Trump tariffs: Is the world watching globalization fall apart?

Mint

10 hours ago

In response to US tariffs, in early April, the UK prime minister's office declared, 'The world has changed, globalization is over and we are now in a new era." But are US President Donald Trump's trade war and immigration policies the only reasons for the collapse of globalization, if at all?
French economist Thomas Piketty argues that Trumpism is 'a reaction to the failure of Reaganism." Republicans, he holds, have realized that globalization and economic liberalism haven't benefitted the middle class. But today's anti-global moment didn't start in 2024. As perceived by Tara Zahra, a history professor at University of Chicago, when thousands of protestors marched in Seattle in 1999 to oppose the World Trade Organization summit, it was an early sign of a backlash against globalization.
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The 2008 global economic crisis didn't trigger another Great Depression, but it destroyed livelihoods, undermined people's trust in the stability and justice of global capitalism and aided anti-global populists in winning elections across the globe. Indeed, a 2023 International Monetary Fund paper revealed that in the 15 years since the 2008 global financial crisis, globalization plateaued. Its modest growth is frequently referred to as 'slowbalization.'
During the 2015-16 global refugee crisis, several European countries began to discourage refugees, while Trump's election in America and the UK's Brexit vote, both in 2016, intensified anti-immigrant sentiment in the West. And then the covid pandemic exposed the vulnerability of economies that rely on imports for essential goods. It's the most significant peace-time disruptor of globalization in recent history. Together, covid and the 2008 financial crisis contributed to de-globalization with echoes of what World War I and the Great Depression had combined to orchestrate about a century earlier.
Amid the disruption of the global economy caused by the Ukraine conflict, America elected Trump once more, and now Trump 2.0 is weaponizing tariffs to isolate the US from the rest of the world.
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However, didn't the core idea of globalization evolve over time? In their 1999 book Global Transformations, British political scientist David Held and his co-authors defined globalization as 'the process of world shrinkage, of distances getting shorter, things moving closer."
Global integration didn't gain traction until the 19th century. Steamships, railroads, the telegraph and other innovations, along with growing international economic cooperation, drove the first 'wave' of globalization. Thus, the term indicates increasing interdependence of the world's economies, cultures and inhabitants, thanks to cross-border trade in technology, commodities and services, apart from flows of people, capital and information.
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Historically, globalization peaked before World War I. In his 1920 book The Economic Consequences of the Peace, John Maynard Keynes described the early 20th-century heyday of the globalized economy thus: 'The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep."
In his autobiography, The World of Yesterday, Austrian writer Stefan Zweig wrote, 'There were no permits, no visas, and it always gives me pleasure to astonish the young by telling them that before 1914, I travelled from Europe to India and to America without a passport and without ever having seen one." Such internationalism ended in August 1914 despite the widespread belief that it was irreversible and that peace and prosperity would be ensured by the interconnectedness of the world economy.
In addition to World War I, post-war protectionism, the emergence of popular politics, the Great Depression and World War II all contributed to globalization falling apart. Following World War II, America contributed to the establishment of a global economic order supervised by multilateral organizations and regulated by generally agreed-upon norms.
With China's gradual economic opening from 1979 onwards, the fall of the Berlin Wall in 1989 and the EU's expansion, the world witnessed its second major acceleration of globalization. This wave followed the Soviet Union's collapse in 1991. Migration and economic integration again increased.
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Although it is not obvious, the globalization curve might be headed for another low right now. However, in this era of the internet and communication, the Keynesian idea of globalization has undergone a substantial transformation. Today, I can enjoy a British sitcom in Kolkata or hold a Zoom meeting with someone in Los Angeles.
Greek economist Takis Fotopoulos has examined many types of globalization. By his nomenclature, the cultural kind is the homogenization of culture, while the political sort describes the rise of a transnational elite and features dreams of the nation-state's dissolution in favour of a common global market. Also, globalization can be 'technological', 'social' and 'ideological.'
Today, the internet has overcome cultural and national divides to quite some extent, presenting new opportunities and difficulties for economies and communities around the world; social media has axed barriers of space and time in interpersonal communication. Thus, despite US tariffs and immigration restrictions, broadly defined globalization will continue, unless countries try to wall off their part of the web from the world.
The author is professor of statistics, Indian Statistical Institute, Kolkata.