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Globalization, once celebrated as a cornerstone of economic advancement, now faces a pronounced deceleration, with the World Bank highlighting a downturn in the drivers that previously sustained global growth. This shift aligns with a marked rise in protectionist policies, as nations increasingly implement trade and investment barriers. Notably, the number of trade restrictions surged from fewer than 1,000 in 2019 to nearly 3,000 by 2022—a trend fueled by mounting skepticism over the perceived benefits of globalisation.

Take, for example, the Trump administration’s aggressive stance on imports to the United States – a policy shift that underscores his administration’s broader aversion to global trade liberalisation. Among the most prominent actions taken was the imposition of blanket tariffs —25% on all steel and aluminium imports—intended to shield domestic industries from foreign competition. In retaliation, the European Union announced countermeasures, pledging to introduce new duties on a range of U.S. industrial and agricultural products valued at approximately €26 billion ($28 billion). These measures extended beyond metals to include goods such as textiles, household appliances, and food products. So far, EU member states have approved retaliatory tariffs on €20.9 billion ($23 billion) worth of U.S. exports, although the European Commission has not yet disclosed the full list of targeted items. Instead, it confirmed that the counter-tariffs would be implemented in phases, with different rounds set to take effect on April 15, May 15, and December 1.

Such actions have not only stalled the cross-border movement of goods and capital but also amplified the adoption of restrictive policies, heightening the likelihood of global economic fragmentation into rival blocs and a disjointed international payment framework.

Yet, protectionism is hardly a novel phenomenon; its resurgence traces back to the 2008 financial crisis, when advanced economies began adopting populist measures to prioritize domestic sourcing and safeguard local industries and employment. Recent years, however, have seen a pronounced acceleration of this trend, particularly in Western nations and Europe, with analysts attributing the shift to compounding crises including the pandemic, the Ukraine conflict, supply chain disruptions, and over-reliance on foreign suppliers for critical defense materials. These events underscored the risks of global economic interdependence, exposing vulnerabilities in cross-border trade frameworks.

A Renewed Protectionist Outlook in the EU

The European Union (EU) too has notably shifted away from its long-standing advocacy for a liberalized global trading system, signaling a strategic departure from its traditional emphasis on trade liberalization. This pivot is evident in the bloc’s escalating regulatory framework, which imposes stricter compliance requirements on both EU-based and foreign firms operating within its jurisdiction. Such measures reflect a marked shift toward protectionism, a trend exemplified by policy changes such as relaxed state aid rules that allow member states to subsidize domestic industries—a policy criticized for distorting competition within the EU Single Market and beyond.

Proponents such as the former EU commissioner for Internal Market and Services, Thierry Breton,  contend that these reforms address pressing challenges, such as supply chain fragility and geopolitical tensions, particularly when compared to perceived gaps in other regions’ strategies. For instance, the COVID-19 pandemic underscored the imperative for resilience, prompting institutions like the IMF to advocate for localized trade networks to mitigate dependency on external suppliers. This recalibration highlights the EU’s balancing act: fostering economic security while navigating the risks of fragmenting global trade structures.

Strategic Protectionism—A Double-Edged Sword for EU Supply Chains

What does this mean for EU supply chains that have predominantly depended on overseas supplies, e.g., from Asia? On one hand, strategic protectionism presents an opportunity to rethink long-held sourcing practices. By encouraging regional production, it offers a pathway to reduce over-reliance on distant suppliers and bolster resilience against global shocks. Take, for example, the European Chips Act, which earmarks €43 billion to strengthen the bloc’s semiconductor autonomy. This initiative directly addresses vulnerabilities exposed by pandemic-era shortages and geopolitical uncertainty. Through the creation of localised manufacturing hubs, the EU stands to benefit from shorter lead times, improved quality control, and greater supply chain transparency—particularly in high-stakes sectors like electronics and pharmaceuticals. A 2024 PwC report reinforces this view, suggesting that regionalization and subsequent localisation efforts can yield substantial benefits, with 82% of companies reporting improved resilience and 77% achieving cost reductions.

Another potential upside lies in revitalising underinvested industries and advancing technological sovereignty. Protectionist policies—such as tax incentives under the Net-Zero Industry Act—aim to accelerate green tech production, reduce dependence on imports, and create high-value jobs. As Dr. Hauke Engel, a McKinsey supply chain expert, notes, “Targeted protectionism, when paired with strategic investment, can turn vulnerabilities into competitive advantages.”

However, these potential benefits must be weighed against the economic trade-offs and competitive pressures they may introduce. For example, restrictive trade measures—such as tariffs on imported raw materials or mandates for local sourcing—can compel firms to depend on costlier domestic suppliers, a shift that can lead to increased operational expenses, which may, in turn, erode price competitiveness on the global stage. For instance, Mr. Lakshmi Mittal, Executive Chairman of ArcelorMittal, has pointed out that EU steel producers face significantly higher production costs compared to their Asian counterparts—an outcome largely driven by stringent localisation requirements intended to enhance climate resilience and sustainability within the region. These rising cost pressures raise valid concerns about the long-term competitiveness of European manufacturers in global markets, particularly in industries where price sensitivity is high and international trade policies remain far from uniform or universally applied.

Beyond cost pressures, protectionism can as well provoke retaliatory trade barriers from partner nations, further destabilizing supply networks. China’s recent restrictions on rare earth mineral exports to not only the U.S but everyone else (including the EU) – retaliating against bloc-wide tech subsidies – illustrate how tit-for-tat measures disrupt access to essential materials for green energy and electronics. These challenges compound other drawbacks, including reduced supplier diversity, slower adoption of global best practices, and strained diplomatic relations.

This underscores the delicate balancing act EU regulators face in navigating protectionism alongside global trade integration. While targeted interventions can help safeguard critical supply chains, overly assertive policies may lead to inefficiencies, elevated production costs, and the risk of retaliatory measures from trade partners. A calibrated, phased strategy—focusing first on high-risk sectors such as semiconductors and green technologies—offers a pragmatic path forward, allowing room to reinforce resilience without compromising overall market openness. However, the interconnected nature of modern supply chains makes such selective application difficult to implement cleanly. This raises a key question: should the EU pursue gradual, sector-specific safeguards to avoid economic disruption, or does even well-intentioned protectionism risk further fragmenting the very global systems it aims to protect and stabilise?

In today’s rapidly evolving landscape—marked by protectionism, regionalized supply chains, and shifting global trade dynamics—supply chain professionals must be equipped with advanced, future-ready skills. APICS' globally-recognized certifications such as CSCP , CLTD, and CTSC  empower you to master end-to-end supply chain strategies, navigate localization challenges, and build resilience in an increasingly fragmented world. Prepare yourself to lead the next generation of supply chain transformations. By joining our courses, you'll have the chance to learn from industry leaders, gain in-depth knowledge, and expand your professional network. Additionally, you'll earn globally recognized certifications that showcase your expertise, setting you on the path to a successful career in supply chain management. Enroll today and take the first step towards optimizing your supply chain strategies and realizing your full potential. Contact Jessica Mariotti for info about our courses, open classes and In-house in Italy and Switzerland, early registration fee and enrolment - Email  info@advanceschool.ch -  phone numbers under Contacts

References

EuroFer. (2025). Carbon border adjustment: An opportunity to preserve EU climate leadership. Retrieved from www.eurofer.eu

European Commission. (2024, July 24). Chips Act. Retrieved from digital-strategy.ec.europa.eu

European Commission. (n.d.). The Net-Zero Industry Act: Making the EU the home of clean technologies manufacturing and green jobs. Retrieved from single-market-economy.ec.europa.eu

Grantham-Philips, W. (2025, April 10). A timeline of Trump’s tariff actions so far. Retrieved from www.pbs.org

Jason, M. (2025, April 14). China has stopped exporting rare earths to everyone, not just the U.S., cutting off critical materials for tech, autos, aerospace, and defense Retrieved from fortune.com

PwC. (2024). Localising supply chains and its impact on performance. Retrieved from www.pwc.com