Analysts say the broader story behind the U.S.-China trade brouhaha is the dramatic loss of support in recent years — among U.S. policymakers and citizens alike — for free-trade principles more generally and globalization in particular.
In the U.S., “there are no free traders left, or at least not very vocal ones,” Mr. Hufbauer said, noting that Mr. Trump’s approach to trade politics “has permeated the whole political landscape” — Democrats and Republicans alike.
Mr. Nakamura said those politicians are simply channeling the growing ranks of people in developed countries who no longer believe the loss of manufacturing jobs that results from throwing one’s doors open to global trade is more than compensated for by growth in the number of better paying jobs in the service sector.
Some analysts hold out hope the backlash can be contained.
Hopefully the belief that it’s better for two countries to trade than not to can persist, said BNP Paribas’ Mr. Morris. The mistake has been in not paying enough attention to those who’ve gotten hurt by global trade – “your steel worker in Pennsylvania or industrial workers in the north of England, and so on,” he said, citing the elections of Mr. Trump in the U.S. and Boris Johnson in the U.K. as “kind of the revenge of the losers from globalization.”
Messrs. Trump and Johnson paid attention to those segments of their populations, and “the acknowledgment of the pain and suffering they’ve gone through was obviously quite powerful,” Mr. Morris said. A greater emphasis on compensating the losers of globalization could help sustain global trade growth in the future, he predicted.
For now, though, most analysts see little likelihood of that ongoing shift in popular sentiment reversing.
The willingness of voters in developed countries to accept “an ever-increasing level of openness of their own economies to the rest of the world has stopped and is currently reversing,” a trend that could drive trade policy for the next 10 to 15 years, Mr. Nakamura said
Hannah Anderson, Hong Kong-based global market strategist with J.P. Morgan Asset Management, said her optimistic case is that at some point there will be a “reset” and acknowledgment that “trade is how we make the economic pie bigger,” but a growing focus on regional trade blocks is a more realistic outlook.
“I think in our lifetimes, the cat’s out of the bag,” MFS’ Mr. Weisman said. It won’t be easy to convince those that lost out, and there are large swathes of people in places like the U.S. Midwest, northern Britain and France’s farm belt who feel that way, to trust policymakers to get it right this time, he said.
That should make “trade-related disruptions … the new normal, and not just in America,” said Ben Powell, Hong Kong-based managing director and Asia-Pacific strategist with the BlackRock Investment Institute. “Structural and persistent” tensions between the U.S. and China, meanwhile, will provide incentives for both heavyweights to become more “self-reliant,” he said.
That pattern, writ large, will see the globalized world of the past few decades give way to one where the more important driver of growth will be intraregional trade.