Globalization can survive the US trade war

AS US President Donald Trump’s sweeping trade levies take effect and raise his country’s average duties to the highest since World War II, it’s easy to imagine globalization is in reverse and that a new era of protectionism, fragmentation, and reshoring has begun. Some of the gloom may be overdone.

- By Chris Bryant

Although the US was the chief architect of the multilateral trading system and has become the world’s most lucrative consumer market, it can’t by itself turn back the clock on global economic interdependence. Prosperity gains from comparative advantage and low-cost container shipping are too great for the rest of the world to ignore. Even as the US embraces self-sufficiency and reveals itself to be an unreliable economic partner, others are keen to keep trading.

“Despite all the talk of deglobalization, if you just look at the numbers, what we are seeing in the last two and a half years is an acceleration of globalization on the back of a huge commercial success from Chinese companies taking market share on the global stage,” Vincent Clerc, the chief executive officer of A. P. Moller-Maersk A/S, told investors last week.

This was after the container shipping giant reported surprisingly resilient demand outside the US and forecast global container volumes could increase by as much as 4% this year. “There is a new driver in container demand that is adding a lot of upside potential,” Clerc said, predicting this stronger Chinese-led growth might last “a few years.” (The US this week extended a pause of nosebleed tariffs on Chinese goods for another 90 days.)

Although China’s exports to the US have suffered a double-digit percentage hit since Trump first threatened a swathe of new duties in early April, it’s offset this by increasing exports to the rest of the world. Such robustness partly reflects stockpiling, and some economists expect a slowdown in the second-half of the year as Washington intensifies scrutiny of the transshipment of Chinese goods to the US via third countries.