Tariffs and Other Forms of Protectionism

The 2008 economic crisis led many politicians to question the merits of globalization. According
to a McKinsey Global Institute analysis of data from the International Monetary Fund, global
cross-border capital flows shrank by 65% between 2007 and 2016. The decrease from $12.4
trillion to $4.3 trillion in those nine years includes declines in lending, FDI, and equity and bond
purchases.

The U.S. and Europe introduced new banking regulations that limited capital flows, and tariffs
have been put in place at times to protect domestic industries seen as vital, such as a 127% U.S.
tariff on Chinese paper clips or Japan’s 778% tariff on imported rice. In Brazil—where import
tariffs run between 10% and 35% —the new government announced in May 2019 that it plans to
reduce them by 10 percentage points through 2023.

The 2016 election of Donald Trump in the U.S. and the British vote to leave the European Union
(known as the Brexit) have also contributed to the anti-globalization movement. These trends
have been driven by anti-immigration sentiments in Europe, although the 2018 election results
veer more pro- than anti-globalization.