The world we inhabit today bears little resemblance to the one imagined by the architects of the late 20th-century global economy. The dismantling of trade barriers was once celebrated as a gateway to shared prosperity. Now new walls are rising—tariffs, subsidies and export bans—signaling not a temporary disturbance but a tectonic shift in economic governance that is reshaping nations’ strategic orientations.
What began as sharp, provocative tweets during Donald Trump’s first term is proving not merely a historical anomaly but the ignition point of a deeper transformation. Yet to single out Trump alone would be incomplete. Beneath “America First” lay a profound unease over China’s rise and its perceived manipulation of the international economic system: leveraging openness to build wealth and industrial strength while shielding domestic markets through bureaucratic hurdles and opaque protectionism.
Economic nationalism has gone global, crossing ideologies and regions. In Japan, voices such as Sanae Takaichi press for economic self-reliance in response to supply-chain vulnerabilities. In Brussels, “strategic autonomy” seeks to reduce dependence on China while hedging against political uncertainty in Washington. Indonesia has pushed downstream processing of nickel and other resources as an assertion of sovereignty. Efficiency, once the supreme principle of globalization, is increasingly subordinated to security and sovereignty.
Understanding economic nationalism requires moving beyond its narrow identification with conventional protectionism. Marvin Suesse’s The Nationalist Dilemma frames it as an attempt to align economic boundaries with national identity and sovereignty. Suesse treats economic nationalism as a rational response to perceived international inequities: when nations feel humiliated by lagging economies or threatened by foreign capital, protectionism can seem an intuitively defensible shield. Yet that shield conceals a paradox: the pull toward isolation to protect domestic industry conflicts with the equally strong need for foreign capital, technology and cooperation essential for rapid development. Without external inputs, industrial catch-up becomes nearly impossible—a dilemma many developing countries, including Indonesia, confront.
A more technocratic but skeptical view comes from Jeremie Cohen-Setton, Madi Sarsenbayev and Monica de Bolle in The New Economic Nationalism. They argue the world is attempting to resurrect the state as the central economic actor—once taboo under liberal orthodoxy—and warn this is a high-risk experiment. Deep state intervention, wrapped in nationalist rhetoric, risks inefficiency, swelling public debt and corruption disguised as industrial policy. Economic nationalism can be medicine at excessive doses that proves toxic.
Jamie Merchant’s Endgame offers a more apocalyptic interpretation. Writing from a Marxist-inflected perspective, Merchant sees economic nationalism not merely as policy but as symptom: global capitalism entering systemic decay. He argues globalization may be collapsing from within as automation and the erosion of surplus value reduce the profit potential of free trade. Economic nationalism, then, becomes a scramble by states to seize shrinking remnants of prosperity as the global system stagnates.
Kenneth A. Reinert, in The Lure of Economic Nationalism, warns of the psychological dangers: economic nationalism seduces societies into zero-sum thinking—the belief that one country’s gain is inherently another’s loss. If China builds massive battery factories, the U.S. may perceive an existential threat to its auto industry; if Indonesia bans raw mineral exports, advanced economies see their market access under attack. The result has been a cascade of tariffs, technology blockades and subsidies—illustrated by the U.S. Inflation Reduction Act—and the weakening of multilateral institutions like the World Trade Organization, leaving the global economy increasingly adrift without mutually accepted rules.
On the ground, economic nationalism is already reshaping behavior. Japanese firms are relocating production out of China at higher cost in the name of “economic security.” The European Union, long a free-trade champion, has adopted anti-coercion instruments to defend market sovereignty. These moves reinforce concerns that the world is fragmenting into rival economic blocs marked by mutual suspicion. Moral justifications complicate matters: developing countries defend protectionism as necessary to escape poverty, while advanced economies claim it preserves middle-class living standards. That collision of narratives fuels populist and far-right movements promising the illusion of absolute self-sufficiency.
Searching for a middle ground requires clear-eyed realism. Economic nationalism has a foundational role in national survival; as Suesse notes, it can empower marginalized nations to demand fairer participation in the international division of labor. Indonesia’s downstream industrialization, nationalist in tone, may be necessary to escape dependence on low-value raw exports. But the dangers are real: forcing domestic production at higher costs risks systemic global inflation and burdens ordinary citizens. Extending nationalism into research and development—techno-nationalism—can suppress innovation by curtailing the free exchange of ideas and fragmenting standards, slowing growth and undermining collective responses to global challenges like climate change and pandemics.
Taken together, the perspectives of Suesse, Cohen-Setton and colleagues, Reinert and Merchant form a sobering synthesis: economic nationalism can be a tool for redressing injustices but also a force that fosters inefficiency, corruption, zero-sum psychology and systemic stagnation. The world stands at a decisive crossroads, one that will shape the economic and political horizons of generations to come.
Ronny P Sasmita is senior analyst at the Indonesia Strategic and Economics Action Institution
