Protectionism of Modern States: New Logic in the Era of Geo-economic Competition

Modern protectionism, unlike its historical counterpart in the 19th – early 20th centuries, is not just a set of tariffs to protect "infant" industries. It is a complex, multi-level, and strategic policy deeply integrated into national models of innovative development, security, and competition for technological leadership. Its main motivation has shifted from the pure economic benefits of individual industries to geopolitical and geo-economic competition, especially in the fields of high technologies and supply chain resilience (resilience).

Evolution of Goals: From Industry to Security and Sovereignty

Classical protectionism (such as in the United States or Germany at the end of the 19th century) was aimed at creating a national industry. Modern protectionism pursues broader goals:

Ensuring technological sovereignty and leadership. Countries strive to protect and develop critical technologies (artificial intelligence, quantum computing, semiconductors, biotechnology) considered as the foundation of economic and military power in the 21st century. Protectionism here is a tool of technonationalism. Example: The U.S. CHIPS and Science Act of 2022, with a budget of $280 billion, aims to attract semiconductor production to the United States and directly limits recipients of subsidies for investments in advanced technologies in "concerning countries" such as China.

Creating resilient supply chains. The COVID-19 pandemic and logistics crisis exposed the vulnerability of global supply chains. Modern protectionism often takes the form of "friend-shoring" or reshoring – relocating production to politically close countries or back home to reduce risks. This is not a rejection of globalization, but its segmentation by political criteria.

Protecting national security. The interpretation of security has expanded to economic and technological security. Foreign investments, especially in strategic assets (energy, data infrastructure, media), are subject to strict scrutiny. Mechanisms like the U.S. Committee on Foreign Investment (CFIUS) have been granted enhanced powers to block deals on national security grounds.

Reaction to "unfair" competition and protection of social standards. Many modern protectionist measures are formally justified by the fight against dumping, forced technology transfer, or environmental/societal dumping (when goods are produced with low environmental or labor standards). The European Union's Carbon Border Adjustment Mechanism (CBAM), which will impose duties on carbon-intensive imports from 2026, is a new "green" form of protectionism that protects domestic producers incurring costs for decarbonization.

Instrumentarium: From Tariffs to "Hidden" Barriers

The arsenal of the modern protectionist is much broader than classical customs duties:

Subsidies and state financing ("budget protectionism"). This is a key tool. Direct subsidies, tax breaks, preferential loans from state banks for priority industries. Examples: massive subsidies from the EU and the U.S. for battery and electric vehicle producers (in response to years of support for these industries in China), China's "Made in China 2025" plan.

Technical barriers to trade (TBT) and sanitary/phytosanitary measures (SPS). Strict quality standards, environmental norms, certification requirements may de facto close the market for foreign goods, formally complying with WTO rules. For example, disputes over standards for genetically modified products or meat processing.

Restrictions on the export and import of data. In the digital age, protectionism affects data flows. Data sovereignty legislation (as in the EU, where Europeans' data must be stored within the Union) or restrictions on technology transfer (as in U.S. export controls on advanced chips and production equipment for them in China) are new forms of digital protectionism.

Procurement for state needs (Buy National policy). Rules requiring state bodies to purchase goods with a high local content. The U.S. has strengthened such requirements within infrastructure laws.

Cases and Consequences

The U.S.-China trade war (2018-present). The most vivid example of strategic protectionism. The U.S. tariffs on hundreds of billions of dollars of Chinese imports under the pretext of combating forced technology transfer and "unfair" trade practices aimed not just to improve the trade balance but to slow down China's technological growth and reshape global supply chains. China's retaliatory measures were symmetrical.

The European "green" protectionism. CBAM is a historic innovation. It aims to protect European industry (metallurgy, cement, fertilizers) from competition with more "dirty" producers in countries with lenient climate regulation. This creates a new global standard and may lead to market fragmentation into "green" and others.

Japan and South Korea: protectionism in agriculture. Despite their developed economies, these countries have for decades maintained a high level of protection (through tariffs, quotas, standards) for their agriculture, considering it a matter of food security and socio-cultural identity.

Criticism and Systemic Risks

Modern protectionism carries serious threats:

Inflation rise and reduced efficiency: Shielding markets reduces competition, which can lead to higher prices for consumers and less innovative companies.

Fractionalization of the global economy and "trade blocs": The world risks dividing into competing technological and trade spheres of influence (American, Chinese, possibly European), which reduces overall growth rates.

Escalation of conflicts and trade anarchy: Retaliatory measures lead to a spiral of restrictions, undermining the system of multilateral WTO rules, which are already in crisis.

"Poor" protectionism: Developing countries, which cannot afford large-scale subsidies, are at a disadvantage, losing access to technologies and markets.

Conclusion: Protectionism as a New Norm

Modern protectionism is not a temporary deviation but a structural element of the new geo-economic reality. It reflects the transition from the globalization paradigm based on comparative advantages and mutual benefits to the paradigm of great power competition, where the economy has become a battlefield for security and influence.

Its future will depend on the balance between:

Justified goals for ensuring sustainability and technological independence.

Risks of the disintegration of the global trade system, rising prices, and slowing innovation.

Thus, 21st-century protectionism is a complex, multifaceted phenomenon where economic policy is inseparable from foreign and defense policy. Its effectiveness will be assessed not so much in terms of economic growth as in terms of achieving strategic autonomy and maintaining competitive advantage in key future technologies.

Permanent link to this publication: