Trump is waging a new kind of Cold War - and millions of jobs are on the front line

Donald Trump has all but reneged on his three most crucial campaign promises on trade. Considering how out of touch with modern norms of international commerce those were, that's a good thing.

The president passed on naming China a currency manipulator, has yet to pull out of the North-America Free Trade Agreement, or impose the aggressive tariffs on imported products from those two countries (China and Mexico) touted on the trail.

However, that does not mean Trump's protectionist rhetoric and the isolationist actions he has taken so far will not have a damaging effect on US trade relations and the economy.

Indeed, the stealth nature of Trump's free trade rollbacks makes them potentially more pernicious, since they could lead to a slow erosion of America's competitive advantage and, with it, the job market.

Just witness the recent watering down of a key statement by the Group of Seven major world economies to remove an explicit commitment to free trade, something the United States was alone in pushing for.

More substantively, the Trump administration has been taking targeted steps in various industries, ranging from steel to agriculture, to pick fights with key trading partners that may have damaging long-run effects.

On steel, Trump has cited national security concerns to launch a widespread review that many worry will lead to new rounds of tariffs and trade disputes. "This issue could come to a head imminently," Axios wrote in its morning newsletter.

"The Trump administration has quickly adopted an aggressive and antagonistic approach to using US trade laws as a protectionist tool," argues Chad Bown, a former White House trade economist and a senior fellow at the Peterson Institute for International Economics (where I used to work) in a new study.

"The effect on trade relations may not be as immediately disruptive as if Trump had followed through on campaign threats to pull the United States out of NAFTA or impose 45% tariffs on China," Bown writes. "However, the escalating trade barriers and the means through which the Trump administration is motivating their use have the potential to severely weaken the rules-based trading system."

During the campaign, Trump even threatened to pull out of the 164-member WTO, which the United States played a key role in developing over several decades. Now the approach is less an all-out trade war but rather a cold war of trade attrition that threatens to be equally damaging, and could led to severe job losses if implemented on an ongoing basis.

"Rather than blowing it up by simply withdrawing, the end result of the Trump administration's tactics may be that the World Trade Organization implodes from within," Bown says.

A Peterson Institute study published ahead of the 2016 presidential elections estimated that, if fully implemented, Trump's proposals on trade would "provoke retaliation by US trading partners, unleashing a trade war that would send the US economy into recession and cost millions of Americans their jobs." They estimated the potential hit to trade-related jobs, which include many service sector positions, down to the state level.

Along similar lines, the European Central Bank took the rare step of rebuking another sovereign state's leadership, arguing the Trump administration presents a key risk to the world economy.

"Since the U.S. election, pressures for more inward-looking policies have risen," the ECB said. "In particular, there is significant policy uncertainty surrounding the intentions of the new U.S. administration regarding fiscal and, especially, trade policies, the latter entailing potentially significant negative effects on the global economy."

The Bank of International Settlements also offers some indirect advice to the Trump administration on trade in its just-released annual report.

"Greater emphasis on measures that would hinder free trade in national policy agendas suggests that the risk of protectionism may be growing further," the BIS cautions. "A rise in protectionism would add to the cyclical and structural factors that have held back global trade post-crisis."