Yuqing Xing is a professor of economics at the National Graduate Institute for Policy Studies in Tokyo. To economists, globalization means the liberalization of trade, capital flows and labor mobility. Its starting point was 1989, when the Asia-Pacific Economic Cooperation forum was founded, the Berlin Wall fell, the U.S.-Canada free trade agreement took effect and Francis Fukuyama proclaimed "the end of history." NAFTA followed in 1992. In 1994 the World Trade Organization was established, and its 164 members handed it the sovereign power to set the conditions under which foreign goods and services enter their markets.

In 1999, the euro unified monetary policy across much of Europe, and in 2001 China, the largest developing country, joined the WTO. Regional agreements such as RCEP and CPTPP multiplied so fast that economists called the tangle a "spaghetti bowl." The gains were real. Free trade and open capital and labor markets across countries allocated resources more efficiently, raised returns on production factors and boosted global economic growth. More than a hundred million people in developing countries escaped poverty and turned into the middle class, while multinationals expanded worldwide and reaped the profits of scale. China, the greatest beneficiary, rose from a per capita gross domestic product of under $500 to over $14,000.

But globalization did not make everyone a winner. Workers in developed countries, blue-collar and increasingly white-collar, faced competition from cheap labor, skilled workers and engineers in developing countries. As multinationals moved mature, standardized production offshore, those who could not follow the capital became unemployed and lost the foundation of their middle-class lives. Between 1990 and 2008, the U.S. lost 4 million manufacturing jobs, and globalization was a major cause. No complex econometric model is needed to see it: Apple under Tim Cook outsourced most assembly to Asia and call centers in Manila expanded as their American counterparts closed.

Economists largely looked away. David Ricardo's comparative advantage theory, the factor endowments of Eli Heckscher and Bertil Ohlin, and Paul Krugman's economies of scale all show that free trade raises overall welfare. Computable general equilibrium models, which assume no unemployment and that farmers could become autoworkers and autoworkers could easily turn into software engineers, estimated growth gains of several percentage points and lent their support to free trade agreements.

Yet free trade creates losers as well as winners and widens inequality within countries. Paul Samuelson, the first Nobel laureate in economics, demonstrated this more than 80 years ago. In their 1941 paper "Protection and Real Wages," Samuelson and Wolfgang Stolper showed that free trade benefits the owners of a country's abundant factor and harms the owners of its scarce one. Developed countries are rich in capital and short of labor, so capitalists win and workers lose in free trade. If a country imports labor-intensive goods, tariffs raise workers' real wages, which means tariffs can protect the losers of free trade.

President Donald Trump signs an executive order to withdraw the U.S. from the 12-nation Trans-Pacific Partnership (TPP) trade pact, on Jan. 23, 2017, in Washington.

In a 2004 article in the Journal of Economic Perspectives, Samuelson went further and analyzed the dynamics of U.S.-China trade. He posited that if China catches up in every industry where America holds a comparative advantage, the U.S. will have nothing left to sell, and the basis for trade disappears. Continued trade accompanied by Chinese technological progress could therefore reduce American welfare. The logic is easy to see. Chinese consumers once bought Japanese appliances until China's own industry rose.

Nokia and Samsung once dominated China's phone market; now domestic brands hold over 85% and Apple is the only foreign survivor. China's car market once belonged to imports and joint ventures, but Chinese EVs now threaten the survival of Japanese and European automakers. In 2004, however, globalization was still the world's dominant theme and American academics and policymakers paid little attention.

The turning point came in 2016, when Donald Trump, a real estate tycoon with no political experience, was elected as the 45th U.S. president. His "Make America Great Again" platform was built on opposition to free trade: tax incentives to bring capital home, renegotiating the U.S.-Canada-Mexico NAFTA trade deal, and withdrawing from the Trans-Pacific Partnership agreement. His victory was no black swan. It was the political awakening of lower- and middle-class voters who had borne globalization's costs and finally used their ballots to reject what elites and economists had long championed.

On his first day in office, Jan. 20, 2017, Trump withdrew the U.S. from the TPP. In 2018 he launched a trade war with China, imposing extra tariffs of 7.5% to 25%. China's four unilateral tariff cuts and the 2020 U.S.-China Phase One agreement never restored the old honeymoon. After returning to the White House in 2025, Trump imposed "reciprocal tariffs" on all trading partners and started a global trade war. His administration refused to approve an extension of the USMCA, the renegotiated successor to NAFTA, and recently opened a trade war with Canada, a long-term ally and friendly neighbor.

Old-style globalization rested on global value chains, in which firms in different countries divided tasks by comparative advantage and worked together to build the best product. That cooperation required trust between countries, and the major trading powers have now lost it. Supply chain resilience, economic security and technological self-reliance outweigh the efficiency gains of free trade. When countries wield tariffs, export controls and technology embargoes to revive domestic industry or punish partners, free trade has ended and deglobalization has begun.

However, deglobalization does not mean the end of trade, nor a return to autarky. "Managed trade" will replace free trade as the mainstream, with each country deciding what it exports and imports, with whom it trades and on what terms.

The $60 billion trade list recently announced by China and the U.S. is one example. The two sides defined the product scope in detail and set the terms at WTO most-favored-nation tariff rates. Because the deal is bilateral, those terms plainly do not extend to other countries facing U.S. tariffs.