A new pattern of world commerce is becoming clearer-as are its costs When America took a protectionist turn two years ago, it provoked dark warnings about the miseries of the 1930s.
Today those ominous predictions look misplaced. Yes, China is slowing. And, yes, Western firms exposed to China, such as Apple, have been clobbered. But global growth in 2018 was decent, unemployment fell and profits rose.
In November President Donald Trump signed a trade pact with Mexico and Canada. If talks over the next month lead to a deal with Xi Jinping, markets will conclude that the trade war is political theatre designed to squeeze a few concessions from China, not blow up commerce.
Such complacency is mistaken. Today's trade tensions are compounding a shift that has been under way since the financial crisis of 2008-09.
Cross-border investment, trade, bank loans and supply chains have all been shrinking or stagnating relative to world GDP. Globalisation has given way to a new era of sluggishness.
Adapting a term coined by a Dutch writer, we call it "slowbalisation". The golden age of globalisation, in 1990-2010, was something to behold.
Commerce soared as the cost of shifting goods in ships and planes fell, phone calls got cheaper, tariffs were cut and the finance liberalised. Bussiness went gangbusters, as firms set up around the world, investors roamed and consumers shopped in supermarkets with enough choice to impress Phileas Fogg.