Economic warfare is being fought with an intensity not seen since the period leading up to World War II as countries deploy tariffs, embargoes and economic sanctions to force policy changes or punish their adversaries.
Free trade is coming off second best, and global trade has stalled. There’s been no growth in trade volumes since late 2017, contributing to a slowing world economy.
The World Trade Organization, as the upholder of global trading rules, looks increasingly impotent. Its resemblance to the League of Nations in the late 1930s will sharpen if, as is possible, the U.S. withdraws in the lead-up to next year’s presidential election.
A rising tide of trade embargoes in the early 1940s was the catalyst for Japan’s bombing of Pearl Harbor and attacks in Southeast Asia to secure its supplies of rubber and oil.
While the escalation of tariffs between the U.S. and China has been the greatest concern to economists and institutions like the International Monetary Fund, the use of economic sanctions is becoming increasingly aggressive and extends far beyond UN Security Council mandates.
The U.S. regards its sanctions as having a global reach—any business defying a U.S. sanctions regime against another country can expect to lose access to the U.S. dollar as a means of payment and have any U.S. financial assets frozen.
China, which doesn’t recognise U.S. sanctions, is increasingly being caught in their web.