An onslaught of protectionism will change global trade

By Cerian Richmond Jones

What’s going on with global trade? 2023 should have been a disaster. America and China entered an all-out trade war, with export bans, import tariffs and investment restrictions. Europe agonised over a riposte to the Inflation Reduction Act (ira), America’s plan to kickstart manufacturing with $1trn in subsidies and tax incentives. India threw up import bans of its own. War in Ukraine played havoc with grain supplies and shipping. The World Trade Organisation, enfeebled by America’s disengagement under Donald Trump, looked on in horror. Predictions about the death of trade came thick and fast.

And yet the world ended up buying more from China, relative to the country’s GDP, in the first nine months of 2023 than in the same period in any previous year. As a portion of its GDP, China bought just as much from the rest of the world as it did in 2022. India’s manufacturing share of GDP rose for the first time in five years. Including intermediate goods, America bought as much as from China relative to its GDP as it had in the previous five years. In 2024, policy and reality will continue to diverge. Though protectionism will continue to flourish, firms and countries will carry on adapting, not retreating.