Trade powers productivity. It is an engine of innovation that drives knowledge-sharing and technology upgrades. It can encourage improved governance and institutional reform. “Slowbalization” has held back trade since the mid-2000s. After the slump caused by the COVID-19 pandemic, we must again harness trade’s capacity to support growth, employment, and sustainable development.
The alternative, trade deterioration, put our current prosperity at risk. The World Trade Organization (WTO) and others have calculated that the direct cost to global output from trade fragmentation and technological decoupling could reach 8-12% in most-affected economies. U.S.-China trade skirmishes have already led to significant trade diversion and income losses. A more uncertain environment depresses economic growth by reducing consumer confidence and spending and removing firms' reasons to invest.
