What Happens When Antitrust and Protectionism Cycles Collide

By Scott Helfstein, Harvard Business Review

Since 1850, the U.S. has gone through cycles of protectionism and antitrust activity, but the two have never coincided —until now. The U.S. has shifted markedly towards protectionist policy, increasing tariffs over the past 18 months while simultaneously launching a series of antitrust investigations (into Big Tech and the auto industry, to name just two). Protectionist cycles usually last about a decade, while antitrust cycles extend further.

Each cycle is driven by a different set of fundamental forces. Protectionism stems from concerns over foreign influence and a desire to maintain the international status quo. Antitrust activity, by contrast, is driven by the desire to change the domestic status quo by increasing competition and weakening entrenched interests. During and after each antitrust cycle, the U.S. economy experienced higher GDP growth along with higher inflation. By contrast, the end of protectionist cycles is marked by major shifts in the global political-economic order and uneven growth.

Perhaps this protectionist and antitrust activity is the start of a new concurrent trend or perhaps one of these forces is an anomaly with longevity. In any case, that they’re happening at the same time adds to the complexity and uncertainty of the economic environment and those responsible for charting corporate strategy or setting capital investment priorities should consider the implications. Should they adopt a strategic vision that prepares them for a global tectonic shift — or for a long economic boom?

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