Globalization and the Dollar

Back in 2017 when the U.S. embarked on withdrawing from multi-lateral treaties and then imposing tariffs on many imported goods across a wide range of major trading partners including China and the European Union, it looked like the pendulum of change was swinging away from globalization to enter an era of de-globalization. Four years later, the reality is quite different.

Globalization is alive and well, just in an altered form.  What is happening is that trade patterns are being re-arranged. This is occurring not only due to the end of the post-WWII era of “Pax Americana” defined by US economic and military might, but also due to the pandemic’s impact on supply chains, the market’s reaction to the virus’ continued  spread, the reality of the UK’s formal separation from the European Union through Brexit, and the strikingly different economic growth prospects of many countries around the world post-pandemic.  Here are our six key observations related to the shifting dynamics of world trade.

  1. Multi-lateral trade arrangements have not disappeared; it is just that the U.S. is less involved, with the exception of the US-Canada-Mexico trade agreement (USMCA).  With China aggressively courting new trade deals, such as the one just negotiated with Europe, multi-national companies are having to rethink how they balance their U.S. and Chinese business opportunities.
  2. There is a new focus on supply chains that no longer purely optimize low costs, but also prioritize resilience and often seek to minimize transportation and logistical risks.
  3. And then there are changing opportunities related to economic growth patterns.  Asian nations - excluding China - are growing rapidly and increasing trade with China.  Latin American countries, in turn, are expanding commodity exports to Asia.
  4. With Brexit, the UK is having to adjust to new rules with Europe.
  5. Nations everywhere are re-evaluating their dependence on critical goods and raw materials related to their own security.
  6. The role of the U.S. dollar in world commerce is changing with the increased U.S.-related risks associated with the end of “Pax Americana” and the emergence of an evolving multi-dimensional world order.

None of these changes and challenges are necessarily a step back from globalization. If the pandemic has reminded us of anything, it’s that we are all part of the same global system.  Globalization is adjusting to new realities and opportunities, and the growth of world trade is likely to accelerate in the process.


All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author(s) and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.

About the Author

Bluford “Blu” Putnam has served as Managing Director and Chief Economist of CME Group since May 2011. With more than 35 years of experience in the financial services industry and concentrations in central banking, investment research, and portfolio management, Blu serves as CME Group’s spokesperson on global economic conditions.

View more reports from Blu Putnam, Managing Director and Chief Economist of CME Group.

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