Shifting Trade Policies and Globalization

A single rulebook helped turn scattered national markets into one vast trading web—so much so that global trade now makes up well over half of world economic activity. Yet today, governments talk about pulling back. How did we get here—and what happens if that web starts to unravel?

By the late Cold War, something remarkable was happening quietly in the background: the average tariff on manufactured goods among today’s WTO members had fallen to under 5%, down from about 22% in 1947. At the same time, the share of trade in world GDP more than doubled. This wasn’t just “more business as usual”—it marked a shift from rival economic camps to a shared set of rules under GATT and later the WTO.

But rules didn’t erase power. The United States, Europe, and—later—China all tried to steer this opening to their advantage, deciding where to specialize, what to protect, and which partners to tie themselves to. That’s why the same system that helped NAFTA trade more than triple also enabled China’s export surge after 2001.