Globalization will triumph over Donald Trump

Sunday happy. April 2 – or “Liberation Day”, as Donald Trump – imminent. The United States’ trade partners will soon discover the form of the president’s “mutual” tariff plan.

Fear of the world of nutrition is high. With the slowdown in the trade of global commodities and the national security doctrine at Vogue, many feel anxious that Trump’s tariff can be the straw that breaks the back of globalization.

So for Diacity this week, I looked for counter -arguments. Here is the reason that Trump 2.0 will not be a fatal international trade.

First, the importance of the United States for global trade can be exaggerated, as it is the largest economy in the world. America accounts for only 13 percent of the imports of global commodities-decreased from nearly five decades. This makes it the largest importer and significant impact on trade patterns, but not enough to reflect globalization on its own.

For evaluation, Simon Venet, a professor at the IMD College of Business Administration, recently managed Thought experience. He found that even if the United States cuts everyone Goods imports, 70 of their commercial partners will completely constitute their lost sales to the United States within one year, and 115 will do so within five years, assuming that they have maintained the current export growth rates for other markets.

The United States is not the main driver for global trade growth. Europe – and recently China – are greater shareholders. Both economic forces are likely to continue to defend free trade, according to the analysis conducted by Malika Sashdiva, a strategic expert in Deutsche Research Bank.

China needs to secure raw material inputs (and thus the Belt and Road initiative) and global markets to support President Xi Jinping’s growth strategy, which focuses on “new quality production powers”. Beijing has already talked about the need for “unilateral resistance” as the United States intensifies protectionism.

However, despite all the hops around the American -Chinese trade war, the share of global goods that occur directly between the two is only About 2.6 percent.

The European Union plays a more important role than both in the World Trade Command – it is likely to grow. Trade remains essential for the European project. Trade within the European Union is likely to improve, as the bloc enhances defensive efforts and economic integration in response to Trump’s harassment. Brussels also realizes the need to be a process of trading with China, given its ambitions to quickly go green and jump on the technology curve. (For example, using Transfer of intellectual property As a condition for Chinese production to turn into Europe.)

Beyond Europe, China, India, Southeast Asia, East Asia and the Middle East, it is expected to support growth in global trade sizes until 2029, according to what he said. Atlas Trade DHL.

After that, although governments are trying to enhance the flexibility of the national supply chain after the Covid-19 and the war in Ukraine, a few of them look forward to Trump. Most countries realize their restrictions on resources (especially small and developing countries, which cannot maintain reasonable living levels without trade).

“As the United States retracts the global theater, other governments will want to rely on possible sales sales and import with new deals,” said Scott Lincum, Vice President at the Kato Institute.

Outside the United States, bilateral and multilateral trade negotiations continue. Recently, the European Union, Mercosur, Australia and the United Arab Emirates have reached agreements. The European Union, the Gulf Cooperation Council, the United Kingdom and India also follows various deals through goods, services and investment.

To put the importance of other commercial areas and its ongoing motives to continue openness in its correct perspective, Stephen German, a great research researcher at the New York Stain University and the author of the Atlas of Trade at DHL, faced through a scenario of the worst case about American definitions:

The complete implementation of the proposed definitions during the Trump campaign and revenge by other countries against the United States can reduce the volumes of global commodity trade by up to 10 percent against the basic growth in the long term. But even this negative scenario still involves about 5 percent of the global commodity trade in 2029 compared to 2024. This leads me to the opinion that increases in the United States are likely to slow down the unlike global trade growth over time.

Certainly, but not the historical height Global goods trade Slow down? Does this trend might get the worst tariff?

What matters Why It slows down in the first place. One factor is political geography. Asset manager Pgim argues This globalization entered the “dual path era”. It finds violation of elements with the effects of national security, such as artificial intelligence, semi -fine connectors, critical minerals and military technology. (This embodies most of the media and political focus.)

But outside the limelight, you find continuous and high -speed globalization for goods and services, which represent the remaining 75 percent From global GDP. This includes professional services, information technology, entertainment, consumer electronics and luxury goods.

However, the importance of trade for the global economy has receded and flow throughout history. Trade flexibility in Global GDP fluctuates with geopolitical sessions, which affects national discussions on protecting industries and workers. But the economic reality has a way to reaffirm itself; The merchandise trade continues to rise over time.

The competencies of specializations around the world-which enables importing cheaper or high-quality or simply or simply undermining the logic of protection of jobs and ineffective industries (as do profits that come from selling these specializations widely in a global market).

The opposite relationship between the KOF globalization index – a measure of the economic, social and political dimensions of globalization – and inflation in advanced economies is an example.

Therefore, it is possible that once governments have built sufficient national capabilities and flexibility in critical industries, the logical economic basis will take responsibility. After all, the definition of critical industries is dynamic.

“Protection comes and goes in courses, but the basic structural force of the relative feature ultimately prevails to create a new balance that continues to expand the expansion of trade in general, especially when the collaboration in both goods and services,” said Paraj Khana, a global strategy consultant.

In the long run, it is difficult to see how the strike will be from the attack on Trump’s tariff in the current “dual path” more than just.

In the short term, the US President may end with his inflationary policies (as I explored in Newsletter last week). Importing replacement is a period of time for a decade. (American producers will take time to switch to local supply chains; imports will not decrease immediately.) Political courses are shorter.

A recent poll conducted by the Kato and Yajov Institute found that 40 percent of American voters consider inflation a major issue. Only 1 percent mention globalization and trade.

As Khanna glimpsed, globalization is more than just trade in goods, which Trump focuses on (currently). Trade in Commercial services Business, financing and communications have grown – twice faster than the merchandise trade since 1990. The increasing digital trade is one of the components of this and is expected to rise faster.

The MCKINSEY report on the flow of services and data now notes a stronger role in the global economy (especially that developing countries consume more goods they produce) The future of trade. It is also believed that new technology, on the Internet, can reduce the trade of global commodities. (For example, electric cars need less mechanical parts than those that have an internal combustion engine.) The important point is that good economic transformations – not only political geography – contribute to slowing the trade of global goods.

In general, it is difficult to see Trump’s tariff, causing a continuous decrease in trade.

Certainly, there are wider dimensions of globalization to evaluate, such as immigration flows and capital flows. But until then, DHL global communication index He explains that international flows through trade, capital, information and all of them rose between 2019 and 2024, a period of inflation by the gossip that they flow.

This does not mean that aggressive protectionism by the largest economy in the world is not harmful to the global economy. that it. But it is better to face it through more free trade. In fact, in the long run, the economic motivation behind globalization in all its forms gives it the power of extraordinary survival.

Send me refuting you and your thoughts to [email protected] Or on x @Teapperikh90.

Food to think

Can social media publications help predict the stock market? this Voxeu column It analyzes approximately 3 million posts related to investment on X, and finds that the feelings based on social media firmly predict market trends in advanced and emerging economies.