Donald Trump’s trade war has triggered panic in global markets, sending economic shockwaves through international supply chains. Stock markets are in free fall, growth forecasts have been sharply revised downward, and an economic recession with rising unemployment looms. This has led many to long for the more orderly times before Trump — nostalgia for the liberal globalization of the 2000s, with unimpeded global free trade and a world economy governed by predictable rules. Ian Bremmer confidently states that “globalization helped make the United States the most prosperous country in history,” and in the New York Times Thomas Friedman writes that our time has been “one of the most relatively peaceful and prosperous in history . . . because of a tightening web of globalization and trade.”
On the face of it, this reaction is understandable. And there are many reasons why Trump’s tariff war is counterproductive. Tariffs are a form of tax largely paid by consumers. They are a flat tax, which hits the poorest hardest, as they spend a larger share of their income on everyday goods that are subject to the new tariffs. If Trump follows through on his promise to use the revenue to fund tax cuts for the wealthy, this could be one of the most regressive tax reforms in US history.
But nostalgia for the free trade era is not a way forward, regardless of what one thinks of Trump and his agenda. The wave of discontent that first brought Trump to victory is intimately related to the tensions unleashed by economic globalization. The neoliberal world order, dominant since the collapse of the Soviet Union, combined free trade and financial deregulation, leading to increased inequality, deindustrialization, and job losses. It should be no surprise,…
Auteur: Rune Møller Stahl
