The U.S. China Trade War May Cause Multipolarity Instead of Deglobalisation

The U.S.- China trade, technology, and possible currency war suggest a continued escalation beyond rhetoric, with negative implications for trade in an already slowing global economy. Following the bout of tit-for-tat tariffs, talks of “deglobalization” have emerged strongly, with falling trade volumes between both countries undoubtedly supporting this narrative. Such claims, I think, are however misplaced as the unintended consequences of the trade war could incentivize, rather than impede, trade amongst other economies in Asia, Europe and beyond. Furthermore, de-globalization is possible only several other countries simultaneously engage in trade wars or a Western-Eastern split emerges more strongly. Nevertheless, the aggressor i.e U.S. is unlikely to impede trade amongst countries over the long-term but the short-term economic costs cannot be understated. Falling PMIs, waning business investment and stock market corrections in both Shanghai and New York suggest the reverberations of the trade war are increasingly palpable.

It might seem economic nationalism could present significant headwinds to globalization; absent Brexit, most of the world continues to trade and all indicators suggest Britain will actively pursue independent trade agreements with the rest of the world contingent on the nature and the timing of its exit. Meanwhile, the European Union (EU) has signed a comprehensive trade agreement with Latin America spanning a range of consumer and non-consumer products for both…