A push towards ‘America First marked Trump’s second term and ‘Make America Great Again.’ It followed an aggressive move to impose import tariffs, especially on Chinese goods, and emphasised the creation of locally produced parts and products. Swiss-origin watch brands like SWATCH have always prioritised country-produced products over imports. In competition with cheaper Chinese models, they emphasise the importance of their own products, connecting it to national identity and Swiss heritage.
Indeed, there is a growing reliance on economic protectionism rather than on existing free trade models, which risks toppling the current system. But what systems exactly? And what really is economic nationalism?
Economic nationalist ideology is defined by prioritising state intervention to regulate tariffs on labour, goods, or capital, and imposing controls on a country’s economic policies to magnify its trade benefit. This moves away from liberal laissez-faire, obviously because the state is involved more. Yet not only has free trade been advocated, but research has also shown that economic growth falters when protectionist moves are made.
The multilateral trading system developed by the World Trade Organisation follows the theory of the positive-sum game. It states that cooperative trade concessions increase the collective trade volume for all trading partners. Highly optimistic, it believes the pie gets bigger for everyone, and in reality, this system has led to healthy growth in the past. Yet, as always, the US has to do something great. The Trump administration plays a zero-sum game, which holds that as one nation gains in trade, the other inevitably loses; i.e., the size of the pie remains constant; it is only how it is divided that matters. In their view, the US has always failed in this pie distribution and has been at a loss, while trading partners have gained instead.
Economic nationalism also carries a political philosophy: the state acquires a central role in the lives of the inhabitants, and the individual is placed second to the state. Here, the society is thought to have interests of its own, apart from the population. This idea, therefore, is abhorrent towards individualism and free enterprise. What it means for the current sentiments of governments around the world, especially the US, is a preference for nationalism and narrowing of imports, further pressing hostilities and distrust amongst nations. Tightening policies aside, we might be entering a new era of industrial racism by killing collaboration and diversity.
Even to put the perspective of economic sanctions forward and their impact in driving affected nations toward forming regional blocs, there seems to be an impending isolation of countries based on their ideologies, practices, and economic contexts, as they protect and put the nation first. Cooperation second: specific regions would be more closely allied than a cross-continent embrace. In technology, especially in AI advancement, countries are looking for ways to develop data centres and semiconductor chips at home rather than abroad, specifically to counter the US’s dominance in these areas. India has invested $210bn in advancing domestic computing capacities. Pakistan also recently inaugurated the Sky47 data centre to lay the foundation for its future technological development. Analysts believe that economic nationalism isn’t something brought in by Trump, nor will it leave with his departure. It is here to stay, and here to spread globally.
It is interesting to ponder whether the consequences of the US-Iran war will reignite deepening economic distress and military revival in the political sphere. Peace or the optimism for healthy discussions seems more at risk than ever before.