The decisive Conservative victory in Britain leaves no doubt that in today’s global equation, national interests are supreme and globalization is suspect.
The notion that global economic integration amounts to human progress had a good run, dominating the thinking of the powers that be for more than seven decades. But a new era is underway in which national interests take primacy over collective concerns, with trading arrangements negotiated among individual countries.
Britain’s voters made that clear on Thursday in handing an emphatic majority to Prime Minister Boris Johnson and his Conservative Party, all but ensuring that the world’s fifth-largest economy — and a charter member of the international trading system — will proceed with its abandonment of the European Union.
A preliminary deal hailed on Friday by the two largest economies, the United States and China, raised the prospect of easing their high-stakes trade animosities. But the nature of their engagement — country to country, not mediated by the World Trade Organization or some other international authority — underscored the principles of the new age.
Britain now faces another complex phase in its tangled European divorce proceedings — negotiations over the terms of its future economic relationship with the Continent. But in one form or another, “getting Brexit done,” the mantra that Mr. Johnson promised and can now deliver, marks a profound change in the world trading system.
In the aftermath of World War II, the victorious Allies built an international order on the understanding that when countries swap goods they become less inclined to trade artillery volleys.
Britain’s departure from the European Union is the clearest manifestation that this idea no longer holds decisive sway. It is not the only one.
The traditional arbiter of international trade disputes, the World Trade Organization, is listing toward irrelevance as countries bypass its channels to impose tariffs. Its appellate body, which adjudicates disputes, has been rendered inoperative by the Trump administration’s blocking of new judges. The panel needs at least three judges to render verdicts, but now has only one.
“The sense that policy moves in one direction, toward more liberalization and more integration, has been replaced by recognition that policy can go backward as well as forward,” said Brad Setser, a senior fellow at the Council on Foreign Relations in New York.
The United States and China together account for more than a third of the global economy, making their wave of escalating tariffs a cause for alarm about diminishing fortunes in nearly every country exposed to international trade — from Germany to South Korea to Mexico.
President Trump has put stock in the unrivaled scale of the American economy in seeking favorable trading arrangements. In his calculus, the United States boasts the advantage in any bilateral trade negotiations and can tilt the rules toward American interests.
This was the logic that prompted Mr. Trump to renounce American participation in the Trans-Pacific Partnership, a trade bloc spanning a dozen countries. It was a project pursued by his immediate predecessor, President Barack Obama, in part to press China to address longstanding complaints that it subsidized key industries, doled out credit to favored companies and manipulated the value of its currency to gain advantage in world markets.
In taking on China, the Obama administration employed the multilateralist mind-set that had guided American policy since the end of World War II. The Pacific trading bloc would set rules on investment, labor and environmental standards. Its members would profit through growing trade, and China would want in. To gain access, China would be forced to adopt the bloc’s rules.
But in Trumpian thinking, multilateralism is for suckers. Shortly after he was sworn in, declaring as his credo “America First,” Mr. Trump ditched the Pacific bloc and weaponized the American market: If China wanted access to the 327 million consumers in the richest country on earth, it would have to buy more American goods and play fair.
On Friday, Mr. Trump cited the preliminary agreement as evidence that his strategy was working. The United States would sharply reduce the tariffs it had affixed to Chinese goods, while China promised to buy more American farm products and respect intellectual property. Mr. Trump called it “an amazing deal for all.”
But economists said the announcement of new farm purchases reflected goods that China was already buying. Even as the scrapping of the next wave of tariffs weighed as positive for the global economy, few were proclaiming the advent of enduring peace. The United States and China have descended into such an adversarial state that they are likely to continue seeking alternatives to exchanging goods and investment. Companies that make goods in China will face pressure to explore other countries, posing disruption to the global supply chain.
China’s leaders have come to construe trade hostilities as part of an American bullying campaign engineered to suppress their national aspirations and deny the country its rightful place as a superpower. Nationalist sentiments and security concerns have become intertwined with trade policy, complicating the pursuit of a final deal.
Now Britain, in leaving the European bloc, embarks on a strategy aimed at securing bilateral trading arrangements with major economies, from the United States and China to Australia and India.
Trade deals are complex and difficult. They entail prying open new markets for exports in exchange for exposing domestic companies to new competitors. Powerful interest groups complain. Deals take years.
Arithmetic reveals that no combination of trade deals is likely to compensate Britain fully for what it stands to lose in walking away from the European single marketplace, a territory stretching from Greece to Ireland.
Britain sends nearly half of its exports to the European Union, a flow of goods imperiled by Brexit. Britain’s appeal as a headquarters for multinational companies will be undermined as it finds itself separated from the Continent by a revived border.
The fraying of international trading arrangements and the rise of nationalist imperatives have been driven by intensifying public anger in many countries over widening economic inequality, and the perception that trade has been bountiful for the executive class while leaving ordinary people behind.
In Britain, struggling communities used the June 2016 referendum that unleashed Brexit as a protest vote against the bankers in London who had engineered a catastrophic financial crisis, and who then forced regular people to absorb the costs through wrenching fiscal austerity.
In the United States, Mr. Trump’s political base has rallied to his trade war. In Italy, France and Germany, furious popular movements have fixed on trade as a threat to workers’ livelihoods, while embracing nationalist and nativist responses that promise to halt globalization.
“The era of freewheeling markets and liberalism is ending,” said Meredith Crowley, an international trade expert at the University of Cambridge in England. “People are dissatisfied with the complexity of policy and this feeling that those who have the levers of policy are somehow out of their reach.”
Economists see perils in this unfolding era, especially as governments champion national industries at the expense of competition. They point to history, notably the Great Depression, which was deepened by a wave of tit-for-tat trade protectionism kicked off by the United States through the Smoot-Hawley Tariff Act of 1930.
The law sharply raised tariffs on a vast range of agricultural and factory goods, prompting American trading partners to respond. As world trade disintegrated, nationalist rage spread, culminating in the brutalities of World War II.
The British election, and the splintering of the European trading bloc, amounts to the most consequential upsurge of economic nationalism in generations.
“Since Smoot-Hawley, I don’t think we have seen something as dramatic as this,” said Swati Dhingra, an economist at the London School of Economics.
One major variable has gained clarity: Congressional Democrats and the Trump administration this week hailed an accord that clears passage of the renegotiation of the North American Free Trade Agreement, the deal that has allowed some $1.2 trillion worth of goods a year to be exchanged freely across the United States, Canada and Mexico.
Yet on another front, Mr. Trump has threatened to impose tariffs on imported automobiles, a step that would be especially disruptive in Germany, Europe’s largest economy. Germany sells far more goods to the United States than it imports, drawing the ire of the American president.
Mr. Trump has openly warned that he could cite a national security threat as justification for auto tariffs. Trade experts have derided that strategy as an affront to the norms of the international trading system.
Last month, Mr. Trump allowed a self-imposed deadline to lapse without imposing auto tariffs. But he has left a major international industry guessing about what happens next.
Since Britain shocked the world with its vote to abandon the European Union, its political institutions have tangled themselves in knots trying to decide what to do with their nebulous mandate to leave. Businesses have deferred hiring and investments, awaiting clarity on future trading terms.
The uncertainty has already exacted significant costs, and far beyond Europe, according to a new paper by Tarek Hassan, an economist at Boston University, and three European accounting experts, Stephan Hollander, Laurence van Lent and Ahmed Tahoun.
Every year since the referendum, the average company in Ireland — which trades heavily with Britain — has seen its growth in investment reduced by 4.2 percent, and hiring is 15 percent less than it otherwise would have been because of uncertainty, the paper concludes. Yet even across the Atlantic, the average American company has seen investment growth limited by 0.5 percent a year and hiring slowed by 1.7 percent.
“There is already a significant drop in employment as a result of the risks of Brexit,” Mr. Hassan said.
Some analysts suggested that the election enhanced the possibility that Mr. Johnson would pursue a softer form of Brexit, keeping Britain closer to the European market. His majority is so comfortable that he need not worry about alienating the hard-liners in his party who favor a clean break with Europe.
But some alteration now lies ahead. If Brexit uncertainty has been damaging, what replaces it is the near certainty of weaker economic growth and diminished living standards.
“It’s going to have massive implications,” Mr. Hassan said.
But Stephanie Grisham, the White House press secretary, said in a statement that the first lady communicates “differently” from President Trump.
Melania Trump, who last year promoted anti-cyberbullying tips as part of her child-focused kindness campaign called “Be Best,” sidestepped any comment Friday on President Trump’s recent decision to mock Greta Thunberg, a 16-year-old climate activist, on Twitter.
“‘Be Best’ is the first lady’s initiative, and she will continue to use it to do all she can to help children,” Stephanie Grisham, the White House press secretary, said in a statement first reported by CNN. “It is no secret that the president and first lady often communicate differently — as most married couples do.”
A day earlier, Mr. Trump targeted Ms. Thunberg after Time magazine named her its person of the year. “So ridiculous,” Mr. Trump said on Twitter. “Greta must work on her Anger Management problem, then go to a good old fashioned movie with a friend! Chill Greta, Chill!”
The Trump campaign also distributed a doctored image of a Time cover with the president’s head superimposed on Ms. Thunberg’s body.9,748 people are talking about this
Ms. Thunberg, who has criticized the president for not responding to climate change, was quick to hit back, and received supportive messages from people like Michelle Obama, the former first lady, who, in a tweet, encouraged her to “ignore the doubters.”
The White House at first declined to issue a statement on behalf of Mrs. Trump, whose “Be Best” effort focuses on child well-being and internet kindness. The material the first lady has distributed to followers of the initiative has tips for protecting children against online harassment.
The East Wing distributed a pamphlet last year called “Talking With Kids About Being Online” that advises adults to talk to children about online manners. Among the tips: “Remind them that real people with real feelings are behind profiles, screen names and avatars.” The pamphlet was also the subject of plagiarism accusations against the first lady, claims the East Wing denied.
Mrs. Trump is fiercely protective of her own son, Barron, who is three years younger than Ms. Thunberg, and reacted sharply when his name was invoked last week during a congressional hearing.
Pamela S. Karlan, a Stanford law professor testifying in support of Mr. Trump’s impeachment, was trying to make a distinction between kings and presidents when she mentioned Mrs. Trump’s son.
“The Constitution says there can be no titles of nobility,” she said. “While the president can name his son Barron, he can’t make him a baron.”
Ms. Grisham flagged the comment for the first lady, who criticized Ms. Karlan for it on Twitter.
“A minor child deserves privacy and should be kept out of politics,” Mrs. Trump said. “Pamela Karlan, you should be ashamed of your very angry and obviously biased public pandering, and using a child to do it.”
Ms. Karlan later apologized.
Ms. Grisham said on Friday that there was a distinction between someone mentioning the name of the youngest Trump child at a congressional hearing, and the president mocking Ms. Thunberg, who has Asperger’s syndrome, a form of autism.
“Their son is not an activist who travels the globe giving speeches,” Ms. Grisham wrote. “He is a 13-year-old who wants and deserves privacy.”
A China hand and former Treasury Department colleague told me before the 2016 election that officials in Beijing preferred Donald Trump to Hillary Clinton because they thought Mr. Trump would be an easier negotiator.
Yet Mr. Trump has proved to be anything but—and in ways that ill serve U.S. interests. Through a series of vacillating threats and entreaties that often seem to be decided on a whim, he has shown President Xi Jinping that he is an unreliable negotiator. Mr. Trump’s public bullying makes it hard for Mr. Xi to accept any deal while saving face, which is very important to the Chinese. Thus Mr. Xi is no longer earnestly negotiating, merely going through the motions.
The new buzzword in Washington discussions of Sino-U.S. negotiations is “decoupling.” From the Trump administration’s perspective, they are threatening Beijing with the prospect of disentangling the U.S. and China entirely and creating two distinct economic systems, similar to the bipolar world of the Cold War. Many in Mr. Trump’s orbit believe that blocking China’s access to U.S. technology would thwart China’s attempts to surpass the U.S. on the world stage.
This approach is naive and probably counterproductive. It is accelerating rather than slowing the Made in 2025 program. Mr. Xi has jettisoned Deng Xiaoping ’s established strategy: “Hide your strength, bide your time, never take the lead.” From his perspective, decoupling is not only an American threat—it’s the new Chinese strategy.
Nowhere is this more evident than Huawei’s case. The Trump administration has temporarily cut off most transactions between U.S. companies and Huawei, and China hawks are pushing the president to make this decoupling permanent. Meanwhile, Mr. Trump dangles access to American-made components as leverage to get Mr. Xi to buy American soybeans. But Mr. Xi does not appear interested in tactical détente as he was last year, when he asked Mr. Trump to save ZTE, the other prominent Chinese telecommunications firm. Instead of giving in to Mr. Trump’s demands, Huawei recently introduced its own operating system, Harmony, an alternative to Android that will reduce Huawei’s reliance on U.S. technology.
I do not contend that China is benign or even that Mr. Trump has misdiagnosed the problem. Rather, my concern is that the president’s erratic approach has aggravated the situation by encouraging Mr. Xi to embrace decoupling on his own terms. After more than two decades of globalization, severing the integrated supply lines of the world’s two largest economies will necessarily be messy. For the U.S., Mr. Trump’s approach makes it even messier.