Growing trade restrictions may reverse economic integration and undermine the cooperation needed to protect against new shocks and address emerging challenges. As countries prioritize their own economic interests over global collaboration, the interconnected nature of the global economy is at risk. Reduced costs, availability, and collaboration between nations can hinder progress and innovation.
China and the U.S. both gained from their economic integration. As they pull apart, each is finding it will be hard to fully replace the benefits of cooperation. The shift towards economic nationalism can lead to increased tensions between nations, impacting not only trade but also diplomatic relations and overall stability.
The economic and military rise of China presents Western democracies with a challenge unlike any they have faced since the inception of the modern global economy. As economic nationalism spreads, the power dynamics between nations are shifting, creating new uncertainties and potential conflicts.
A world ordered for decades by globalization and geoeconomics has quickly become a world grounded in geopolitical risk. Accumulating shocks such as the COVID-19 pandemic have highlighted the vulnerabilities of a fragmented global economy, emphasizing the need for cooperation and unity in addressing global challenges.
Protectionism could make the world less resilient, more unequal, and more conflict-prone. By prioritizing national interests over global cooperation, countries risk isolating themselves and missing out on the benefits of a connected global market.
Few would dispute that U.S. economic policy has enormous consequences for America's national security and role in the world. The decisions made by the U.S. government regarding economic nationalism can have far-reaching implications on global stability and the country's standing on the international stage.
The World Economic Forum's Global Risks Report 2023 explores some of the most severe risks we may face over the next decade that include economic nationalism, trade conflicts, and geopolitical tensions. These factors are interconnected and have the potential to disrupt the global economy if not addressed effectively.
Both the American left and right often use “national security” to justify sweeping proposals for new U.S. protectionism and industrial policies. The debate over economic nationalism is not limited to one political ideology, as both sides see it as a crucial aspect of safeguarding the country's interests.
A plurality of experts think sweeping societal change will make life worse for most people as greater inequality, rising authoritarianism, and economic instability become more prevalent. The consequences of economic nationalism extend beyond trade and can have profound effects on social, political, and economic systems globally.
