AND NOW, JOSÉ?

"The party is over, the lights are out, the people have vanished, the night has chilled, and now, José?" This excerpt from the brilliant poet Carlos Drummond de Andrade expresses anguish, existential emptiness, and a sense of hopelessness. This may be the feeling of those who bet everything on globalization—who grew with it, expanded, and even became key players—but now look to the future with concern. There are plenty of examples of frustration with the end of globalization—think of the Republic of Singapore and Apple, to which we’ll return later.

Indeed, "Liberation Day" has buried globalization for good. The system of trade and investment based on rules and multilateral institutions is giving way to arbitrary, interventionist, protectionist, and discriminatory systems that even violate the principles of international jurisdiction. The rejection of the WTO is merely the most visible symbol of this turmoil.

The trade war will profoundly change international economic relations and likely lead us into a global recession. Trade relationships will become case-by-case affairs, driven by narrow and immediate interests, dismantling an entire institutional framework that took decades to build and consolidate.

Countries most dependent on trade and the international economy will likely be hit the hardest. Let’s go back to Singapore. The country was one of the biggest beneficiaries of the liberal order established by the United States after World War II, making unparalleled use of free trade, rule of law, multilateralism, and global value chains. As a result, the island—territorially smaller than the city of São Paulo—managed to achieve very high levels of development.

But with the end of globalization, the country is likely to face significant challenges, given its very small domestic market relative to the scale of its business activity. In addition to trade barriers, the country will confront vulnerabilities such as its extremely high dependence on imports of energy, food, water, inputs, and many other essential resources for its population and economy. In an increasingly chaotic and unpredictable world, all this creates risks that could even bring the country to its knees.

Yes, Singapore has massive international reserves, multibillion-dollar sovereign wealth funds, and political cohesion—an impressive protective shield. But in the current context, these strengths must be seen in relative terms. Just as Singapore benefited immensely from globalization, it could also be one of the most penalized by its collapse.

Now think of Apple. The company benefited enormously from global value chains—a key tool in its growth and consolidation. Apple expanded by outsourcing production to China, tapping into international talent, and taking advantage of specialization in chip and component manufacturing across dozens of countries, as well as generous local subsidies and tax strategies to minimize its tax burden. Broad access to global consumer markets was also decisive. In this setup, Apple focused on designing and developing technologies, orchestrating and integrating the global value chain, and managing marketing, branding, inventory, and sales. Low costs and huge profit margins made it one of the most valuable companies in the world.

But the winds of "Liberation Day" also reached Apple. It’s estimated that the price of an iPhone could rise by at least 43% due to trade barriers—and producing in the U.S., as President Trump desires, would make Apple unviable. Beyond higher prices, the fragmentation of the global market, possible weakening of patent protections, stricter rules of origin, and many other protectionist measures in the pipeline will hit the heart of the company: its value chains.

Since the beginning of the Trump administration, Apple has lost nearly USD 1 trillion in market value, and the losses are expected to grow. Just as Apple gained enormously from globalization, it will also suffer greatly under the new order. It would be no surprise to see American consumers buying cheaper iPhones abroad than at home—something once unthinkable. Without a doubt: countries like Singapore and companies like Apple will have to reinvent themselves to move forward.

And what about Brazil? The country will also be affected. After all, it depends on foreign trade, services, investment, and technology. But looking at the glass half full, Brazil could even benefit in relative terms. That’s because it is geographically distant from the geopolitical conflict zones and is one of the few countries with relations with virtually all nations. It is one of the few countries that guarantees its own energy and food security, has a large domestic market with significant growth potential, and holds vast natural capital and resources.

Brazil enters this new phase relatively protected, well-positioned to collaborate with other countries and to take part—through the front door—in industrial production chains and powershoring initiatives, based on its comparative and competitive advantages, such as biofuels, bioeconomy, food, energy, minerals, and more.

Singapore, Europe, Japan, South Korea, and other countries stand to gain greatly from strengthening economic ties with Brazil. Perhaps it’s no coincidence that the old continent is reassessing the EU-Mercosur agreement, or that we are seeing increased interest from banks, funds, corporations, and international investors in doing business and investing in the country. All of this is repositioning Brazil and giving it credentials and bargaining power.

Brazil now has a unique opportunity to address its deep development challenges and to look toward the millions of "Josés" scattered across its economically depressed areas. It is up to the government and the country’s elites to understand this historic moment and the opportunities before them, and to act with focus, boldness, ambition, and determination.

This post was originally published in my opinion column in the newspaper Valor Econômico on April 10, 2025