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In recent years, global economic dynamics have undergone significant transformations, prompting many nations to reassess their trade strategies.
The concept of a free market, which has been a cornerstone of the global economy for decades, is giving way to policies increasingly geared toward protecting national industries.
Governments and institutions are reconsidering the importance of economic self-sufficiency and the safeguarding of strategic industries.
This approach, characterized by state interventions, tariffs, and incentives for domestic production, echoes mercantilist concepts and is profoundly impacting international trade, investments, and global economic growth.
Numerous economies are adopting measures that favor domestic production at the expense of imports.
The return of modern mercantilism is evident through various instruments used by governments to defend their economies.
Among the most common measures are:
- Tariffs and trade barriers: Countries such as the United States, China, and the European Union have introduced new tariffs on strategic products, aiming to reduce dependence on foreign suppliers and promote local production.
- Industrial subsidies: Governments are directly investing in critical sectors such as technology, energy, and manufacturing, providing financial incentives to domestic companies to compete with global entities.
- Regulations on foreign investments: More nations are imposing restrictions on foreign investments in strategic industries, limiting international companies’ access to crucial infrastructure.
Trade tensions between the United States and China have further fueled this trend, with both countries imposing tariffs on strategic goods to reduce economic reliance on foreign markets.
The European Union has adopted similar strategies, promoting investments in key sectors and limiting market access for non-European actors.
This shift toward economic protectionism is reshaping several industries:
- Technology and semiconductors – The technological rivalry between the United States and China has led to export restrictions on advanced semiconductors and essential electronic components for artificial intelligence development and digital infrastructure. Building domestic supply chains and technological alliances is becoming a priority for many advanced economies.
- Energy and raw materials – The European Union and the United States are investing in policies to reduce dependence on external energy sources. The transition to renewable energies and the establishment of domestic supply chains for critical raw materials (such as lithium for batteries) are strategies implemented to avoid geopolitical vulnerabilities.
- Automotive industry – Many governments are incentivizing local production of electric vehicles and batteries, limiting imports and encouraging domestic industrial partnerships. This transformation is pushing companies to relocate production and reduce reliance on foreign suppliers.
The rise of neo-mercantilism has direct implications for international relations, reshaping the global economic landscape. Among the most significant consequences are:
- Increasing trade tensions: Economic conflicts between major powers can destabilize global trade, reducing opportunities for emerging economies and slowing worldwide growth.
- Supply chain reallocation: Companies are reevaluating their production strategies, investing in countries with more favorable trade policies and fewer restrictions.
- Impacts on financial stability: Uncertainty related to protectionist policies is affecting financial markets, making long-term economic forecasts more challenging.
Balancing protectionism and market openness will be crucial in the coming years.
Governments must carefully assess the level of economic intervention needed to protect strategic industries without undermining long-term competitiveness.
The key will be to find solutions that encourage domestic growth without penalizing international cooperation.
The need to ensure economic and technological security must be weighed against the importance of global competitiveness and cooperation.
The future of trade will depend on striking a balance between national protection and market openness, avoiding distortions that could hamper global grow
SOURCE :
- The Interpreter
- Democracy of Hope
- Project Syndicate
- Center for Strategic & International Studies
- Phenomenal World
CLARISSA VAN VUUREN
Honorary President
PROYTEC PANAMA CORP
