We may be living through an era in which free trade is relegated to the dustbin of history. That’s because the notion of tariff elimination equaling free trade is becoming quaint. And the concept of a “level playing field” is similarly vague — and probably distracting.
Strategic trade has been and always will be the norm as nations use industrial policy, exchange rate devaluation, and tariffs to win the global competition for good jobs and industries. More specifically, nations that successfully produce and trade use exchange rate devaluation to achieve a continuing trade surplus, and they often rely excessively on foreign consumers.
They also use tariffs, industrial strategies, and other means to improve the composition of their production and trade, usually aiming toward advanced manufacturing and high-tech goods.