Go forth and conquer the world.
That was the prevailing dictum for U.S. and other Western multinationals as, starting in the 1970s, it became easier and easier – and cheaper – to move goods around the globe. They had the know-how. Asia supplied the inexpensive manufacturing. Meanwhile, local governments and global regulatory organizations held the doors open, consistently enacting rules that greased the wheels of international trade.
But now some of those doors are closing. World trade is projected to shrink by a third in 2020. The U.S. is engaged in an increasingly hostile trade war with China and has pressed for substantial reforms to the World Trade Organization and the way it resolves trade disputes. A global wave of protectionism has produced a slew of new export bans, domestic subsidies, foreign investment regulations, and tariffs.
The chaos wrought by COVID-19 accelerated and exacerbated the shift and could very well produce an entirely new set of trade policies and priorities. But the turn toward protectionism didn’t start with the pandemic.