Globalization—the unfettered cross-border flows of goods, services, people, and data—does not rule the world anymore. It may not even survive threats posed by a world of rampant political populism and nationalism. Frustrated and moody electorates have become more hostile toward open borders.
This has become a big risk to the architect of globalism, the champion and primary beneficiary of the international liberal economic order of the past seven decades: the United States.
Without access to the world’s resources, capital, and labor, many U.S. firms would be shadows of their current selves in terms of market capitalization and earnings. That would endanger the whole U.S. economy.
Supported by globalization, the U.S. economy has roughly tripled in size since 1990, while manufacturing output has doubled. Meanwhile, U.S. exports of goods and services have increased fourfold over the past quarter-century. That’s how the U.S. has flourished in the age of globalization.
Although there are serious concerns about globalization, greater cross-border connectivity has made the U.S. economy larger, more competitive, and wealthier, while boosting the fortunes of most American corporations and their workers and shareholders. This makes the rising anti-trade and investment tide in America all the more dangerous.
While all presidential election campaigns are long on populism and short on economic common sense, this time it was different, because of the mounting insecurity of the U.S. voter base. When Washington speaks about slapping tariffs on Chinese goods, discourages American firms from investing overseas, promotes the building of walls to halt immigration, or favors renegotiating free-trade agreements, the underlying assumption is that America can be a closed economy and doesn’t need the rest of the world. Nothing could be further from the truth.