Why It Matters
The Washington Consensus Could Not Hold
Apr 2, 2025
Shannon K. O’Neil, a leading authority on global trade at the Council on Foreign Relations, joins to discuss the evolving landscape of U.S. trade policies. She examines the decline of the Washington Consensus, contrasting its historical role in promoting unity with the current trend towards protectionism. The conversation dives into the impact of tariffs under the Trump administration, highlighting their role in both international relations and American business uncertainty. O’Neil emphasizes the need for a renewed trade strategy to adapt to ongoing global challenges.
30:27
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Quick takeaways
- The erosion of the Washington Consensus reflects its failure to address modern issues like income inequality and job displacement.
- China's economic model demonstrates the effectiveness of state control and industrial policy, challenging the tenets of free-market advocacy.
Deep dives
The Washington Consensus: Evolution and Relevance
The Washington Consensus, formulated in 1989, originally comprised ten policy prescriptions aimed at improving economic performance in emerging markets. While it emphasized opening economies to trade and privatizing state-owned enterprises, its applicability today is in decline. Many of the ideas that drove this consensus were meant to promote unrestrained market activity, but they failed to address enduring challenges like income inequality and job losses in advanced economies. Consequently, the credibility of the Washington Consensus has eroded, as its old frameworks no longer resonate with contemporary political and economic realities.
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