Across Europe and beyond, governments are recalibrating economic strategy toward continuity, control and strategic exposure, with global efficiency no longer serving as the primary organising principle.
Trade continues to play a central role, and interdependence remains a defining feature of the global economy. Its terms, however, are now defined by conditions tied to security, resilience and political alignment.
For decades, economic policy prioritised scale, cost reduction and just-in-time logistics. Supply chains were designed to minimise disruption, assuming political stability as a given. That assumption has become less reliable.
In Europe, industrial strategy is now framed explicitly around resilience. Energy, food systems, semiconductors, pharmaceuticals and critical infrastructure are increasingly treated as strategic assets, no longer viewed solely as neutral market goods. Policy initiatives aimed at reducing external dependencies—particularly for raw materials and energy inputs—reflect a growing consensus that efficiency without redundancy creates vulnerability.
This logic is evident in the European Union’s approach to critical raw materials, where access to lithium, cobalt and rare earths is increasingly treated as a matter of strategic autonomy. Similar considerations now inform public investment decisions in defence, grid infrastructure and industrial capacity.
In the United States, industrial policy has returned as a core instrument of economic governance. Tariffs, targeted subsidies and investment screening mechanisms are framed through the lens of national security, with trade optimisation no longer serving as the primary reference point. The objective centres on maintaining production capacity and technological capability under conditions of pressure.
Financial institutions increasingly factor this reality into long-term forecasts. Capital allocation is adjusting to a world in which political alignment, regulatory exposure and supply security influence returns as much as cost efficiency. Economic nationalism, in this sense, is less an ideology than a planning framework.
The effects are visible even inside long-standing economic structures. The European Single Market, built on the free movement of goods, capital, services and labour, is under pressure from targeted state support and regulatory divergence. While the framework remains intact, its operation has become more discretionary.
Germany’s export-driven model, long supported by stable global demand and open trade routes, is undergoing sustained reassessment. Policymakers are increasingly focused on reinforcing domestic value chains and reducing exposure to geopolitical disruption, while attempting to preserve competitiveness. Within this context, the long-term position of Germany’s automotive industry—historically central to the country’s economic strength—is facing growing uncertainty as global markets fragment and industrial policy priorities evolve.
These developments do not point to the end of global trade. They indicate a more selective and conditional approach to openness, shaped by strategic considerations rather than market access alone.
For many Europeans, this recalibration also echoes an older tension. The transition to monetary and economic union was once framed as an irreversible step toward shared prosperity, even as everyday perceptions reflected uncertainty and the loss of familiar reference points. Today’s return to national economic strategy does not reject cooperation, but reflects a more sober understanding of how trust, stability and shared responsibility must be continuously sustained.
Supply chains are being redesigned with political risk as a core variable. Export controls on strategic materials, particularly those essential for energy transition technologies, illustrate how state decisions now shape industrial viability. Companies respond by shortening supply lines, diversifying suppliers and accepting higher operating costs in exchange for continuity. Redundancy is now understood as a form of risk insurance.
Political-risk analysts describe this reconfiguration as structural, as supply chains are redesigned to prioritise continuity and operational resilience under disruption.
Economic nationalism does not eliminate international cooperation. Trade agreements continue to progress, including large-scale arrangements such as the EU–Mercosur framework. But these agreements are negotiated with safeguards, adjustment mechanisms and domestic protection measures built in from the outset. Openness now operates within boundaries defined by strategic priorities.
The current trajectory reflects a broader reassessment of how economies function in an environment marked by geopolitical rivalry, resource competition and systemic risk.
For governments, economic policy increasingly operates as an extension of security policy. For businesses, resilience has moved to the centre of strategic decision-making. Supply chains that are slower, more costly and subject to greater regulation are now treated as baseline assumptions within long-term planning.
The central question now lies in how effectively institutions adapt to an economic environment that requires stability to be actively maintained.
