The Other Globalisation

In the endless debate about globalisation, it helps to remember that not all trade is created equal. There is a difference between the trade of things and the trade of ideas, between the shipping container and the cloud. And if you pay close attention, you start to see that deglobalisation is very much a story of the former. Goods are under siege. Services are not. At least, not yet.

When Donald Trump returned to the centre of global economic policy with his fresh round of tariffs, it was a familiar playbook. This time, the 10% blanket tariff applies to imports from almost everywhere, with certain countries like Vietnam facing effective rates above 50%. China, predictably, bears the brunt. The aim, as always, is to restore domestic manufacturing glory. But what often goes unsaid is how narrowly these tariffs are drawn: they target physical goods. They don’t touch services.

This matters. In 2024, the US recorded a $1.21 trillion deficit in goods. In services, it ran a $293 billion surplus. That contrast isn’t a quirk. It reflects a deeper structural shift: advanced economies have become net importers of manufactured stuff and net exporters of intangible things—finance, software, entertainment, expertise. Even the EU, with all its industrial backbone, finds itself importing more from China than it sells in return, to the tune of €291 billion in goods deficit. But in services, it’s a different picture: the EU actually runs a surplus with China, totalling nearly €17 billion in 2023. It’s a modest figure compared to the goods deficit, but it reinforces the broader trend—services are still the terrain where advanced economies hold the upper hand.

Services: The Untouchables

The problem for policymakers is that goods are easy to protect. A tonne of steel arrives at the port; a tariff goes on top. But how do you tax a consulting engagement or a line of code sent over the cloud? Services cross borders invisibly and, for the most part, freely. Yes, governments have tried. France, Italy, the UK and others have rolled out digital services taxes, but these have mostly targeted the narrowest corner of the tech universe: advertising platforms and social networks. A 2% cut from Google or Meta is more headline than solution.

In recent days, Brussels has floated the idea of expanding these levies as a kind of tit-for-tat against Washington’s latest tariffs. But even if such proposals come to pass, they’ll likely only graze a few large American tech firms, and mostly in consumer-facing domains. The vast world of business tech—enterprise software, cloud infrastructure, B2B logistics—is left alone. Services, in other words, still enjoy a broad and mostly unchallenged moat. And even this modest pushback has prompted warnings of retaliation from the US.

The Real Sequence: Offshore First, Automate Later

So what are companies supposed to do in a world where it’s getting harder to trade goods, but services remain relatively untouched? The textbook answer is a dual strategy: automate what you can, offshore what you must. But the real-world order of operations tends to flip. Not because offshoring is better, but because it’s faster—and cheaper. Automation takes capital. Offshoring takes a Zoom call and a service contract.

As tariffs, high interest rates, inflation, and a near-collapse in capital markets squeeze margins, companies need immediate relief. That means shifting roles abroad before committing billions to AI or robotics. Customer service? Move it to Cebu. Payroll processing? Send it to a shared services centre in Kraków. Compliance, HR, procurement—India can do that just fine. Anything that doesn’t directly touch the product gets trimmed, packaged, and offloaded.

The second phase comes later. Once the economy stabilises, capital becomes cheaper, and tech firms stop hoarding their cash, the investment in automation arrives. And those jobs that were shipped off? They don’t come back. They’re not repatriated—they’re deleted. The people who lost their jobs to cheaper hands today may lose them again to cheaper code tomorrow.

The Worker Left Behind

None of this is good news for the average worker in developed economies. The narrative of “reskilling” is comforting, but the reality is slower. You can’t take a factory floor worker and make them a machine learning engineer in six weeks. Meanwhile, companies have earnings calls to manage and margins to protect. The stock market rout of recent weeks—with the S&P 500 down over 10% overnight—has only sharpened the knife. Cost-cutting is no longer optional. It’s existential.

There is a broader irony here. The very policies meant to protect domestic jobs are accelerating the forces that threaten them. In trying to make goods more local, we may make work less so. Services, left mostly untaxed and unregulated, become the new frontier of globalisation. But the benefits of that trade accrue unevenly: to the highly skilled, the digitally native, the globally mobile.

The Unkind Truth

What’s the takeaway for my readers? First, that the trade war is not just a story about geopolitics or tariffs. It’s a story about who wins and who loses in a bifurcated global economy. Investors and executives need to think hard about where value is created, and how resilient their labour model really is. Policymakers should recognise that protectionism in one domain breeds disruption in another.

And for the average worker, the message is unkind but clear. In the short run, your job may go abroad. In the long run, it may go to an algorithm. Either way, the world isn’t getting smaller. It’s just getting smarter about what it sends where.