Why Americans and Europeans disagree about globalisation

BACK in 1999, when the euro was introduced, the lack of flexibility in Europe’s labour market was widely expected to make responding to shocks more difficult. This fear was vindicated after the global financial crisis a decade later, when a real-estate boom went bust, leading to a sovereign-debt distress and prolonged downturns in the eurozone. The United States, by contrast, recovered from the 2008 crisis fairly rapidly. But the US has struggled far more than Europe to cope with another major economic shock: globalisation and China’s emergence as an export powerhouse.

In many ways, globalisation has presented a bigger challenge to Europe than to the US. Whereas US merchandise imports are almost exactly the same level as 25 years ago – 10-11 per cent of GDP – the European Union’s imports have increased from about 11 per cent of gross domestic product to over 14 per cent. The challenge presented by China’s rise, meanwhile, is roughly the same on both sides of the Atlantic. By 2023, both the EU and US were running trade deficits with China of about US$300 billion annually.

Despite these similarities, narratives about globalisation differ sharply between the EU and US. Though direct comparisons of opinion polls are imperfect, owing to variations in phrasing and methodology, the basic message is clear: Whereas a large majority of Europeans believe that they benefit from free trade, most Americans think other countries have reaped more benefits than they have.