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US-China trade war
OpinionAsia Opinion
Andrew Sheng
Andrew Sheng

Opinion | How to protect global free trade from misguided US nationalism

  • Globalisation didn’t hurt US jobs, contrary to what American politics would have you think
  • Still, in a fractious era of more trade barriers, economies like Hong Kong can contribute to seamless global trade by adopting digital documentation

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Gantry cranes are seen at dusk at the Kwai Tsing Container Terminals, in Hong Kong, on March 13, 2023. Photo: Bloomberg
Andrew Sheng
Until 2016, it was almost taken for granted that free trade is good for everyone. That was before Donald Trump started the tariff war on Chinese imports, which Joe Biden – his successor as US president – turbocharged with even more sanctions against individuals, companies and countries.
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The International Monetary Fund (IMF) has calculated that, since 2019, the number of new trade barriers imposed yearly had nearly tripled to about 3,000 in 2022. The European Union is about to introduce a carbon border tax on imports, which will add costs and administrative burdens to exporters to Europe.

The move towards free trade has been a catalyst for many countries to increase export income, reduce poverty and raise living standards. The Asian manufacturing export model is testimony to how trade opening has helped reform and open up Asian economies to greater income, trade and investment. Globalisation arose from the ability of developing countries to access advanced markets and trade with each other.

Even before Trump withdrew from the Trans-Pacific Partnership in 2017, there were rumblings in the US that globalisation was hurting domestic jobs. Yet, a 2024 analysis by Georgetown University’s Lab for Globalization and Shared Prosperity shows that the US’ current nationalistic tendencies are based on outdated information.

Two decades’ worth of data reveals that imports actually had a positive effect on American manufacturing employment, as the US economy grew resilient to imports from emerging markets. And, instead of trying to bring manufacturing back onshore, the United States may be better off focusing on developing its comparative advantages in tradeable services.
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This focus on services would also be consistent with the observations of economist Richard Baldwin about where global trade is heading: whereas trade in goods seems to have peaked, growth is coming from services.

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