It’s starting to look like the 1930s for all the wrong reasons

Surging tariff wars, a tripling of trade barriers since 2019. 

A major power conflict in the heart of Europe aided vicariously by the U.S. and NATO. 

Nascent coalitions — the U.S. and fellow democracies on one side, a Eurasian entente (China-Russia-Iran-North Korea) on the other. Both loose alignments incrementally harden into economic and security blocs.  

It’s not the 1930s, but it’s starting to rhyme.  

While not a perfect analogy to Ukraine, the Spanish Civil War (1936-39) was a prelude to World War II, with blocs taking sides. Fascist Germany and Italy backed the nationalist military revolt, while the Soviet Union backed the Republican government along with U.S. volunteers like Ernest Hemingway and the Abraham Lincoln Batallion. 

And while deglobalization is not yet of the magnitude of the 1930 Smoot-Hawley tariff act, the Biden administration’s recent wave of tariffs on Chinese electric vehicles and other goods is the latest sign that economic nationalism and protectionism around the world is surging. Trade restrictions have been growing exponentially since 2015. 

That may sound like a harsh assessment of current trends, but it is difficult to conclude otherwise. Things could be worse this time, with climate change and a raft of fragile and failing states compounding the burgeoning disorder. 

The International Monetary Fund has been sounding alarm bells about the erosion of the rules-based order. In a recent speech, IMF Deputy Managing Director Gita Gopinath voiced fears about geopolitics shaping economic decisions.

“Countries are reevaluating their trading partners based on economic and national security concerns,” she said, noting “increasing signs of fragmentation.”

“Trade and investment flows are being redirected along geopolitical lines,” she concluded.  

We’re experiencing what a McKinsey report described as a “new geometry of trade.” Russia’s trade has been rewired away from Europe by Western sanctions. And while China is still a leading trading partner with the U.S., tech wars, tariffs, mutual “derisking” and China’s cultivating of developing nations have shifted trade patterns. 

China now trades more with the Global South than with the U.S., EU and Japan combined. More nations are seeking to use currencies other than the dollar for trade 

Gopinath said these new trade and financial patterns have not yet reached worrisome proportions. But if they persist, we could see “a world divided into three blocs: a U.S. leaning bloc, a China leaning bloc and a bloc of nonaligned countries.” 

One consequence, the IMF warns, could be a loss of 7 percent of global GDP growth over time.

Such a revamping of global economic connectivity would almost certainly reinforce the intensity of great power competition, with Russia and China looking to carve out their respective spheres of interest, and the U.S. trying to maintain its eroding global primacy. 

Such goals are a prism through which to view current tensions. Some fear if Vladimir Putin wins in Ukraine that Moldova or even the Baltic nations might be his next target. 

In any case, the risks of escalation in Ukraine — Putin’s threats to use tactical nuclear weapons — could be a trigger. What happens if NATO members France and Lithuania, which are considering sending troops to Ukraine, actually do so — and they are killed by a Russian missile? 

Turbulence in Asia has its share of potential triggers for major power conflict. China’s determination to absorb Taiwan into just another Chinese province and its deep distrust of Taiwan’s new independence-leaning president, Lai Ching Te, has already led to Beijing staging major military exercises near Taiwan’s shores — in effect a dress rehearsal for a blockade. A post-inauguration visit to Taiwan this week by a U.S. House delegation is likely to spark another Chinese temper tantrum.  

Similarly, China is ratcheting up coercive maritime actions in the South China Sea, shooting water hoses at Philippines ships. 

China claims reefs and shoals in the Philippines’ economic zone as its own. But China’s territorial claims to some 85 percent of the South China Sea were rejected by the International Court of Justice at the Hague in 2016. Beijing rejected the court’s ruling even though it ratified the Law of the Sea Treaty on which the ruling was based. 

Manila is a U.S. treaty ally, and in response to China’s actions, the U.S., Japan, Australia and the Philippines last month staged a joint military drill in the South China Sea. It doesn’t take great imagination to see how an incident in these contested waters or around Taiwan could spark U.S.-China military confrontations. 

Nothing is inevitable. But the point to viewing our current predicament, its economic and geopolitical trends in the context of the pre-World War II period is to illuminate possible futures. Perhaps also, this exercise might lead to reexamining some dominant assumptions. 

Current economic and geopolitical policies and trends seem to disregard recent history, the fateful policy decisions and actions that resulted in World War II. Nor do lessons from the Cold War, with harrowing near catastrophes like the 1962 Cuban missile crisis, seem to be weighing on the major powers.  

For example, the entire edifice of nuclear and conventional arms control — the Intermediate-Range Nuclear Forces Treaty (INF) and the New START Treaty, which eliminated whole categories of weapons and 80 percent of nuclear weapons, is gone. 

Both the U.S. and Russia withdrew from the INF accord, and Putin has suspended the New START agreement over the Ukraine war. China has so far refused U.S. calls for nuclear arms talks. Instead, the U.S., Russia and China are all modernizing and expanding their nuclear arsenals. 

This pattern of zero-sum strategic competition so far seems to preclude efforts to find a stable balance. It also constrains cooperation on existential common problems such as pandemics and climate change. 

The hope is that shining light on these historical parallels may lead the contending major powers to pause and reflect on where the current trajectory is headed before a catastrophic event. 

Robert A. Manning is a distinguished fellow at the Stimson Center and its Global Foresight and China programs. Follow him on X/Twitter @Rmanning4.