It’s no surprise that international trade is experiencing turbulence. After the global financial crisis began in 2007, a decades-old trend of increased globalization first decelerated and then started to reverse course. The COVID-19 pandemic emerged in 2020, instantly snapping supply chains. Countries and companies focused on so-called “nearshoring” and “friendshoring.” Then Russia invaded Ukraine, and geopolitics began to impact trade even more. Add in a brewing cold war between the United States and China, as well as a wave of nationalism around the globe, and one can start to see why the world seems to have embarked on an era of industrial policy. From the United States to China, India, Europe, and beyond, major economies are turning inward, favoring domestic expansion over free trade and the global flow of goods.
In his State of the Union address in February, U.S. President Joe Biden deployed the phrase “Buy American” to loud applause. His administration has passed landmark legislation such as the Inflation Reduction Act (IRA) and the CHIPS and Science Act, which provide subsidies in clean energy and semiconductors worth more than $400 billion. But the inducements encourage U.S. companies to invest only at home—not elsewhere. Opportunistic firms in Asia and Europe have already begun to relocate investments to the United States. Cue the protests from other parts of the globe: A chorus of nations are accusing Washington of fostering unfair competition.
If the United States is turning protectionist, it is hardly the only
