal exit, the imposition of unilateral tariffs is still a violation of WTO rules, and this already signals the erosion of global rule-based trade norms. With the U.S. having already paralyzed the WTO Appellate Body (again), a complete departure would accelerate institutional fragmentation.

The legal and economic consequences would be chaotic. As we will see, U.S. exporters will face retaliatory tariffs, consumers will bear higher costs, and the rules-based trading system will give way to bilateral coercion and transactionalism. Export-driven sectors like agriculture, manufacturing, and tech may see steep declines, and global supply chains will recalibrate and realign to avoid U.S. unpredictability.

Another concern is the wave of potential lawsuits that could emerge from WTO member states in response to the current spate of unilateral U.S. tariffs, which target key trade partners in Asia, Europe, and the Americas. Although technically actionable under WTO dispute settlement procedures, such lawsuits will likely flounder due to the Appellate Body’s dysfunction and the U.S.’s non-cooperative posture. Moreover, these legal proceedings could be neutralized by strategic exit strategies from the U.S.—either through formal withdrawal or deliberate non-participation—further undermining the enforceability of trade law. This scenario places the burden on regional blocs like the RCEP to not only absorb trade shocks but to establish parallel systems of compliance. Neither the CPTPP nor IPEF, which excludes China has the economic weight to rewrite trade rules without China’s participation. What this suggests is that the neoliberal countries who have been enforcing Washington’s notion of free trade may be adopting rules that are far more representative of the needs of the Global South access and infrastructure.

RCEP: From Trade Pact to Strategic Anchor

The vacuum left by U.S. withdrawal would immediately enhance the strategic centrality of RCEP. Covering over 30% of global GDP and 2.3 billion people, RCEP already links the ASEAN bloc with China, Japan, South Korea, Australia, and New Zealand. In the absence of U.S. leadership, it could evolve into the default trade framework across the Asia-Pacific.

Rather than relying on the ideological scaffolding of neoliberalism, RCEP is structured around flexibility, consensus, and regional pragmatism. With its lightweight institutional framework, RCEP allows member states to harmonize trade, investment, and regulatory policies while preserving sovereignty. As WTO norms dissolve, this kind of adaptable structure becomes more attractive, especially to states wary of Western legalism.

China, BRICS+, and Multipolar Trade Governance

China, already wielding institutional influence through RCEP and the Belt and Road Initiative (BRI), stands to gain the most from a U.S. withdrawal. The ideological narrative of Beijing as a steward of multilateralism will likely gain traction, especially in the Global South. In concert with BRICS+, RCEP may become the platform through which new trade imaginaries are developed—imaginaries that resist the dollar hegemonic model and that can support local currency settlements, infrastructure cooperation, and regional development banks.

Local Innovation, Regional Opportunity

The convergence of RCEP and BRICS+ would allow the emergence of a truly multipolar trade governance model. A U.S. WTO exit may ironically open space for innovations in trade, particularly among small and medium-sized economies within RCEP. Without the burden of aligning to U.S.-led trade sectors or dispute arbitration models, countries could experiment with frameworks that integrate environmental metrics, social protections, and economic equalization—especially in response to climate emergencies.

Digital trade—previously subordinated under WTO e-commerce frameworks—could find regional expression in Asia-Pacific models rooted in public and community ownership. Pacific Island countries, for example, may gain leverage to negotiate on their terms, using regional local data sovereignty frameworks to value ecological contributions and restoration.

In short, a U.S. withdrawal from the WTO would not end global trade; it would mark a significant reordering of its governance. RCEP, with its pragmatic and pluralist approach, is well-positioned to absorb and redefine regional trade flows. What emerges could be a more grounded, ecologically responsive, and multipolar trade regime—one in which the Global South asserts its needs and interests.

The opportunity now is not to salvage the old system, but to build new architectures of exchange that reflect planetary limits, plural sovereignty, and the deep reservoirs of community-based knowledge and resistance. In this reshaping, RCEP and its convergence with BRICS+ may be not only instrumental but transformative.