Professor Pervez Ghauri
The global trade environment has experienced profound shifts in recent years, with the rise of protectionist policies and tariffs marking a new chapter in international economic relations.
One of the most striking examples of this transformation is the United States’ decision to impose tariffs on a range of goods under the Trump administration in 2025—a move that has sent ripples throughout global value chains and raised urgent questions about the future of globalization.
In early 2025, the U.S. administration announced sweeping tariffs on approximately $900 billion worth of imports, affecting key trading partners including China, Canada, and the European Union. These measures included a 25% tariff on all imports from China, escalating to 125% on certain goods by April 2025, and 25% tariffs on Canadian steel and aluminum, as well as on U.S. goods entering Canada, such as vehicles and agricultural products.
This decision was met with retaliatory tariffs from countries around the world [World Economic Forum (2025). “Trump tariffs: Visualising new US trade restrictions”. https://www.weforum.org/stories/2025/02/trump-tariffs-visualising-new-us-trade-restrictions/]
It seems that the term “Pax Americana“, once used to describe the period of relative stability and free trade under U.S. hegemony after World War II, is increasingly at odds with the emerging geopolitical and economic tensions of the 21st century.
With protectionist sentiments gaining traction, the world finds itself at a crossroads in terms of trade policy and international cooperation. The erosion of multilateral trade institutions, coupled with the resurgence of economic nationalism, poses serious challenges to the rules-based global order.
In this context, we had the opportunity to sit down with Professor Pervez Ghauri, a distinguished scholar of international business and economics, to explore the implications of recent U.S. tariff policies.
Professor Ghauri, who has spent decades researching the dynamics of multinational enterprises (MNEs) and global value chains, brings invaluable insight into how these policies are reshaping the landscape for businesses, governments, and emerging markets alike.
Professor Ghauri, thank you for your time. In your view, how do the recent U.S. tariffs reflect broader trends in global trade and economic relations? Are we seeing the evidence of a more protectionist era rising? Or a temporary disruption in the global trade system?
The unprecedented tariff hikes by the US government in early 2025 have created a highly uncertain environment for international trade. The impact of these hikes is felt in most businesses, consumer demands, and the competitive strength of companies globally.
However, provided that these shocks are the trademark of the present US government and will not last beyond this regime, there is very little risk that we are moving to a more protectionist era. Many regions are becoming more liberal toward each other within each region, and inter-regional trade will rise. There are visible trends towards this shift in regions such as Europe, Asia, Latin America, and the Middle East.
China has become particularly active in Asia, Britain is looking for free trade agreements with several countries, and it recently signed such an agreement with India. The US will realize within a year or two that trade between the US and the rest of the world will decrease, while trade within regions and globally will increase.
Companies and countries are becoming increasingly interdependent as resources and capabilities reside in different locations. I believe these disruptions are temporary and will be short-lived.
In your opinion, how does the current scenario compare to previous historical periods of economic nationalism?
In terms of international trade, this crisis is not much different from other crises such as the oil crisis, the financial crisis, and the Pandemic. In most cases, countries and companies learn and adapt themselves to new realities, and modified or new trade structures appear. Interestingly, this time the crisis is more in America and America’s relationship with the rest of the world, although it has consequences for the whole world.
What do you think are the most significant implications of these tariffs for MNEs and their global value chains? How might these tariff policies challenge the current understanding of global value chains?
If you look at Buckley & Ghauri (2004) [Buckley, P. J., & Ghauri, P. N. (2004). Globalisation, economic geography and the strategy of multinational enterprises. Journal of International Business Studies, 35, 81-98.
https://doi.org/10.1057/palgrave.jibs.8400076], nothing has changed. No company or country can today claim that they are self-sustaining in producing whatever it produces.
The production systems today work as ‘global factories’ where inputs and materials come from different locations/countries that specialise in that particular slice of the whole value chain.
We might see some inter-regional movement of the value chain, but that is mostly based on political reasons and not tariffs. If Apple starts assembling its iPhones in India instead of China, that is purely a political decision.
In the same manner, if many Western companies start importing their components from Vietnam and Cambodia and not China, that is because of political reasons, although in many cases, the factories in Vietnam and Cambodia are also owned by Chinese investors.
How do you think emerging markets are being affected by the new trade environment shaped by U.S. tariffs? Are there regions or countries that stand to benefit from these changes?
Yes, many emerging markets are negatively affected by the new tariffs imposed by the US. It is mostly cheaper product components that are exported by these countries, and now their products/components might become more costly.
This means that, in the end, however, it is the American consumers who will pay the price, as the products in America will become more expensive. For emerging markets, this might prove to be a blessing in disguise, as they will learn to trade more with each other and try to be less dependent on the American market.
In your understanding, what could be the potential impact of the emerging scenario on sustainability efforts around the world?
Unfortunately, the impact on sustainability efforts already has a negative impact, particularly in America and the UK, as the UK always mimics the US. However, around the world, including the EU, fortunately, sustainability efforts continue and would have a rather minimal impact.
Europe is coming with new measures and direction and has recently introduced its ‘Omnibus’ programme/framework, which is even more forward-looking. Many emerging markets, most of all China, have explicitly announced that they will continue with their sustainability programmes and will even speed up.
How could policymakers mitigate the potential negative effects of these changing scenarios?
I believe the best way for policy makers, outside the US, is not to panic and invest in resetting their cost structures, rationalise and refocus, invest in growth, and stimulate market demand.
This is particularly relevant for the EU. Invest in inter-regional trade and rethink/realign their policies towards China and other emerging markets, instead of just blindly following the US.
We would like to warmly thank Professor Pervez Ghauri for the time he dedicated to this interview and for generously sharing his deep expertise on international trade and global value chains.
As Professor Pervez Ghauri highlights, the current turbulence in global trade, marked by sweeping U.S. tariffs and rising economic nationalism, should not be seen as the end of globalization, but rather as a critical juncture.
Multinational enterprises and policymakers must navigate this moment strategically, recognizing that interdependence remains a core characteristic of global value chains.
Rather than retreating into isolationism, this period calls for renewed regional cooperation, adaptive supply chain strategies, and a long-term commitment to sustainability and inclusivity in trade. The temporary nature of political shocks must not obscure the structural realities of a deeply interconnected world.
