‘Globalization is over’: Trump’s tariffs usher in a new supply chain era

By John Manners-Bell

The shock which has convulsed global financial markets, the media, politicians and the business community would suggest that President Trump’s tariffs came, as the saying goes, like a bolt from the blue. In fact, the crisis has been decades in the making and can be traced back through the Great Recession of 2008 to China’s accession to the World Trade Organisation – and even beyond.

During this time, pressure has been building on the transnational institutions established after the Second World War to manage international trade, finance, law, security, health and transport (amongst others) in an orderly and efficient way. Whilst the globalisation which these institutions facilitated (helped by containerisation of shipping and global data networks) benefited parts of society, it also left Western manufacturing ‘hollowed out’ as jobs and know-how were off-shored to Asia. This has also left the West critically vulnerable to global supply chain risks, a fact demonstrated to full effect by the Covid-19 pandemic when PPE supply chains broke down and US ports were overwhelmed by demand for consumer goods. At the same time, China (and other emerging markets) have used the wealth they have amassed from globalisation to pursue their own political agendas, which rather than bring them closer to the West (as was the hope), has created new hegemonies and geopolitical tensions. It has also made North America and Europe dependent on a strategic adversary.

Whether you agree with his approach or not, President Trump has addressed the issue which countless other politicians have avoided. Only time will tell if his ‘medicine’ ends up killing the patient. Whilst many people believe (especially those with vested interests) that there is no need to reform the existing world order, this stance has become increasingly difficult to justify. In Europe, Brexit; dependency on Russian gas; the response to the Covid-19 pandemic; over-regulation; economic stagnation; defence vulnerability; unemployment and the rise of populism all suggest that existing political and economic structures have not served people or businesses well. Even the European Commission recognises that changes are necessary and UK Prime Minister, Sir Keir Starmer, has acknowledged that, ‘The world has changed, globalization is over and we are now in a new era.’

Whilst this belated recognition of the need for urgent change is welcome, it has come too late to avert the meltdown of global markets or provide businesses with any confidence. This observation is not made with the benefit of hindsight, as there have been plenty of voices pointing out the weakness of the model and calling for changes, whether in the West or in emerging markets. Back in 2014, Ti Insight published a whitepaper entitled (tellingly) ‘Are Global Supply Chains Dead?’ In the paper, I write, ‘…major changes in the dynamics of the world’s economy, supply chains and logistics are already underway. In the next twenty years the industry will experience systemic change, and all players will need to be agile enough to respond… in the long term it is not viable to focus on global flows of goods when the reverse of this trend is already starting to occur.’ At the time such views were considered heretical.

The point of the paper, and my subsequent book, ‘The Death of Globalization’ published in 2023 (Sea-Pen Books), was not to predict an end to international trade or call for a return to inter-war protectionism. Rather that nuanced supply chain strategies were required to deal with the complex political, security and economic landscape which was developing. This would involve re-shoring, near-sourcing, friend-sourcing, strategic autonomy, circularity, industrial support and investment in Fourth Industrial Revolution technologies. It would also require investment in energy, ICT and transport infrastructure as well as – critically – in education and training. In fact, if more resources and political will had been put into upskilling generations of American and European workers to equip them for the challenges of global competition, we might not have ended up in the present predicament.

The Death of Globalization by John Manners-Bell can be purchased from Sea-Pen Books and other major book retailers. The Second Edition is due later in 2025.

Author: John Manners-Bell

Source: Ti Insight 

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