Is its age of expansion at an end?
Is the era of trade liberalization that began in 1945 over? The collapse of world trade talks in 2008, Great Britain’s shocking vote last year to leave the European Union and the election of President Trump on an anti-globalization platform suggest that it might be. The gains from trade for both advanced and emerging economies are hotly debated. While economic globalization lifted hundreds of millions from poverty, developing countries have balked at further trade talks dominated by rich nations. Workers in industrialized countries have begun to doubt that free trade is a net positive for them, and politicians have responded with an about-face on new agreements. For supporters of global economic integration, the way forward is unclear.
Among the key takeaways:
World trade fell precipitously during the Great Recession of 2007–2009, and dropped again in 2015 by nearly 14 percent.
A trade war—possibly sparked by new U.S. policies, followed by retaliatory tariffs by China and other trade partners—could result in massive job losses in the United States and elsewhere and trigger a recession.
Further trade liberalization looks unlikely in the near term; merely maintaining current levels of integration may require new strategies and policies.
Resources for Further Study
Bernstein, William, “A Splendid Exchange: How Trade Shaped the World,” Grove Press, 2009. A financial theorist and historian looks at the long narrative of trade, from ancient Mesopotamia to the WTO Doha round.
Bhagwati, Jagdish, “In Defense of Globalization,” Oxford University Press, 2007. A Columbia University economics professor argues for free trade, detailing how it has the potential to enable prosperity in developing countries by reducing child labor, increasing literacy and supporting the participation of women, among other things.
Fletcher, Ian, “Free Trade Doesn’t Work: What Should Replace It and Why,” Coalition for a Prosperous America, 2011. A trade theorist advocates a high (perhaps 30 percent) flat tariff on all U.S. imports of goods and services, saying such a levy would be politics-proof and would trigger a return of capital- and knowledge-intensive industries.
Irwin, Douglas, “Free Trade Under Fire,” Princeton University Press, 2015. A Dartmouth College economics professor asks if free trade deserves its poor reputation and concludes that, despite its flaws, trade enables growth and works against poverty.
Mandelbaum, Michael, “The Road to Global Prosperity,” Simon & Schuster, 2014. A professor of foreign policy at the Johns Hopkins School of Advanced International Studies looks at recent worrisome economic developments, yet argues that globalization will continue to be a positive force.
“CFR’s Jagdish Bhagwati Argues Against Preferential Trade Agreements in New Book; Recommends Completion of Multilateral Doha Round,” Council on Foreign Relations, July 16, 2008, http://tinyurl.com/
Appelbaum, Binyamin, “A Little-Noticed Fact About Trade: It’s No Longer Rising,” The New York Times, Oct. 30, 2016, http://tinyurl.com/
Hufbauer, Gary Clyde, and Euijin Jung, “U.S. Bilateral Trade Balances: A New Guide to Trade Policy,” Peterson Institute for International Economics, Nov. 15, 2016, http://tinyurl.com/
Rodrik, Dani, “Put Globalization to Work for Democracies,” The New York Times, Sept. 17, 2016, http://tinyurl.com/
Scheve, Kenneth, and Matthew Slaughter, “A New Deal for Globalization,” Foreign Affairs, July/August 2007, http://tinyurl.com/
Slaughter, Matthew, “High-Trade Jobs Pay Higher Wages,” The Wall Street Journal, Jan. 20, 2014, http://tinyurl.com/
Tankersley, Jim, “Donald Trump’s trade war could kill millions of U.S. jobs,” The Washington Post, March 25, 2016, http://tinyurl.com/
Verma, Sid, “Barclays Warns ‘Politics of Rage’ Will Slow Global Growth,” Bloomberg News, Oct. 24, 2016, http://tinyurl.com/
Reports and Studies
“The Economic Benefits of U.S. Trade,” Council of Economic Advisers, Executive Office of the President of the United States, May 2015, http://tinyurl.com/
“Report urges WTO members to resist protectionism and get trade moving again,” World Trade Organization, July 2016, http://tinyurl.com/
“Trade in 2016 to Grow at Slowest Pace Since the Financial Crisis,” World Trade Organization, Sept. 27, 2016, http://tinyurl.com/
Furman, Jason, “Wal-Mart: A Progressive Success Story,” New York University, November 2005, http://tinyurl.com/
Hufbauer, Gary Clyde, and Sean Lowry, “U.S. Tire Tariffs: Saving Few Jobs at High Cost,” Peterson Institute for International Economics, April 2012, http://tinyurl.com/
The Next Step
Rise of Nationalism
Chesto, Jon, “GE’s Immelt raises concern about nationalist trade policies,” Boston Globe, Feb. 27, 2017, http://tinyurl.com/
Holodny, Elena, “A new study shows that areas in Europe hit hardest by trade saw a rise in support for nationalist parties,” Business Insider, Feb. 8, 2017, http://tinyurl.com/
Pazzanese, Christina, “In Europe, nationalism rising,” Harvard Gazette, Feb. 27, 2017, http://tinyurl.com/
Lee, Don, “Trump’s push for American-made could disrupt NAFTA supply chains and raise consumer prices,” Los Angeles Times, Feb. 28, 2017, http://tinyurl.com/
Light, Larry, “Are robots or Mexicans to blame for U.S. job losses?” CBS News, Feb. 21, 2017, http://tinyurl.com/
Velazquez, Katarina, “Proposed Mexico tariff could complicate agriculture trade,” Star-Telegram, March 4, 2017, http://tinyurl.com/
Brewer, Contessa, “Border towns feel the chill from Trump’s tough talk on trade and immigration,” CNBC, March 4, 2017, http://tinyurl.com/
Bryan, Bob, “Asked about Trump’s immigration plans, Janet Yellen says ‘slowing immigration would slow economic growth,’” Markets Insider, Feb. 15, 2017, http://tinyurl.com/
Singh, Shruti, “Cargill at Odds With Trump as It Warns on Trade, Immigration,” Bloomberg, Feb. 4, 2017, http://tinyurl.com/
“EU awaits ‘solid outline’ of Trump trade goals with Europe,” The Associated Press, ABC News, March 3, 2017, http://tinyurl.com/
Chrysoloras, Nikos, and Stearns, Jonathan, “The Trump Trade Threat Could Unite the Rest of the World, EU Official Says,” Bloomberg, March 4, 2017, http://tinyurl.com/
Donnan, Shawn, “Policy uncertainty threatens trade growth, says World Bank,” Financial Times, Feb. 21, 2017, http://tinyurl.com/
American Enterprise Institute
1789 Massachusetts Ave., N.W., Washington, DC 20036
Think tank that advocates in favor of the free-enterprise system.
Coalition for a Prosperous America
1200 G St., N.W., Washington, DC 20005
Think tank that promotes an overhaul of U.S. trade policy.
Economic Strategy Institute
1730 Rhode Island Ave., N.W., Suite 414, Washington, DC 20036
Research organization that favors more transparent and open markets in international trade.
International Monetary Fund
700 19th St., N.W., Washington, DC 20431
Institution established by 1944 Bretton Woods conference that works for global monetary cooperation, financial stability and global trade.
International Trade Administration
U.S. Department of Commerce, 1401 Constitution Ave., N.W., Washington, DC 20230
Commerce Department office that helps coordinate trade matters and provides studies and data on trade.
Office of the United States Trade Representative
600 17th St., N.W., Washington, DC 20508
White House agency responsible for coordinating U.S. international trade, commodity and direct investment policy and overseeing negotiations with other nations.
Peterson Institute for International Economics
1750 Massachusetts Ave., N.W., Washington, DC 20036-1903
Think tank focused on international economic and trade issues.
U.S. International Trade Commission
500 E St., S.W., Washington, DC 20436
Federal agency established in 1916 as the U.S. Tariff Commission; gathers and analyzes trade data and provides trade expertise to Congress and the president.
World Trade Organization
Centre William Rappard, Rue de Lausanne 154, CH-1211 Geneva 21, Switzerland
+41 (0)22 739 51 11
Intergovernmental organization that regulates international trade.