The Backlash Against Globalized Trade Is Changing, Not Subsiding

A container ship participating in globalized trade is unloaded in California.
A container ship is unloaded at the Port of Oakland, Calif., July 12, 2018 (AP photo by Ben Margot).

After decades in which globalization was seen as an unalloyed force for good, a backlash to globalized trade has gathered steam over the past six years. Once hailed as a way to improve efficiency in developed economies and create prosperity in developing ones, the disruptions caused by trade liberalization began to generate popular discontent in both.

In the aftermath of the global financial crisis, inequalities resulting from the undistributed gains generated by free trade had already gained prominence in political debates, particularly in Europe. Beginning with the Brexit referendum in 2016 and the subsequent election of Donald Trump as U.S. president, the reflexive acceptance of trade as a net positive had given way to movements that saw it as a threat to their communities, whether local or national.

Trump’s hostility to free trade resulted in four years of trade wars, not only with China, but also with U.S. partners in Asia and Europe. That didn’t stop those countries from pursuing their own deals, but it replaced U.S. global leadership on efforts to liberalize trade with four years of withdrawal and even obstruction by Washington.

The COVID-19 pandemic then introduced its own challenges to the global trade order. In the scramble to procure first protective equipment and then vaccines, countries reverted to the kind of nationalism Trump celebrated, focusing policymakers’ attention on the need to secure “strategic supply chains” for products deemed essential for national security and societal resilience. The pandemic’s lingering impact on trade is also being felt in disruptions to supply chains that have fueled a spike in inflation across the world.

Finally, the war in Ukraine, but also the U.S. strategic competition with China, has seemingly put paid to the expansive vision of globalization from the first decade and a half of the new millennium. In response to Russia’s invasion, the U.S. and its European allies imposed economic sanctions to isolate Moscow that will be difficult to lift absent a sea change in Russia’s behavior or leadership. And Washington has increasingly turned to export controls, particularly in the high-tech sector, to counter China’s ambitions.

More broadly, while President Joe Biden’s administration has repudiated many of Trump’s policies since taking office in January 2021, the major exception has been in the arena of trade. Biden is facing no pressure from the left wing of the Democratic party to revert to the status quo on free trade, and he could open himself to criticism from critical Rust Belt voters if he reverses Trump’s trade agenda. In fact, his “foreign policy for the middle class,” including elements of industrial policy and supply chain nationalism, has some observers wondering if it isn’t simply a softer and gentler name for the same objectives pursued by Trump.

As a result, the trade war with China looks set to continue. Perhaps more surprisingly, Biden belatedly removed Trump’s aluminum and steel tariffs on American allies, only to restoke trade tensions with European partners over what they see as the protectionist subsidies included as part of the Inflation Reduction Act’s climate policy measures. More broadly, from Southeast Asia to the Americas, Biden has thrown cold water on the desire among Washington’s partners for free trade agreements with the U.S. as an alternative to China’s economic pull.

WPR has covered the dramatic changes in global trade in detail and continues to examine key questions about future developments. Will the U.S. and Europe formulate a collective approach to China’s unfair trade practices? Will Beijing’s use of trade as coercive diplomacy backfire? Will the lingering impact of the coronavirus pandemic—and now the fallout from the war in Ukraine—permanently alter global trade patterns? Below are some of the highlights of WPR’s coverage.

Our Most Recent Coverage

The EU and U.S. Are Squaring Off Over Climate Policy’s Trade Impact

Financial incentives for the purchase of electric vehicles included in the U.S. Inflation Reduction Act are leading to renewed trade frictions with the EU. While those tensions are significant in and of themselves, they mask deeper problems with how the IRA and climate legislation more generally fit into the global trade regime.

Global Trade

There have been several major multilateral deals struck in the past six years in Asia and North America, and between the EU and a range of national and regional partners. And Africa rang in 2021 with the official launch of a new, continent-wide free trade zone. But from Brexit to Trump’s presidency, voters have been willing to sacrifice economic connectivity to enhance national sovereignty. Now governments are increasingly following their lead.

U.S. Trade Policy

On trade policy, the transition from Trump to Biden brought surprisingly little change. The U.S.-China trade war continues, and protective tariffs remain the order of the day. On one front, though, Biden has moved to break with his predecessor, signaling an interest in thawing relations with the EU, particularly when it comes to cooperating on countering China’s unfair trade practices. But even there, parts of Trump’s legacy, like the steel and aluminum tariffs that Biden only belatedly removed, continued to be an irritant, even as the IRA’s protectionist subsidies have introduced another.

The WTO

The WTO’s new director-general, Ngozi Okonjo-Iweala, made history when she became the first African and the first woman to head the global trade body. She will not have much of a honeymoon period, though. The WTO must rebuild its appellate body after Trump officials blocked key appointments and ground its work to a halt, while also addressing pressing issues related to the COVID-19 pandemic, including an impulse by major economies to focus on securing their own supply chains at the expense of global trade rules.

Editor’s note: This article was originally published in April 2021 and is regularly updated.

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