Trump Fashions a Trade Policy for the AI Age

 

“Since President Trump returned to the White House, Washington's trade debate has revolved around tariffs. But something much more consequential has been unfolding. The administration is building what could become the foundation of a global trading system for the age of artificial intelligence.

 

Through nine agreements on reciprocal trade and a growing number of preliminary framework agreements with key partners, the administration is modernizing international trade rules for an economy driven by data, software, cloud computing and AI.

 

If this effort succeeds, it may become the administration's most lasting and beneficial trade achievement. The trade rules governing data, AI and digital commerce will help determine who leads the world's economy in coming decades.

 

The global economy has changed dramatically, but the rules governing it haven't. When the World Trade Organization was established in 1995, digital commerce barely existed.

 

Today, digital goods and services account for roughly 10% of U.S. gross domestic product -- more than the share of manufacturing and 10 times agriculture -- and about a quarter of American exports.

 

Yet much of the international trading system still operates as if goods cross borders only aboard container ships.

 

That disconnect is a problem. Over the past decade, trade partners have increasingly resorted to digital regulatory barriers that function like tariffs but are less visible and harder to challenge. The U.S. trade representative recently identified 146 such barriers across 43 jurisdictions. These include digital services taxes aimed disproportionately at American firms, restrictions on cross-border data flows, requirements that data be stored locally, and the forced transfer of intellectual property, technology and private data.

 

These measures may not look like traditional protectionism. But their effect -- and often their purpose -- is the same. This isn't only a Silicon Valley matter. Digital trade barriers also harm manufacturers, farmers, exporters and workers across the American economy. Today, almost every business is a technology business.

 

Take the Ohio medical-device company that relies on proprietary software and AI systems embedded in its products. If regulators in another country demand access to the company's source code as a condition of market access, the company faces a choice between surrendering valuable intellectual property or walking away from the market.

 

Or consider a Michigan carmaker that uses AI and cloud-connected machinery at every step of the supply chain, from initial design to final delivery. If other governments force that data to stay on local servers, the manufacturer loses real-time insights and faces increased storage costs. This hidden barrier prices American goods out of the market without a traditional tariff.

 

Rather than wait for consensus from multilateral institutions that struggle to keep pace with technological change, the Trump administration has pursued bilateral agreements to establish modern digital trade rules. Those agreements prohibit discriminatory digital taxes, protect cross-border data flows, preserve duty-free treatment for electronic transmissions, and prevent governments from using regulation to extract proprietary American technology or place U.S. and other foreign competitors at a disadvantage.

 

The agreements with Indonesia, Cambodia and Malaysia show what this approach can accomplish. They include protections against forced technology transfers, restrictions on localization requirements, commitments for supporting digital infrastructure, and safeguards against demands for source code and other proprietary technologies.

 

Taken together, the agreements constitute the outline of a modern trading framework for the AI era. There is, however, a risk that these bilateral agreements could become a patchwork of overlapping commitments that are unevenly enforced and easily ignored. Rules that look impressive on paper quickly lose value if there are no consequences for violating them.

 

That is why the next phase matters. The U.S. must enforce the commitments it has already secured. Countries that agree to digital trade obligations should be expected to honor them fully.

 

In addition, future negotiations should address discriminatory AI rules that affect a crucial part of the economy. Around the world, governments are defending as safety measures new regulations that are really intended to impair foreign competition. Legitimate safeguards play an important role; protectionism disguised as regulation shouldn't.

 

Finally, the administration should view these agreements not as isolated successes but as the foundation of a broader coalition.

 

Nearly 20 countries have accepted some version of the same core digital trade principles. That is an opportunity to expand one-off deals and to shape global standards for digital commerce and artificial intelligence. Ultimately, the goal shouldn't be a collection of bilateral agreements. It should be the modernization of the entire international trading system.

 

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Mr. Bhatia is Google's global head of government affairs and public policy. He served as deputy U.S. trade representative, 2005-07.” [1]

 

1. Trump Fashions a Trade Policy for the AI Age. Bhatia, Karan.  Wall Street Journal, Eastern edition; New York, N.Y.. 22 July 2026: A15.