Six-Chart Sunday – Who Killed Globalization?
6 Infographics + 1 Video (Amy Walter on Redistricting & the Midterms)
OK, fine… Globalization is not dead. Global trade remained ~58% of GDP in 2025, only modestly off its peak of 60.1% in 2008. But the political consensus in support of globalization is shattered, especially in developed economies. The world is rapidly shifting from efficiency-first integration to resilience-first fragmentation. Who or what is responsible, and what will it mean? Here are six “suspects.”
1. China
For many, China’s meteoric rise to dominate global manufacturing is the result of unfairness — playing by different rules. State subsidies, SOEs, forced tech transfer, stolen IP and currency manipulation are not what WTO architects envisioned in 2001. Many see China’s record $1.2 trillion surplus in goods trade in 2025 coming at the expense of their own manufacturers and workers, threatening to render the world ever-more dependent on Beijing and necessitating ever-greater protection & response.
2. Davos Man
The architects of the global order designed a system that maximized aggregate welfare but often ignored distributional externalities. The elites who championed open borders for capital, goods and people pocketed the benefits (efficiency-driven profits, tax minimization, cheap labor, dynamic talent pools), while working-class communities absorbed the wage pressure, housing competition & cultural disruption without compensating investment or transition assistance. Western middle class voters increasingly perceive a system where the very rich (in the developed world) and very poor (in developing nations and immigrants) get richer while they get screwed. Populism anyone?
3. President Trump
President Trump is a more of a symptom than a cause of anti-globalization backlash. Import protectionism had already grown 650% from 2008-2016, before Trump arrived on the scene, and it continued expanding after he first left office in 2020. Trump is certainly accelerating deglobalization in his second term — or at least decoupling from the U.S. “Liberation Day”+ tariffs, and now the ongoing stalemate in the Strait of Hormuz, are forcing companies and countries to reassess their global supply chains, critical infrastructure resilience and alliances.
4. Supply-Shock Trifecta: COVID + Ukraine + Iran
COVID exposed that just-in-time supply chains were just-in-time until they weren’t (PPE, baby formula, semiconductors). Putin’s invasion of Ukraine demonstrated how economic integration can create vulnerabilities as much as strengths (e.g. EU energy). Both systemic shocks exposed companies’ and countries’ dangerous dependencies and reignited levels of inflation not seen in decades, energizing nationalists and powering populism. The impact of the Third Gulf War remains to be seen, but the World Bank’s latest Commodity Markets Outlook (out this week) predicts a 24% surge in energy prices and 16% rise in overall commodity costs this year, the most significant spikes since Russia’s invasion of Ukraine in 2022.
5. Purposeful Protectionists
Globalization also weakened when major powers started treating trade as a tool for coercion, deterrence, and social change. Sanctions, export controls and investment screening pursued for foreign policy or societal goals, rather than economic advantage, nevertheless undermined global interdependence. After the 2022 freeze of Russia’s central bank reserves, for example, governments from Beijing to Riyadh to Delhi started hedging Western (dollar) exposure with record central bank gold buying, parallel payment systems, “dual circulation” strategies.
At the same time, the climate transition gave governments a “principled” reason to intervene in markets in ways that subverted globalization. Green subsidies, local-content rules, export restrictions on critical inputs and carbon-border measures made market access increasingly contingent on political alignment & regulatory compatibility.
6. Silicon Valley
21st century technologies are both accelerating and undermining globalization. They accelerate cross-border integration by making more services tradable at distance, reducing the importance of geography, and increasing the role of software, data, and remote delivery in world commerce. At the same time new technologies undermine the old pro-globalization coalition in three ways: (a) social media weaponizes economic anxiety, giving grievance a megaphone and amplifying populist politicians; (b) automation accelerates the same labor-market dislocations caused by trade; and (c) platforms themselves became geopolitical objects — TikTok divestiture, Huawei bans, Starlink support for militaries, AI tech stack competition.
The ever-growing economic power, social centrality and security implications of Big Tech all-but-guarantee increasing government regulation, market intervention and nationalization of underlying technologies.
SO WHAT?
If globalization dies it’s more likely a suicide than homicide, undone by its own distributional, governance and security failures. It is more likely trade continues expanding but on regional lines, with policymakers aiming to reduce vulnerabilities, hedge dependencies and reassess priorities (e.g. more defense spending; build new ports; fund food and energy alternatives). Geopolitics for the foreseeable future is the race for resilience and leverage, with just-in-case nationalism replacing just-in-time globalism as the prime directive. Businesses and nations need to adjust and adapt… quickly.
VIDEO
The great Amy Walter — editor-in-chief & publisher of the Cook Political Report (subscribe) — joined me this week to discuss the midterm elections, speaking to our largest audience ever just four hours after the Supreme Court’s redistricting decision and 45 minutes after the Florida legislature voted for a more GOP-friendly map.
Globalization was not killed by any one of the 6 culprits; it lost legitimacy when it stopped confirming the hierarchy that made it comfortable for the West.
Bruce is right that globalization is not really dead. Global trade is still large, with global trade still 58% of GDP vs 60% several years ago. What has collapsed is the old political consensus behind efficiency-first globalization.
The six “suspects” are interestingly: China, Davos Man, Trump, supply shocks, purposeful protectionists, and Silicon Valley. But I would frame them as symptoms of one deeper structural shift.
Globalization worked politically when it still confirmed Western advantage: finance, brands, IP, standards, capital markets, technology, and the upper layers of the global value chain remained largely under Western control.
Once globalization began producing a non-Western industrial system strong enough to challenge that hierarchy, the language changed. Efficiency became vulnerability. Openness became dependence. Competition became unfairness. Interdependence became leverage.
Thai is what I put in my recent post Globalization is Moral when the West wins.(https://leonliao.substack.com/p/globalization-was-moral-when-the?r=731anr&utm_medium=ios)
So globalization was not killed by one culprit. It lost moral legitimacy when it stopped producing outcomes that were politically and strategically comfortable for the West.
The new era is not deglobalization in a simple sense. It is globalization reorganized around resilience, control, security, and leverage.
What is wrong, in itself, with a country running a large trade surplus? Much of the fear over trade deficits stems from the myth that exports are good and imports are bad. But why should we think sending goods away is better than receiving them?
As Milton Friedman often pointed out, when China sells us goods, we give them dollars. If they simply burned those dollars, we would have received real goods in exchange for worthless paper.. Of course, they do not burn them. They either use those dollars to buy American goods and services or invest them in U.S. Treasury bonds, stocks, businesses, real estate, or other dollar-denominated assets.
In one form or another, the dollars return as demand for something American. A trade deficit is therefore matched by a capital inflow.