The New York Times reports that President Trump heads to the Group of Seven at a moment when America's closest allies are actively reconsidering the terms of their partnership — estranged over trade policy, the war in Ukraine, NATO obligations, and now the American conflict with Iran. This is not, at its root, a quarrel of personalities. It is a quarrel about the rules that make cooperative exchange possible between sovereign nations.

I wrote, in the Wealth of Nations, that restrictions on trade between nations are a tax levied on the consumer to enrich a narrow producer interest. A tariff wall that one trading partner erects forces the other to pay more for the same good, or to find a costlier substitute. The gain flows to the protected manufacturer; the loss is distributed invisibly across every household that buys what that manufacturer makes. This arithmetic does not change because the parties are nations rather than individuals, nor because the politician imposing the restriction calls it strength rather than protection.

But I must be equally plain about the other side of the ledger. A trading relationship, to be productive for both parties, requires a framework of mutual obligation — something analogous to contract law within a nation. The old Atlantic alliance was precisely such a framework: shared defense spending, agreed rules of commerce, reciprocal commitments under law. When one party treats that framework as a liability rather than an asset, the other party is not irrational to ask whether the contract still holds. The New York Times notes that European leaders are doing exactly that. Their hesitation is the market's signal that something in the institutional arrangement has gone wrong.

Here is the danger I would press upon the reader. When a great trading framework dissolves, the immediate beneficiaries are not the common people of either side — not the German worker, not the American farmer, not the Ukrainian civilian who needs both. The beneficiaries are those narrow interests — in every country — that profit from closed markets, captive suppliers, and political favors substituted for open competition. Mercantile restriction was the disease I diagnosed in the chartered companies and corn laws of my own century; it takes new forms but its logic is unchanged.

I cannot speak with authority on the precise terms of NATO financing, the engineering of a ceasefire, or the diplomatic architecture of a deal with Iran — these are modern technical matters beyond my recollection, and I will not pretend otherwise. But I will say this as inference from durable principle: an alliance that cannot settle on a shared institutional rule — who pays for collective defense, on what terms goods cross borders, under what law disputes are resolved — is not an alliance. It is a series of bilateral transactions, each subject to the bargaining power of the moment. That is a weaker and more expensive arrangement for everyone, and the costs, as always, fall heaviest on those least able to bear them.

The institutional question, then, is this: can the parties reconstruct, or preserve, a framework of mutual obligation capable of making their exchange honest? If they can, the gains from cooperation — in security, in trade, in the stable rules that allow ordinary people to plan their lives — are very large. If they cannot, the retreat into rival mercantilist blocs will impoverish both sides in ways that no tariff schedule will ever fully reveal to the voter who pays it. That is the reckoning the G7 table now faces, and it is a political economy question before it is anything else.