Ashutosh varshney writes democracy has provided the rationale for tariffs it will produce a reaction against it
President Donald Trump’s tariff blitzkrieg raises a difficult, though important question. Are democracy and globalisation increasingly at odds? The reason for posing the question this way is quite simple. Tariffs were an integral part of Trump’s campaign for an election that he won. One may argue that his campaign did not include a frontal attack on universities or law firms. It was at best a subsidiary theme. But the centrality of tariffs to the campaign was beyond doubt. Raising tariffs can thus be viewed as an expression of a democratic mandate. The implementation of this mandate, however, will seriously undermine globalisation, now more than four decades old.Why would that be so? Between the mid to late 1970s and 2008, trade as a share of global GDP rose from 37 per cent to 61 per cent (2008 was the highest point of globalisation; since then, trade’s share of the world’s GDP has declined somewhat). Producing as much as 25 per cent of global GDP, America is still the world’s biggest economy and largest market. When tariffs raise the price of selling goods in such a large market, with retaliatory tariffs emerging in other big economies, free movement of goods across national borders is bound to suffer. Since trade has been so central to the international economy, worldwide income deceleration should be expected. US democracy and globalisation have entered a period of conflict.
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