If globalization were ever going to unravel, the beginning would probably feel something like this.
President Donald Trump, the leader of the country that built the world trading system, continues to disrupt international commerce as a weapon wielded in pursuit of national aims.
He has unleashed trade hostilities with China, placed tariffs on steel made by allies like Europe and Japan, and restricted India’s access to the American market. He vowed to hit Mexico with tariffs mere months after he agreed to a new version of a deal liberalizing trade across North America.
But globalization has become such an elemental feature of life that it is probably irreversible. The process of making modern goods, from airplanes to medical devices, has become so mind-bendingly complex, involving components drawn from multiple continents, that a few unexpected tariffs will not prompt companies to swiftly close factories in China and Mexico and replace them with plants in Ohio and Indiana.
What does appear to be ending is the post-World War II era in which the United States championed global trade as immunization against future conflict, selling the idea that the free exchange of goods was a pathway toward a more stable world order.
U.S. administrations forged rules governing disputes, enabling countries to trade with diminished fear of capricious political intervention. In ceding this role, Trump has weakened the rules-based trading system while removing a counterweight to China, whose transactional approach to trade places scant value on transparency and human rights.
“One thing is really clear: There has got to be a reset in the world trading system,” said Swati Dhingra, an economist at the London School of Economics. “It’s all breaking at the seams at this point.”
The trade war unleashed by Trump has injected higher costs and confusion into the global economy, forcing businesses to anticipate the next venue for hostilities. U.S. retailers and manufacturers voiced that complaint in testimony to the Office of the U.S. Trade Representative, ahead of Trump’s plans to put tariffs on a further $300 billion worth of Chinese imports.
“This is now the post-American world economy, one in which globalization is much more spotty,” said Adam S. Posen, president of the Peterson Institute for International Economics in Washington. “The world is a riskier place, where access to markets is a lot less sure.”
In the Trump framing, the United States is best served by the unsentimental exploitation of its position as the world’s largest economy. It must brandish threats of limiting access to its market to force other countries to capitulate to its demands.