I saw this first hand on recent visits to Beijing and Dubai. In both cities I detected a growing undercurrent of economic anti-Americanism creeping into the climate. The irony of it all is truly extraordinary: The United States has the largest external deficit in the history of the world and is now sending increasingly negative signals to two of its most generous providers of foreign capital--China and the Middle East. So far, the United States has been extraordinarily lucky to finance its massive current-account deficit on extremely attractive terms. If America's creditors suddenly feel threatened, it would be logical for them to demand a change in those terms--with adverse consequences for the dollar, real long-term U.S. interest rates and overly indebted American consumers. The slope is getting slipperier, and Washington seems all but oblivious to the mounting risks.

In Dubai I was met by a palpable sense of consternation. Fresh from the wounds of the rejected Dubai Ports World transaction, several major private equity investors in the UAE were quite blunt in expressing their sudden loss of appetite for U.S. assets. As one seasoned investor in U.S. companies and properties put it to me, "As practitioners, as investors, we have become very shy of the United States--we just turned down a recent deal for that very reason." Another added, "For us, foreign direct investment into the United States has become far less palatable due to recent developments. The bulk of our dedicated offshore money is now going elsewhere." The comment from the Middle East investment community that unnerved me the most took this exasperation to an even deeper level. One investor asked, "What can we do to push back, to send a signal?"

I certainly don't want to make too much out of an unscientific survey of a few private equity investors in Dubai. But up until recently, this was one of the Middle East's most pro-American investment communities. The individuals I met with are seasoned participants of many cross-borders transaction into the United States. For them, the political shockwaves from Washington have come from out of the blue, and they now see little reason to go back to the same well--especially given the wide menu of less contentious alternatives available elsewhere in the world. In the broad scheme of things, Dubai is a small player in the world of international finance. But to the extent that the Dubai backlash is emblematic of similar distaste from other Middle East investors--hardly idle conjecture, in my view--the repercussions cannot be minimized.

For free traders like myself, the words of Dubai investors are extremely troubling. Yet to the protectionists who seem to be dominating both political parties at the moment, this must be music to their ears. On grounds of "national security" they are getting precisely what they want--a warning to America's trading partners that they must play by rules made in Washington.

Trade has become an extremely important topic in this political season. If anything, the pressures for legislative action in Congress will only intensify between now and the midterm elections in November. Within Congress, support for action is bipartisan and deep--and momentum is building by the day. U.S. politicians are finding there is little to be gained by taking a soft line on trade--they run the risk of being characterized as unsupportive of the plight of the beleaguered American middle-class wage earner. With the political fix increasingly at odds with the macroeconomic fix, the odds of a disruptive outcome for the U.S. and global economy are high and rising. This could well be a pivotal moment for globalization.

Stephen S. Roach is chief economist for Morgan Stanley.