Bill Hawkins, head of trade and investment at Sussex Strategy Group and managing principal of GrowthBridge, examines whether the Trump administration is precipitating an end to globalization as we’ve known it since the Cold War. Drawing on recent research papers in VoxEU and Foreign Affairs, he argues in favour of the thesis that globalization has historically thrived under a single hegemon willing to create “public goods” like stable trade rules and security guarantees, but that America is now abandoning this role based on a bipartisan consensus that past trade agreements haven’t benefited ordinary Americans. The Hub’s editor-at-large, Sean Speer, discusses with Hawkins how America could actually be helping China’s rise in global dominance through its engagement in trade wars.
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Program Transcript
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SEAN SPEER: is the Trump administration precipitating an end to free trade and globalisation as we’ve known it since the end of the Cold War. I’m pleased to be joined by Bill Hawkins, the head of trade and investment at Sussex Strategy Group, and the managing director of growth bridge, a market access consultancy, to answer this question. Bill, thanks so much for joining me.
BILL HAWKINS: Great to be here.
SEAN SPEER: Bill. A new research paper that you brought to my attention argues that globalisation only thrives under a single hegemon that’s prepared to use its economic and political power to hold together a system of free trade and open exchange. Let’s start with that simple yet profound insight. How has it shaped your own thinking about what’s been playing out over the past several months?
BILL HAWKINS: Yeah, well, thanks. It is a really interesting thesis, very interesting academic work that was done. I should credit it, and I will later in the show, or perhaps we can put it up the same time as we post the podcast, because there’s been a couple of really interesting papers come out that have helped all of us who are thinking about these matters begin to crystallise, not only in understanding what’s going on, but also to help understand what our most appropriate path forward might be. But yeah, the paper found that by looking back over history in the arc of the last 200 plus years that really globalisation and trading particularly measured through treaty formation associated with matters that have to do with trade. Those sorts of activities flourish when there is a unipolar environment, highly dominant economic actor, usually militarily as well. Think British Empire, think most recently over the last century, Pax Americana, and that in the absence of that kind of ordering power, that there is a significant disaggregation, lots of headwinds, all fighting against trade and the costs associated with economically existing as a middle power nation, rise dramatically, and it characterises really the environment that we are well on our way in terms of heading into.
SEAN SPEER: So Bill, I’ve spent a good part of the past several months, indeed, longer trying to understand Some of the intellectual currents occurring in the United States, particularly on what sometimes is characterised as a new right. And one of the most interesting yet controversial ideas that I’ve encountered is this operating assumption you that you see within the Trump administration and among intellectuals adjacent to it that the past 40 years or so of globalisation have been bad for America, yes, and that that is the right way to think about the reordering of the global economic order. How do you respond to that starting assumption?
BILL HAWKINS: Well, let me just first give about 30 or 40 seconds of context here, which I’m the history, which is the these most recent papers have really crystallised the thinking on this. But really, I think instinctively, when we think about it, this is very something that we all appreciate and know just instinctively, and that is when there is a dominant as there has been over the last, certainly since the fall of the of the Berlin Wall, collapse of the Soviet Union, so the last 35 years, and arguably dating back all the way to Bretton Woods some 80 years ago. Whenever there is a dominant economic power, there are due to the behaviours of that power, a series of public goods that are created. And it’s not like those are just happenstance. There is a deliberate intent on the part of that uni power to create these public goods, because there is an understanding of the immense benefits that accrue to them as a result of their generation of these public goods for an ever expanding network of countries. Now let’s put it into the practical with respect to the United States.
So the public goods that have been created by the by America’s actions on the world stage include generating not only for themselves, but for the network of countries that align with them and do business with them. Those public goods include creation of low friction access to US supply chains, low friction access to the US market, security with respect to navigating the air and seas for commercial purposes, a real confidence in the sanctity of national borders and ensuring that they are not going to be encroached upon, and that property within them is not going to be expropriated by others. Broadly common set of international trading rules. Rules the availability for all of the trading nations to something that is immensely important, and that is stable dollar assets within which to transact business and to store your reserves. And probably most significantly, but really the most unseen, is the hugely valuable, significant savings that everybody enjoys in the risk management expenses that otherwise would be incurred in order to do business.
So really, the activity of the of the dominant uni power, the US, in our case, has brought certainty, it has brought predictability. It has brought largely peaceable order through the creation of these public goods, and they’ve done so deliberately because of the immense benefits that accrue to this, like what? Well, the fact that they’re the reserve currency means they get cheap, long term loans with which to finance their government and their and their activities around the world. The fact that the US is being relied upon as the dominant financial institution for all of the world’s transaction and the holding of financial reserves generates massive benefits, huge influx into the American economy of foreign investment and investment, therefore in American workers, a near global adherence to us set international trade standards and associated technical standards, real development of markets for us, companies, payments that the US receives for the garrisoning, garrison of us, troops and military hardware, land, sea, air around the world, hundreds of bases that has money coming in.
And as a result of all those things, the US has enjoyed, as every unit power has in their day, unrivalled foreign policy power projection, not only through those hard military assets that are out there, but from all the goodwill and alignment that their generation of the public goods creates. And there’s been a recognition that these are benefits which are immense, highly valuable, and are deliberately attempted to be created.
And you’re right, this takes you to the point that you just made. And I suppose I just put a capstone on all the benefits. Yeah, as a result of all those benefits, the American citizen has had a dramatic increase, unrivalled over the course of history, in their quality of life over these certainly the last 35 years and dating back even 80 years ago, dramatic now the US present us Republican administration does not profess us to not recognise the value in any of these public goods, and in fact, the Trump approach in Its more extreme form, and we’ve seen that on display so many times of late. Number one, it dismisses, like utterly disregards, undervalues, ignores even the benefits that these public goods have created for the United States and simultaneously, and this is where it gets, particularly pernicious, simultaneously as disregarding all those benefits with respect to the continued generation of public goods that their actions create, the US is seeking to dramatically reprice what it is those public goods cost their allies and More broadly, that previously aligned set of countries, and simultaneously to repricing those public goods, the US is doing two other things.
They’re significantly diminishing, significantly diminishing the quality of those goods, their scope, their breadth, the terms on which they are enjoyed, and they are the US strategically placing those goods in a position of uncertainty, which is continual. So all of those benefits that that the activity of a of a hegemon creates, so the de risking, the weaving of the fabric of alliances through economic and security relations, the creation of mutual benefit, the projection of the values of the United States and the governmental system democratic capitalism over the last century. All of those benefits are put at risk through their approach these days, and it’s based, as you started off by observing there’s this historical situation which has arisen, which is the benefits that have accrued to the United States have not been recognised, and in fact, all of the activity of the other countries which generate these benefits are. Significantly devalued and, in many cases, criticised, and that’s led us to where we are today, which is the starting point for Canada and other countries. How do you find your way in a world such as this?
SEAN SPEER: We’ll get there in a minute. But it prompts the question, because everything you just set out would be intuitive for countries around the world that have often felt like they are involved in asymmetrical relationships with the United States to the advantage of the United States. Would be surprised to discover that the operating assumption not merely of the Trump administration, but of a growing consensus, I would argue in parts of Washington that this whole thing has been, on balance, detrimental to US interests like, how does one go about explaining that these people aren’t dumb? They’re, you know, they’re making this judgement based on something.
BILL HAWKINS: right? Well, a lot of it has to do with the fact that the on the trade piece alone. Forget about security for a moment. Well, I’ll deal with it quickly. The adventurism of the United States with respect to its war making around the world, right? Iraq, Afghanistan, we know what the Maga movement and more broadly, the American populace thinks of that now, looking back in the rear view mirror, the benefits have not accrued. And in fact, you know, the the the decisions that were made to take the country, the country and the world into those situations, are highly suspect and open to criticism. But on the economic side, the the capstone to the effort on the part of the United States acting as this benevolent hegemon, what really is the Trans Pacific Partnership, now known as the cptpp, so Canada, you and I were, we were deeply involved in trying, along with 11 Other nations, led by the United States, but involving Japan and many other Trans Pacific nations, we were involved in a project through the course of the last decade to ring fence China and really establish terms of trade with which China would have to do business in the Trans Pacific region And more broadly across the rest of the world. What happened in when Trump was re elected?
Well, first of all, Hillary Clinton, the TPP was closed, actually, in October of 2015 so the last few days of the Harper administration during the campaign, and what happened in October 2015 thereafter is the deal was closed. Still, the United States was going through its election process, and the both contenders disavowed, disavowed the agreement which the United States had been leading the effort on a plurilateral trade agreement, modern inform To perform this foreign policy projection in order to really curtail the behaviour of the Chinese, which, after they joined the WTO in 2001 they began to gain the system, arguably.
I think in substance, it can be proven so. And this was an attempt on the part of the Western world to use all of its powerful tools. Hillary Clinton disavowed it. Donald Trump not only disavowed it, but pulled the United States out, and at that time, it marked the beginning of the US is behaviour that was now going to be and continues to be governed by, as you pointed out, a growing bipartisan consensus in America that the instruments of the past trade agreements have not actually generated benefits which have accrued through both through to the to the, you know, certain segments of the electorate, certain segments of the of the citizenry, and In many respects, when you look at the data, they’re not wrong. Does that mean the appropriate choice was to throw the baby out with the bathwater? Probably not, but that is what has happened. And remarkably, I really just I was struck personally in the days after the inauguration of Trump’s second administration, Marco Rubio was appointed as as the Secretary of State.
And I just want to read a quote four days after the inauguration. You know, almost minutes after his appointment as Secretary of State, Marco Rubio, who, you can criticise, the man, but he is within the caucus, he is something that somebody who thinks about matters. He is He is smart, he’s safe. You can’t suggest that that individual does not have an interesting perspective on how the world is unfolding. His quote was this. This is him speaking. It is not normal for the world to simply have a unipolar power.
So that was, note the use of the past tense. That was an anomaly, a product of the end of the Cold War. But eventually you were going to reach back to a point where you had a multi polar world, multi multiple great powers in different parts of the planet. We face that now with China, to some extent, Russia, rogue states like Iran and North Korea, this is what we face now. So they have their mindset is based and it is a bar bipartisan conclusion. I do believe, as you pointed out, that multi polarity is upon us, and the the strategy that has been prosecuted and continues to be intensively prosecuted by Trump’s second administration. It not only enjoys pretty broad based support across the country, but it is taking us deeply into an environment of multi polarity, and for those of us, Canada, Japan, Mexico, to a large extent, the EU, those of us who have been so strongly aligned as allies to the American project as it has been embodied, with respect to policy, international trade, mostly on security.
Canada didn’t, didn’t go into the Iraq War. But we were, we were, you know, hand in glove with them, arm in arm, and with many other respects, it is our nations that are having the toughest time recalibrating. Yes, our stance in this environment, and you know, Canada is is really challenged in this respect. It is a daunting time for us, and it is, it is only going to intensify going forward.
SEAN SPEER: yeah, what comes out in a moment before we do I just want to ask you directly, notwithstanding the imperfections of the system of free trade and globalisation and open exchange that has persisted for nearly 40 years, what are what are we losing? What are we effectively giving up by American slouching from their place as the unipolar nation that essentially held this system together.
BILL HAWKINS: Yeah, well, I wouldn’t characterise it as slouching. I know you weren’t really being 100% serious about that, but I do recall from our last conversation here on the hub, a term that you use, which really struck me at the time, and it stayed with me is you characterised the shift in the US stance on trade as somehow revealing what it is that America left on the table, previously in their in their negotiations. And the reason that that stuck with me is because really, regardless of which side of the aisle in the states the administration at any given time came from, the broad intent was to solve what is really a multivariate equation with relatively balanced values in those multiple variables, which really is a different way of saying there was an intent to create these public goods, which, yes, generated an expense for America, but it was an investment. It was not a liability. It was an investment that generated a huge payback.
SEAN SPEER: Yes, and some of it, some of it quantify, some of it quantifiable, and some of it more qualitative, right?
BILL HAWKINS: Right. So what are we? So what are we giving up? Well, as the Trump administration has sought to solve that multivariate equation by maximising the values, particularly on trade, and also to a fairly significant extent, on security. Well, we are, we’re giving up all of the benefits that previously had had been generated these public goods, the just think of it, stability, certainty, predictability, trust, a sense of all of which are not only needed for nations to feel secure, but are critical to foster environments where the private sector can invest with confidence and capital can be deployed. I was talking it was in Ottawa for most of last week, and spent a lot of time with officials in various departments, and the frightening aspect of the discussions were associated with the acknowledged degradation, degradation in the investment thesis to put capital into Canada. And it’s not simply foreign investors with whom the Canadian government maintains a current dialogue and an ongoing dialogue, but it is Canadian companies themselves, when you look at their capital allocations over the first part of 2025, significant billions of dollars, significant sums have been invested in North America.
But where not in Canada, you. South of the border. So the capital flight and the lack of capital receipts that Canada itself may face as a result of this scenario where, previously our investment thesis was entirely derived, or at least significantly derived, from not only the proximity to the United States, but the easy market access to it fostered by NAFTA now usmca, if to the extent that that goes, we lose as an investment destination, we lose as a set of investors and other economic actors who need crave certainty with respect to having the confidence to do business abroad and even even domestically. So these are, these are matters, these uncertainties and these other costs that we are now facing.
These are matters that we have to address to the extent that we can overcome, and they will never return to the high degrees of trust, ability predictability that we’ve enjoyed. But we must persevere in operating in an in an environment that is far more fraught, far more uncertain, perilous in many respects, than we’ve ever had to operate in, certainly in any of our lives. And that is going to be a major challenge for Canada, not only our policy makers, but our business community that has enjoyed a rather comfortable existence selling most of our goods.
SEAN SPEER: yeah. Which leads me to my final question, what does this all mean for Canada? Bill, how, if at all, can we help to shape globalisation in this new multipolar era?
BILL HAWKINS: Yes, okay, so I mean again, whole another topic here, but our our mission here is to twofold in nature. We must accomplish both goals. We must mathematically. It is simply necessary for us to reach revised terms of trade with as much predictability associated with it as we can much as many safeguards as we can put into it, revised terms of trade with the United States. Mathematically, let me just give you this 75% of our exports go into the United States. Right? That’s about $670 billion our second biggest market is China. They receive about 4% of our exports worth about $30 billion and the EU is not too far away from that. It’s probably about double. But you’re looking at 30 billion China. Let’s call it 60 or 70 billion EU you are not you to match anything close to the $670 billion worth of exports that we put into the United States in 2024 as a and that was not an anomalous year.
Mathematically, we must find new terms of trade with the United States. So that’s mission number one. Mission number two is we cannot rely on that alone. We must diversify our trade. And when we look at the world, it is not as simple as saying, Well, this big galute To the south is treating us poorly. Let’s go over to our second biggest partner, China, because we know what China has, how they’ve treated us and we under and we should remind ourselves of the nature of that government and its foreign policy objectives and what it would have its world, where it becomes the unipolar actor. What would that world look like, and does it align with what is in our interest and in our in alignment with our values? I think the answer has to be no. So perhaps we deal with them opportunistically, although that’s difficult to do with many commodities which have long lead times, but we must look at other parts of the world. That means the Indo, Pacific and the EU and those are our two projects that that we must overcome. The EU is a highly saturated, very traditional market. In many respects, economic relations are long standing.
It’s going to be difficult to break those economic relations that pre exist our intensified interest, but we must find a way. And critically, and in my view, I believe that the more fruitful, although perhaps longer term, area of the world for us to focus on is the Indo Pacific meaning, right from India all the way through to the northern Asian countries of Japan and Korea and all of the Southeast Asian countries, all the way down to Australia New Zealand. Those are the areas that we have to focus on, and that is going to be such a culture change. It is such a culture change. I faced it every day in my trade diversification practice. It’s such a culture change for Canadian businesses. But we can do it. We must do it.
SEAN SPEER: well. We’ll have to have you back on soon, Bill, to unpack how we can do it in the meantime, thank you so much for joining me. Bill Hawkins, the head of trade and investment at Sussex Strategy Group, and the managing director of growth bridge, appreciate drawing on your wisdom and experience to help us work through these highly important questions for Canada.
BILL HAWKINS: Thanks, Sean.
