If it can be argued that WW2, was at least in part, caused by the economic mayhem of the 1930s, when protectionism converted a bad recession into a depression, then it can also be argued that globalisation was the antidote both to war in Europe and to isolationist protectionism.  A lesson which appears to be lost on a US President who has argued that “trade is bad – despite the fact that in 2024, global trade reached a record $33 trillion.  Whilst globalisation may not be an unalloyed good, it has delivered an unprecedented increase in global living standards, immense improvements in trading and economic efficiency and lifted millions out of poverty. 

However, last week, we were treated to the unedifying spectacle of Downing Street not only declaring globalisation dead, but also a failure. Whilst this is not a new stance for the Labour Party to take (Rachel Reeves said that “Globalisation … is dead’ in a speech in May 2023), as a political position it is as jarring as Theresa May’s arrogant dismissal of global citizens.  With a dismissive flick of the rhetorical wrist, the PM scorned the economic gains and the development benefits of 85 years of unprecedented prosperity as he rushed to join other sycophants genuflecting at the altar of Trump’s populist nationalism.

Just as with Liz Truss, Trump was forced into a humiliating retreat – not by the free-falling stock-markets, but by chaotic turmoil on the bond markets - the opponent no politician can outface.  The irony of his anti-globalist economic populism being throttled by Wall Street, the definition of the epicentre of globalisation has been quite delicious – though sadly, not matched by any recognition on either side of the Atlantic that declaring globalisation dead was a tad premature. Indeed, Trump’s team attempted to cover the retreat with a story that the aim all along had been to force the world into a lower-tariff era (which would result in more, not less globalisation…)

But even though Trump was forced into an ignominious retreat on his tariffs, according to the Yale Budget Lab, the world is still facing the highest effective globalised tariff rate since 1903 - due to the universal application of 10% tariffs and the impossibly high tariff walls that the US and China have constructed against each other. That fact will have an impact on international supply chains and inflation, which, in turn, will affect the resilience of globalisation as a system and the institutions created to facilitate it.

And globalisation is a system – not just a mechanism for trade.  It is the set of common ideas and institutions based on the rules-based order; respect for the rule of law; the self-determination of nations; commitment to humanitarian aid, environmental responsibility, human rights and democracy, and multilateral cooperation between nations which has typified the success of the post WW2 world order.  

For this approach to work, there has to be general, international acceptance of and trust in a common set of rules and institutions.  And common agreement to abide by those rules, the application of law and respect for decisions of the Courts in the case of a dispute.  The final element necessary for globalisation to work is a degree of political stability – violent swings in political doctrine undermine trust and reliability. This globalised system requires each country to relinquish a certain degree of national autonomy and sovereignty on the basis that this surrender is actually not only for the common, but the national good. Without these ingredients, the highly effective and efficient operation of specialised and extended trade supply lines which criss-cross international and political borders falls apart. 

Paul Krugman commented that “Trump [has] burned it all down,” in his 100 days since taking power.  He has systematically (deliberately?) undermined each of the necessary ingredients of successful globalisation, destroying trust in institutions and assaulting the US and international legal system (as a lawyer, I find the populist attack on the legal system, typified by Trump’s attempts to subjugate and cow the judiciary and place himself above the law particularly worrying: a society which no longer places the ultimate value on respect for the law is on which has begun its slide into political chaos), leaving the system wondering who will lead it now.  To quote Mark Carney “The 80-year period when the US embraced the mantle of global economic leadership, when it forged alliances rooted in trust and mutual respect and championed the free exchange of goods and services, is over. While this is a tragedy, it is also the new reality.”

Mark Carney goes on to note that “The global economy is fundamentally different today than it was yesterday. The system of global trade anchored on the United States … since the end of second world war, a system that while not perfect helped deliver prosperity… for decades, is over.’  Carney’s comment acknowledges that globalisation has not delivered uniform benefits and that there are many who feel left behind by its march, with whom the nationalist, populist’s wholesale rejection of globalisation resonates and to whom Trump spoke when he described the US carnage of “rusted-out factories, scattered like tombstones across the landscape of our nation”.

And it is not hard to point to the failures of globalisation.  Massive Chinese solar or EV subsidies, for example, have distorted international markets, raising the risks of dumping and unfair competition.  Geopolitical competition for access to minerals and resources have contributed to a growing feeling of distrust (leading to the emergence of the phenomenon of near, on- or friend-shoring supply chains – which is protectionism in disguise).  Health and security crises have led to a re-assessment of domestic vulnerability – the Ukraine crisis brought home how dangerously over-reliant Europe was on Russian oil and gas (and the fragility of undersea connections); Covid exposed the worrying vulnerability of over-restricted pharmaceutical supply chains. The Second Trump era has demonstrated the weakness of European defence sector manufacturing capacity. In response many governments have introduced counter-measures (tariffs, non-tariff measures, export controls and investment restrictions) which has led to an increase in trade fragmentation – The Guardian quotes figures which show that ‘in 2024 alone, more than 3,000 trade restrictions were implemented globally’.

But I do not view Carney’s comments as signalling his acceptance that globalisation has failed and should be abandoned (as the UK PM and Chancellor appear to believe). Nor that he shares Trump’s chaotic alternative prescription of deliberate destruction and encouragement of protectionist fragmentation of markets (characterised by Gordon Brown as ‘Let chaos reign and don’t rein in the chaos’). I do not think he is suggesting that globalisation itself is finished, rather that Trump’s Liberation Day signalled an abdication of the US leadership of the global trading system: taken in that light, his comments resonate as a call to arms.

Far from signalling the end of globalisation, Trump’s accession to power and his dangerous and damaging flirtation with tariffs present an opportunity, not to reject globalisation, but to robustly defend its virtues and benefits, whilst acknowledging its failures and seeking to remedy them.  By doing this, we can avoid repeating the mistakes of history and emerge from the chaos of the Trump era with a better blue-print for global trade.  One which offers a new reinvigorated fair, just and equal system of globalisation as a brighter alternative to the dangerous trend towards economic populism and protectionism.

To do this, we need a new determination to make globalisation work for all.  We need to rebuild trust in politics and the rule of law. We must make and win the argument that that, by surrendering a degree of sovereignty to enable international institutions to apply the law equitably, we reach a better collective outcome.  We must create new and improved systems of international economic and financial coordination, oversight and enforcement mechanisms to prevent market abuse and distortion; a common international agreement on mutual tariffs and market access rules; new systems for dispute resolution; better, more transparent and robust global institutions.  All built around a narrative which places fundamental principles at the heart of a new and improved world order: that international cooperation is in our collective interests, and that a zero-sum world of competing nationalisms leaves us all poorer and less secure.

To end where I began.  The protectionist agenda unleashed by President Trump threatens to take us back to the 1930s.  But his rejection of globalisation offers us an opportunity, which, if seized with courage and vision will lead us, not to the 1930s descent into global anarchy, but rather into an optimistic vision of a better, more just, re-imagined, re-designed and re-built system of globalisation.