Is nationalism pushing back on free cross border trade and globalisation?

 Introduction

The recent trade centric manoeuvres by the new United States of America (US) administration have unleashed shock waves in international trade. Many countries are fearing that the actioned and impending US foreign trade policy measures will affect theirs and the entire world’s economy.  The media has been buzzing with orders, policy pronouncements and announcements by the new US administration led by President Donald Trump. President Trump was sown into office on 20 January, 2025. He signed a flurry of executive orders soon after the inauguration ceremony. He has followed up with more and made several statements regarding trade tariffs. These US trade policy shifts have affected regional, continental and international trade. As the saying goes, when America sneezes the world catches a cold. This has unleashed a series of tariff announcements and counter retaliatory rhetoric. A tariff is a domestic tax levied on a good as it enters from abroad. It is proportional to the declared value of the imported good.

Canada and Mexico, US’s neighbours on the northern and southern borders, respectively, were the first nations to taste these trade policy shifts. The US slapped a 25% import tariff on selected Canadian and Mexican goods on 4 February, 2025 but this was suspended for a month, a few days later (British Broadcasting Corporation(BBC) News, 2025). The suspensions came after the two countries’ complied with US demands for more border guards to be deployed on their respective borders with the US. A 10% tax was also levied on Chinese imports. China responded with counter levies on selected US exports to China. These counter tariffs came into force on 10 February 2025. Mexico, Canada and China are the US’s biggest trading partners. They accounted for 40% of imports into the US in 2024, according to BBC News (based on information compiled from the US Census Bureau).

So the question is, is this the start of a regional trade war between the US and its neighbours and a global trade war between the US and China? Is the “America First” agenda synonymous with a pull away from regional trade integration and a push back at globalisation? Are the days of free movement of people, goods and services around the global slowly coming to an end? Should we brace ourselves for more trade restrictions and trade wars?  

Regional and continental trade integration pull away

Global trade policy trends have historically skewed towards greater geopolitical regional and continental integration. Removal of tariff and non-tariff barriers, such as free movement of people, goods and services, and single currencies, are key indicators of trade integration. The North American Free Trade Agreement and the Free Trade Area of the Americas are examples of the free trade agreements that the US, Mexico and Canada have interacted with. 

This decade has witnessed a growing trend of state trade policy reversals and withdrawals. Brexit (short for British exit from the European Union (EU)) is historical and memorable. The United Kingdom (UK) was the first country to leave the EU since its establishment. The process started in 2016 with a referendum. The final withdrawal took place on 31 January 2020. The UK and the EU finalised a new trade deal on 24 December 2020.

Anti-immigration sentiment, post 2015, was one of the key drivers of Brexit (Britannica, 2025). The BBC reported that US tariffs on Canada and Mexico have been motivated by President Donald Trump’s concerns on illegal immigration and drug trafficking on the Canadian and Mexican borders, leading to illegal entry of prohibited drugs into the US market. But, there is no doubt that introduction of these tariffs is also linked to trade. The US is the world’s largest economy and obviously is interested in keeping the status quo. The World Trade Organisation (WTO) identify tariffs as a preferred and transparent means of protection (Koo and Kennedy, 2005). The WTO has received and circulated to members China’s request for a dispute consultation with the US regarding the new tariff measures (WTO, 2025).

Current globalisation era, is China the big winner?

There is no doubt that globalisation and the technological advancement spurred by the internet has made the world a global village as was envisaged by many. The world economy has been dramatically and significantly transformed by the recent era of globalisation. The first era of globalisation took place in the nineteenth and early twentieth centuries, between 1813 and 1914. Financial integration, flows of people between continents, improved transportation, communication and reduced government trade controls and restrictions led to unprecedented rates of world trade (Rodrik, 2011).

There is no doubt that some countries have reaped and benefitted enormously from the ability to produce goods in large quantities, at low cost, and to export them to offshore customers, all over the world. China, with the world’s largest population, and cheap labour, has been a big winner in this regard. The country has leveraged financial globalisation (the daily exchange of currencies, securities, derivatives, and other financial assets exchanged globally) by lending to rich nations (ibid.).  The current globalisation era has seen China overtake Japan as the world’s second largest economy (Moyo, 2011).

Of course, there are many who see globalisation as a loss for their domestic economy, especially when it comes to the manufacturing sector. Nationalists are among the loudest and influential voices among those who claim that China has unfair advantage.  The argument is that small businesses, and even big corporations, are unable to compete on price when it comes to Chinese manufactured imports. This has resulted in business losses, closures, and the other knock-on effects on the domestic economy. The loss of domestic jobs to overseas labourers for example, is a major political issue.

What can Africa, a newcomer to continental free trade area agreements, learn?

Imported Hair food on sale in Zambia

Elsewhere, in Africa, the African Continental Free Trade Area started trading on 1 January 2021. It is the largest free trade area in the world. What can Africa learn from these trending issues in international trade? I think one of the key sticking points, to pay attention to, is the cross border labour immigration. Migration of skilled and unskilled labour leads to oversupply of labour in some sectors (unless there are work permit prohibitions for immigrants or quota systems) in the receiving country. This results in many people chasing a few jobs. Resentment and anti-immigration and nationalist views and narratives abound (we saw this trigger xenophobic attacks in South Africa, when political instability and high poverty levels in neighbouring Southern Africa Countries, drove many to seek employment opportunities there). There are no easy answers to these challenges especially when the humanitarian imperatives require us to open our borders to people fleeing from various atrocities in their native countries. However, it is important to anticipate mass labour migration and plan for it better, in regional, continental and global trade integration agreements.

Conclusion

There is no doubt that nationalist ideologies are growing and increasing, globally. This is in part driven by scepticism (for example, Euroscepticism in Europe) and frustration with global, continental and regional trade integration instruments and agreements. The key issue is that some have enabled free movement of people, goods and services. Will the push back by nationalists succeed in halting the trajectory of globalisation and free markets?  Only time will tell. Will protectionist policies gain ground and spread? What is important is that policy and decision makers pay close attention to the balance and tensions between domestic and foreign trade dimensions. International trade still remains one of the biggest opportunities for national, regional and global economic growth and poverty reduction.

Memorial Park in Zambia 

What China has demonstrated over the past half century is that strategic engagement in multiple geospatial markets leads to sustained domestic economic growth and poverty reduction. China has been able to win in the current globalisation era because it has cast the net wide and is present everywhere including in several developing markets in Africa and the pacific island nations. This is truly ironical given that China’s outlook was inherently internal and introspective for centuries (Moyo, 2011:16).

References

African Union, [internet]. The Africa Continental Free Trade Area. The African Union Commission [undated]. Available at https://au.int/en/african-continental-free-trade-area

Boak, J., Sánchez, J., Gillies B., [internet]. Trump agrees to pause tariffs on Canada and Mexico after they pledge to boost border enforcement. Associated Press; [updated 4 February 2025] Available at https://apnews.com/article/trump-tariffs-canada-mexico-china-sheinbaum-trudeau-017efa8c3343b8d2a9444f7e65356ae9

Hoskins, P., [internet]. China’s tit-for-tat tariffs on US take effect. BBC News [updated 10 February]. Available at https://www.bbc.com/news/articles/cvg8zg7ll09o

Koo, W.W., Kennedy,P.L., 2005. International Trade and Agriculture. Blackwell Publishing: Malden

Moyo, D., 2011. How the West was Lost: Fifty Years of Economic Folly-And the Stark Choices Ahead. Penguin: London

Murphy, J., Grant, W., Race, M.,[internet]. China, Canada and Mexico vow swift response to Trump tariffs. BBC News; [updated 4 February 2025] Available at https://www.bbc.com/news/articles/c627nx42xelo

Rodrik, D. 2011., The Globalization Paradox: democracy and the Future of the World Economy. Oxford University Press: New York

Sherman, N., [internet]. Trump suspends tariffs on small packages from China. BBC News [updated 7 February 2025]. Available at https://www.bbc.com/news/articles/c5y7edy35pvo

Wallenfeldt.J., [internet]. Brexit. Britannica [updated 3 February 2025]. Available at https://www.britannica.com/topic/Brexit

Wendling, M., da Silva, J., Labiak, M [internet]. Trump says tariffs coming on steel and aluminium. BBC News [updated on 10 February, 2025]. Available at https://www.bbc.com/news/articles/c98yv3e1yyqo

World Trade Organisation, [internet] Dispute Settlement: China initiates WTO dispute complaint regarding US tariff measures. WTO [5 February 2025]. Available at https://www.wto.org/english/news_e/news25_e/ds633rfc_05feb25_e.htm