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An essential guide to the implications of Trump’s second presidential term for Washington, commerce, and the global stage
The contributor is an FT collaborating editor, a visiting scholar at the Hoover Institution, and author of a forthcoming publication on worldwide interconnectedness
If you have been following current events in 2026, you might believe that the worldwide economic dispute is reaching its zenith. A recent ruling by the Supreme Court suggests that US President Donald Trump has encountered the constitutional boundaries of his duties dispute. When evaluated on its own merits, it has proven ineffective, with the majority of levies being passed on to American enterprises or consumers. Consequently, this approach is unpopular, with 64 percent of Americans expressing disapproval. Since most nations have resisted a retaliatory spiral reminiscent of the 1930s, should Trump, or his successor, withdraw, the tariff conflict will rapidly diminish. Nonetheless, concerning economic protectionism, the full extent has yet to be observed.
Import duties command considerable attention, and not merely because they preoccupy Trump. The scope of affected commerce is immense and straightforward to quantify: in 2024, global movements of imported and exported goods totaled $49 trillion, representing 45 percent of worldwide GDP. The intervention mechanism is simple to grasp—a levy on tangible commodities traversing national boundaries. The direct expenses are measurable. Trump’s tariffs generated an amount equivalent to 1 percent of US GDP in 2025. The decision-makers are quite clear. In America, the executive branch or Congress holds this power. In China, Xi Jinping does. A global consensus exists regarding their effectiveness, which posits that at best they break even, with the funds collected by the state largely borne by consumers. At worst, they stifle productivity and confidence.
The issue is that merchandise exchanges and tariffs represent only the most visible facet of globalization and economic nationalism. The other dimension is more challenging to measure but likely more significant. Worldwide cross-border inflows and outflows of services, intellectual capital, data offerings, investments, and other forms of receipts and disbursements amounted to $48 trillion in 2024. If one includes the domestic sales of multinational corporations’ foreign subsidiaries, the grand total ascends to over $60 trillion.
Even this figure is an understatement. Certain flows possess far greater importance than others. The world’s immense cloud service providers generate less income than its apparel exporters, yet they possess the power to halt planetary operations. Transnational payment networks constitute a medium-sized industry by revenue but profoundly influence how capital is distributed. A disproportionately large share of global stock market valuation is predicated on the substantial profitability of leading companies that manage the movement of intellectual capital.
The strategies governments are now employing to influence this vast, secondary category of global activity are considerably more difficult to monitor than tariffs. These strategies signify a departure from the principle that businesses should be treated impartially irrespective of their nationality. This occurs via a complex web of industrial policies, punitive measures, investment restrictions, regulatory favoritism, heightened national sentiment, and other societal norms. The direct expenditures are impossible to ascertain. Decision-making is decentralized, involving governmental bodies, regulatory authorities, and private enterprises. Consequently, even if one wished to reverse course, it would be challenging to do so. And most governments have no desire to revert. They are embracing “economic statecraft” because they believe it can bolster national security in a perilous world, appease certain constituents, and stimulate development.
Thus, even as the threat of tariffs reaches its peak, economic nationalism continues to gain momentum. Evidence of this trend is omnipresent. Nations are developing alternatives to the financial, technological, and defense infrastructures upon which they were perilously reliant. Europe is conceptualizing a digital currency. Rheinmetall, Germany’s principal defense firm, anticipates its revenues will multiply fivefold by 2030. India has recently declared $210 billion in private investments for “compute” capacity to be physically situated within its national boundaries.
Most multinational corporations and investment organizations are deliberating how to adjust to this transformation. For businesses, this entails restructuring external collaborators and internal frameworks to capture substantial earnings while mitigating considerable expenses. For investors, this paradigm shift signals a divergence in asset valuations, interest rates, and risk premiums, thereby disrupting the convergence mega-trend that has characterized global finance for the past three decades.
In the US, attention is gradually but inevitably shifting toward the 2028 election and the period following Trump’s presidency. Many individuals harbor hopes for a return to moderate politics, a reassertion of the rule of law, and the cessation of aggressive tariffs. Perhaps their aspirations will be realized. However, an unspoken reality is that regardless of who assumes power next, a significant degree of continuity will persist, particularly concerning the differentiation between businesses based on their national origin. The prevailing standard, in America and elsewhere, dictates that foreign policy and economic agents are expected to prioritize national interests first, and global interests second, if at all. This explains why, even if tariffs subside, the new era of economic nationalism is merely commencing.