Economic globalization is facing intensifying headwinds, with former World Bank vice president Otaviano Canuto warning that rising protectionism and U.S. tariff measures risk fragmenting global trade and finance, in a recent interview with China Media Group (CMG) in Washington D.C.
Canuto, now a senior fellow at the Policy Center for the New South, outlined three major forces disrupting global integration. While he does not foresee a complete halt, he emphasized the mounting pressures and the real danger of fragmentation.
"First, rising protectionism and trade barriers. There has been a sharp increase in tariffs, trade restrictions and non-tariff barriers worldwide. A second factor has been geo-economic competition and political tensions. The strategic rivalry between major powers has intensified. This has led to sanctions, tariffs, investment screening in export controls that fragment trade and finance along geopolitical lines. But a third factor has been also rising concerns with supply chain risks and resilience. Countries focus on securing and internalizing critical supply chains, reducing integration," he said.
Canuto noted that the Trump administration sees the current international trade order as skewed in favor of other countries, undermining U.S. interests. This opposition, he explained, marks a strategic pivot away from the multilateral trade liberalization framework the U.S. once championed, and toward a focus on domestic economic security.
He highlighted that the administration has prioritized a "made-in-America" approach and trade policies designed to restore manufacturing and reduce trade deficits. However, he cautioned that the tariffs will mostly harm consumers and disrupt the country's domestic resource allocation.
"Those tariffs conflict with free trade principles and international trade law by conflicting with the most-favored-nation principle, according to which, tariffs shouldn't discriminate among countries. Not always being truly reciprocal as tariff rates imposed by U.S. often exceed those faced by American exporters abroad," he said.
"But as most analysts believe, they will mostly raise costs for consumers and distort the domestic allocation of resources," he added.
Former World Bank official warns of global trade fragmentation amid US tariff push
