Trump’s tariffs shake the foundation of globalisation

With US President Donald Trump’s new tariffs, including a massive 104% levy on Chinese imports, taking effect on Wednesday, the world braces for a fresh wave of trade upheaval. However, Trump’s protectionist stance not only fuels uncertainty and disrupts international trade networks but also unsettles the very foundations of globalisation.

Therefore, it is no exaggeration to state that without referring to globalisation, any meaningful discussion of contemporary politics, economy, culture, and society is almost impossible. Anyone interested in arriving at an informed understanding of global affairs cannot afford to bypass this uncommonly pivotal process. But what exactly is globalisation, and how has it evolved as a process?

What is globalisation?

If we break the term into two – global and isation – it would simply mean the process of becoming global. But this simplification, though not incorrect, hardly serves a definitional purpose. Scholars from across humanities and social sciences have defined globalisation by seeking recourse to what seemed to them absolutely cardinal about the phenomenon/process. While it is somewhat impossible to bring in all the definitions of globalisation here, some of its core features include connectedness, economic integration, movement/mobility, homogenization, and rolling back of the state.

With respect to its origins, once again, there is no consensus. Scholars of Marxist persuasion argue that globalisation is not a unique phenomenon but simply a stage in the long historical evolution of capitalism. For them, it was clear early on that capitalism would enter the remotest nooks and corners of the world and would transform the domains of production and consumption. They would rather use ‘advanced capitalism’ as opposed to using an otherwise attractive name. 

The Marxists trace the origins of globalisation to the commercial revolution, particularly the 16th century, which witnessed decisive shifts in the domains of trade and exchange, shaping up of banking and insurance, and significant feats in sea navigation. Prominent scholars such as Immanuel Wallerstein and Fernand Braudel have endorsed this view most forcefully.

New world that rallies around market

There are many who trace globalisation all the way back to the ancient world. For them, globalisation is all about connectedness via trade and commerce, and various kingdoms of the ancient world were connected to each other through trade relations.

While the centrality of connectedness in globalisation cannot be disputed, what accounts for globalisation’s new-ness is the extraordinary pace at which things happen across different parts of the world. In that regard, it could very well be argued that globalisation cannot be imagined or talked about without taking into consideration the spectacular advances in the field of information and technology.

Going by the distinctiveness of globalisation, its beginnings can be traced back to the years after the Second World War. Capitalism and socialism, endorsed by the US and the USSR respectively, emerged as two ideologies vis-à-vis getting nations back on track economically.

With the passage of time, capitalism raced ahead and by the time we entered the 1980s, socialism had totally lost the battle. The fall of the Berlin Wall (November 1989) and the disintegration of the USSR (December 1991) became testaments to socialism’s marked futility in the ‘new world’ that rallied around the market more than the state.

While the term globalisation was used for the first time in the 1930s in the domains of education and international relations, it was Harvard professor Theodore Levitt who looked into it from the vantage point of massive shifts in global economic operations (the growing pervasiveness of free market) in an article he wrote for Harvard Business Review in 1983 titled The Globalization of Markets. He defined globalisation in terms of “the changes in social behaviours and technology which allowed companies to sell the same products around the world”. 

Advantages and disadvantages of globalisation

But what drives globalisation? Our response to that question must begin with advancements in communications and technology. Whether it is about electronically integrated economies, compression of time and space, massive operations of multinational corporations, or the growing awareness of the world as a shared space, nothing provides more impetus than strides in the field of information and technology.

Alongside this, governments have brought down trade barriers, embraced free market operations, and encouraged standardised consumption patterns and competitive pricing. Add to this a growing base of the aspirational middle class – also called the new middle class – that relies more on the market than the state, and the drivers of globalisation become clear. 

Having developed a basic understanding of globalisation – its origins, key features, and drivers, it seems reasonable to ask if globalisation is a positive or negative phenomenon. There is no straightforward answer as globalisation is both. Some of its advantages that merit a mention have to do with the followings: 

— it offers tremendous scope for developing countries to benefit; 

— brings different governments together on crucial issues like terrorism, hunger, climate change;

— provides greater access to foreign cultures, which, inturn, makes societies more accommodative and open-minded; 

— scales up competition that lowers prices;

— makes us more aware through greater media coverage of otherwise peripheral and marginalised regions and communities.

But globalisation also brings its share of challenges:  

— it has deepened economic inequality both between and within nations;

— rich nations have grown richer, while underdeveloped nations have become poorer and more marginalised, similarly, within countries, the wealth gap has widened;  

— culturally, globalisation’s push toward standardisation has led to a decline in diversity along the lines of food, language, clothing, and entertainment at a worrying pace; 

— sociologist George Ritzer has captured this trend in his celebrated work, The McDonaldization of Society. Ritzer has taken a fresh look at some of these pressing concerns in the digital age and the peculiarities acquired by them during the Covid-19 pandemic;

 — globalisation’s instrumental role in accelerating environmental degradation can hardly be contested. As firms aspire for a more global presence and scale up their operations massively, the tragic bearing on the environment does not come as a surprise

An important point to consider while assessing globalisation as a process is that it works differently for different sections of a society. For the middle class and above, globalisation will not be disadvantageous. But for poor sections of society, it can be a death knell. In fact, it can be argued that the extent of globalisation’s benefits and harms directly corresponds with class levels.

Resurgence of protectionism

In more recent deliberations on globalisation, one of the most prominent concerns has been the resurgence of protectionism. Protectionism essentially refers to policies aimed at restricting international trade – particularly imports from other countries – usually through the imposition of high tariff rates. Generally speaking, there are two inter-related grounds for protectionist policies: protecting domestic industries from foreign competition and addressing anticipated damage to be caused by market failures.

As globalisation increased the movement of labour and services across nation-states, inhabitants of many developed countries began to resent workers from the Global South, perceiving them as a threat to local jobs. This aversion, in some cases, contributed to the rise of new forms of racism in the Global North. However, protectionism is not restricted to the developed world alone.

It did not take long for the underdeveloped world to recognise the adverse effects of globalisation. It became evident that domestic industries were collapsing under pressure from big multinational corporations. Protectionism was thought of as a powerful antidote to the growing dominance of these big firms – a means to shield domestic industries.

In India, for instance, we have witnessed the decline of small-scale industries, traditional crafts, and village-based production systems. While not exactly a protectionist policy, the ‘Make in India’ campaign can be seen as a thoughtful response to these growing concerns. Arguing towards turning the campaign even more relevant and fruitful, economist Raghuram Rajan made a plea towards transitioning to ‘Make for India’, essentially hinting at the dire need to increase the demand base within the country of domestic products.

Most recently, US President Donald Trump has introduced a series of overtly protectionist policies under the banner “Make America Great Again”. These policies include withdrawing from various key international agreements, cutting funding to international organisations committed to humanitarian work, and imposing high tariffs on imports – all of which have raised serious global concerns.

What is equally worrying if not more is the perception that these policies, as opposed to the claim that they are in the interests of the nation, are increasingly influenced by groups pursuing narrow interests. Hence, globalisation must be reclaimed by critically looking at such deceptive policy formulations.

Post Read Questions

What is globalisation, and how has it evolved into the force it is today? 

Can globalisation be simply understood as the process of “becoming global”? Why or why not?

What are the core features that characterise globalisation? What are its advantages and disadvantages? 

What does George Ritzer mean by “McDonaldization” and how does it relate to globalisation?

How do Trump-era U.S. policies reflect a retreat from globalisation?

(Irfanullah Farooqui is an Assistant Professor at IIM, Kozhikode.)

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