Global growth and American economic nationalism

Sunday 15 February 2026

In a world that spent the better part of fifteen years arguing about “secular stagnation”, it is faintly disorientating to find ourselves back in a period in which global economic growth is, once again, treated as the baseline expectation rather than a fragile exception. Forecasts differ in their precise numbers, but the direction of travel is broadly consistent across the major international institutions: the International Monetary Fund projects global growth around 3.3 per cent in 2026 and 3.2 per cent in 2027, roughly in line with the estimated 2025 outturn. The World Bank, using a different framework and set of assumptions, also describes an unexpectedly resilient world economy, with growth easing in 2026 before firming again in 2027. The OECD, more cautious, expects a moderation in 2026 followed by a slight improvement in 2027. 

That broad resilience matters, because it forms the backdrop against which American economic nationalism must be judged. Economic nationalism is often discussed as though it were a single policy choice, like raising a flag. In practice it is an overlapping set of instincts and instruments: tariffs, export controls, domestic-sourcing rules, “strategic” subsidies, pressure on allied supply chains, the selective politicisation of capital flows. It is also a story of priorities—of a great power deciding that the old bargain of globalisation, in which efficiency and consumer welfare were paramount, is now subordinate to security of supply, industrial capacity, and political stability at home.

The puzzle of the present moment is that these instincts are strengthening even as global prosperity continues—unevenly, but visibly—to rise. If growth is now the norm, why the turn towards borders in economic policy?

The answer is that global growth, as a headline, is compatible with at least three different distributions of benefit—and it is the distribution, not the aggregate, that is driving politics.

First, global growth can be broad-based, lifting wages and living standards across countries and within them. Secondly, it can be geographically dispersed but socially polarised—raising national income while concentrating gains in certain regions, sectors, and asset-holding classes. Thirdly, it can be strategically lopsided—expanding output while increasing dependence on a small number of choke points, suppliers and technologies. The last two patterns—polarisation and dependence—are precisely the ones that, in the American political imagination, are read as “globalisation went wrong”, even if global GDP keeps rising.

The IMF’s January 2026 update captures the odd duality well: resilient growth, but “divergent forces”, with technology investment and private-sector adaptability offsetting trade policy headwinds. That line is more than diplomatic phrasing. It is a description of a world in which firms can still make money, households can still spend, and aggregate output can still expand—while governments simultaneously pull on the brakes of integration in the name of security or domestic politics.

American economic nationalism, in this context, should be assessed less as an attempt to end global growth than as an attempt to renegotiate who captures it, how reliably, and under what conditions.

Consider what the United States is trying to do.

She is not, in the main, attempting autarky. The American economy remains too large, too complex and too financially enmeshed for that to be realistic. Instead she is seeking to reshape the terms of interdependence. The preferred tools are not old-fashioned import quotas so much as targeted tariffs, selective carve-outs, industrial subsidies, and technology controls—measures aimed at shifting marginal investment decisions over a decade rather than collapsing trade overnight.

A recent Financial Times report illustrates the modern style: even when the administration tightens chip-related tariffs, she reportedly considers exemptions for major American technology firms in order to sustain domestic artificial intelligence development while still pushing for onshore semiconductor capacity. This is economic nationalism in its contemporary, pragmatic form—less a barricade than a managed set of gates, some locked, some unlocked, with the keys held in Washington.

The political justification is familiar: rebuild manufacturing, reduce vulnerability to hostile states, strengthen the middle class and secure supply chains for the next crisis. The intellectual justification is also increasingly mainstream: industrial policy is no longer treated as an eccentric departure, but as a response to strategic contestation, climate transition, and the realities of technology diffusion. Even the World Trade Organization’s recent work acknowledges the resurgence of industrial policy as a defining feature of the current era. 

Yet the economic costs are also real—and they appear in places that headline growth numbers can obscure.

Tariffs and localisation rules are, in the short run, a tax on consumption and a subsidy to selected producers. They redirect investment, but they also encourage rent-seeking—firms competing for political favour rather than competing in markets. They can deepen fragmentation, with different technical standards, compliance regimes and supply-chain architectures developing in parallel. They also shift bargaining power: large states can impose their rules extraterritorially, while smaller states must choose alignment, or attempt a perilous neutrality.

From the perspective of global prosperity, the key question is whether American economic nationalism is mostly corrective, or mostly extractive.

A corrective nationalism would aim to fix genuine market failures—underinvestment in resilience, under-provision of strategic goods, concentration risk, and the social dislocation caused by rapid trade shocks—while remaining compatible with a high level of international exchange. An extractive nationalism would aim to capture a larger share of global value added through leverage—using market access, the dollar system, and security relationships to compel other states to absorb American preferences and costs.

The evidence points to a blend—and that blend is unstable.

On the corrective side, it is difficult to deny that the pre-pandemic global economy relied upon a degree of just-in-time fragility that was politically tolerable only because crises were assumed to be rare. They are no longer assumed to be rare. The pandemic, Russia’s war against Ukraine, and the weaponisation of energy, food, and shipping routes have changed the calculus. The World Bank explicitly flags trade tensions and policy uncertainty as constraints even amid resilience, which is another way of saying that the institutional settlement of the 1990s has broken down without yet being replaced. In such a world, some duplication of capacity is rational insurance, even if it is inefficient in peacetime.

Moreover America’s turn to industrial subsidies has had second-order benefits for innovation and deployment in areas such as semiconductors and low-carbon technologies—fields where scale, learning curves and interconnected effects matter. It can be argued that if these policies accelerate the global diffusion of new production methods, some of the gains will eventually spill across borders, even if the initial rents are captured domestically.

On the extractive side the pattern of selective tariffs, exemptions, and bilateral pressure invites the criticism that America is not merely building resilience—she is choosing winners and using the world’s dependence on her market to force compliance. The Atlantic Council, writing about the tariff shocks of 2025 and the possibility of constructive reforms in 2026, implicitly treats elevated US tariff levels as a new baseline that discriminates amongst trading partners while still allowing trade to continue. That is not a return to rules-based openness; it is a managed hierarchy.

The result is a world economy that can keep growing, but does so with more friction, more duplication and more geopolitics embedded in supply chains. That combination tends to alter relative prosperity even if absolute prosperity rises.

For advanced export-oriented economies—Germany, Japan, South Korea, Taiwan—the American shift is a demand that they reconfigure the core of their growth models. They can still prosper, but the terms of access to the American consumer, and to American technology platforms, become more conditional and more political. For emerging economies, the picture is mixed: some benefit from “China-plus-one” investment and supply-chain diversification, while others find themselves squeezed by compliance demands, export controls, or new origin rules. The OECD’s outlook, with its emphasis on tariffs as headwinds for multiple economies, reflects that unevenness. 

For China—whose industrial capacity and export model remain central to the debate—American nationalism functions less as a cyclical policy and more as a strategic constraint. Reuters reporting on China’s central bank focus on boosting domestic demand is one small indicator of the pressure to rebalance away from reliance on uncertain external markets.  That rebalancing, if it succeeds, could support global growth through domestic Chinese consumption. If it fails, it could intensify competitive export strategies, worsening trade tensions while the world economy still grows in aggregate.

For Europe—especially for countries proximate to Russia’s war—the American shift presents an uncomfortable mirror. Europe wants strategic autonomy, yet also relies on American security guarantees and, increasingly, American industrial policy choices that shape technology and capital flows. It is entirely possible for Europe to experience steady growth while losing relative position in the technologies that will define the next decade—precisely because the returns to those technologies accrue where production, intellectual property, and finance are anchored.

That is where the assessment of American economic nationalism becomes clearest.

In a world where global growth is the prevailing norm, the stakes move from “will there be prosperity?” to “who sets the terms of prosperity?”. American economic nationalism is best understood as an attempt to ensure that the United States sets more of those terms. It is a bid to translate military and financial primacy into industrial primacy—particularly in semiconductors, artificial intelligence infrastructure, advanced manufacturing, and energy transition supply chains. 

Whether that bid is justified depends on one’s moral and strategic priorities. From Washington’s perspective, it might be interpreted as prudent statecraft: the international system is contested; supply chains can be utilised as weapons to achieve geopolitical outcomes; rivals can exploit openness; domestic politics will not sustain a return to the pre-2016 consensus. From the perspective of global welfare, it is a trade-off: marginally slower efficiency gains, more political allocation of capital, and higher friction—but potentially fewer catastrophic disruptions, and a re-legitimation of openness amongst Western electorates who otherwise might reject it altogether.

The danger is that the logic becomes self-reinforcing.

If America raises tariffs and subsidises domestic production, others respond in kind. The European Union tightens her own subsidy frameworks; China doubles down on industrial support; middle powers pursue their own localisation strategies. Each step can be rational in isolation, yet collectively it produces fragmentation. Growth continues, but it becomes more expensive, less coordinated, and more vulnerable to political shocks—precisely the kind of environment the IMF warns about when describing policy headwinds amid resilience. 

There is, however, a less cynical reading.

American economic nationalism may be a transitional phase in the construction of a new global bargain—one that accepts strategic competition and supply-chain security as permanent features, but still preserves enough trade and investment openness to keep growth alive. In that sense, today’s “managed gates” may evolve into tomorrow’s updated rules—different from the 1990s, but still rules.

If that is to happen, two conditions matter.

The first is restraint: nationalism that is bounded by transparency, predictable criteria and genuine security rationales, rather than used opportunistically for domestic political theatre.

The second is reciprocity: if America demands that allies align with her controls and standards, she must offer them meaningful participation in the industries she is rebuilding, not merely subordinate roles. Otherwise, she will not be building a resilient bloc—she will be building dependency dressed as partnership.

Global economic growth can indeed be the prevailing norm again. The numbers suggest it is. But prosperity is not only a curve on a chart. It is bargaining power, technological position, social legitimacy, and the sense that tomorrow’s gains will be shared rather than captured. American economic nationalism is, at heart, a wager that she can secure those intangible assets at home without extinguishing growth abroad.

The world’s uneasy task is to ensure that her wager does not become everyone else’s bill.