The writer is an FT contributing editor, visiting scholar at the Hoover Institution and author of a forthcoming book on globalisation
If you have followed the news in 2026 you might think that the global economic conflict is peaking. Last week’s Supreme Court judgment suggests that US President Donald Trump has reached the constitutional limits of his tariff war. Judged on its own terms it has been ineffective, with most duties passed through to US businesses or voters. As a result the policy is unpopular, with 64 per cent of Americans disapproving of it. Because most countries have resisted a 1930s-style retaliatory cycle, if Trump, or his successor, back off, the tariff war will quickly de-escalate. Yet when it comes to economic nationalism, you ain’t seen nothing yet.
Tariffs get lots of attention, and not just because they obsess Trump. The activity affected is huge and simple to count: in 2024 global flows of imports and exports of goods were $49tn, equivalent to 45 per cent of global GDP. The mechanism of intervention is easy to understand, a tax on physical goods crossing borders. The direct costs are quantifiable. Trump’s tariffs raised the equivalent of 1 per cent of US GDP in 2025. It is fairly clear who makes decisions. In America, the executive or Congress do. In China, Xi Jinping does. And there is a global consensus about their efficacy, which is that at best they are a wash, with the cash raised by the state mostly paid by consumers. At worst they kill efficiency and confidence.