The current scenario might be one of these pivotal moments. “Globalization as we’ve known it for the last couple of decades has come to an end,” British politician Darren Jones told the BBC on Sunday. While it may sound like an overreaction to President Donald Trump’s tariffs, Jones’ statement is grounded in reality.
What the world is currently experiencing transcends a mere trade war. It signifies the decline of an economic order that has underpinned global prosperity for the past three decades. The New York Times elaborates on this, noting that the current landscape resembles the collapse of the first era of globalization. It occurred after 1913, when the value of global exports dropped from 14% to 6% of the world economy.
The U.S. was the architect of the globalized system, but it now wants to destroy it. The country that once harnessed the benefits of free trade for growth now imposes the same 10% base tariff on both democratic allies and fundamentalist regimes. In fact, Trump has imposed higher tariffs in the European Union than in North Korea.
Trump’s tariff policies aren’t merely a result of an eccentric presidential decision, but rather the culmination of a longstanding trend. Warnings began back in 1999 with the anti-globalization protests in Seattle, where tens of thousands demonstrated against the WTO. This discontent grew more pronounced following the 2008 financial crisis. The pandemic further exposed the fragility of the world’s supply chains. The world was already fragmenting before Trump’s return to the White House.
What’s particularly concerning is the response from China. Rather than lamenting its situation or waiting for better times, China is actively constructing its own independent economic sphere. The case of Huawei is illustrative. It’s not building bridges. Rather, it’s digging trenches. Its strategy has shifted from competition to creating its own parallel, self-sufficient ecosystem.
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Beijing has been preparing its countermeasures to Trump’s tariffs, implementing its own tariff hikes and even banning U.S. movies. These actions aren’t just defensive responses. They’re part of a long-term strategy to reduce China’s dependence on the West. The Chinese government aims to develop its own technological, financial, and commercial ecosystems. Similarly, the EU is also searching for solutions to navigate this changing landscape. An era of independent economic “islands” might soon emerge.
While some changes may be reversed when Trump leaves office and a new president takes over, others will likely be permanent. Once trust is broken, it’s not easily restored. The experiences of Huawei and other companies in 2019 serve as a stark reminder. Reliance on a single market, especially the U.S., poses a significant vulnerability.
“The decisions [companies] make off the back of that are going to reshape global trade,” Pranesh Narayanan of the Institute for Public Policy Research, a British think tank, told NBC. The result will be a global system that’s more fragmented, more redundant, and, paradoxically, less efficient than the current globalized system.
Meanwhile, other experts predict that the cost of this “de-globalization” will ultimately be passed on to consumers, resulting in higher prices and a reduced variety of available goods.
Many of the elements that have contributed to the recent unprecedented global prosperity are now being unraveled. In light of challenges such as AI, climate change, and demographic shifts, society should be seeking more cooperation, not less.
The pendulum seems to be swinging back toward closed borders and self-sufficiency. China is aiming for self-reliance, and the U.S. is moving toward a similar goal. The EU, which had previously focused on other priorities, is starting to reconsider what it needs to protect.
It remains to be seen what the future holds. This isn’t about whether globalization can be salvaged. In the end, reversing certain steps seems very complicated. Rather, it’s about what will emerge from its remnants.
Image | Adolfo Félix
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