The drums of tribalism are beating within the global economy. The kind of economic rhetoric brought back by Donald Trump, with both great fanfare and controversy, is now mainstream. 

The old world order is crumbling before our eyes, and new tribes and alliances are shaping up. Perhaps it’s just human nature. Perhaps it was inevitable this would happen. 

But this collapse speaks volumes about the unique achievements of the past three decades. Not without flaws, globalisation built a platform where business interest was the glue binding the most unlikely partners. 

Today, it’s almost naive to think that the energy consumption of millions of people and businesses in western Europe should hinge on a single pipeline running from Russia to Germany. That pipeline, Nord Stream, is now in pieces, allegedly sabotaged by unknown forces, and energy will be rare currency in the upcoming winter months.  

However, up until a few months ago, Europe seemed blind to this risk. It was even willing to challenge the US’s strong opposition to activate Nord Stream 2 and deepen even further its dependence on Russian gas. 

Those days are gone. The pendulum has swung and tribalism has replaced globalism. 

Once again, the world is divided into the good guys and the bad guys — accolades that change hands as you move across borders — and sitting on the fence is no longer an option for governments and private companies. 

Even the UK had to learn this the hard way. In April, seven members of the US Congress wrote to president Joe Biden urging him to engage in “direct diplomacy” with his UK counterparts to block the sale of Newport Wafer Fab, a minor semiconductor producer based in Wales, to Nexperia, a Dutch firm controlled by a Chinese owner. “If diplomatic outreach is unsuccessful, we urge your administration to immediately reconsider the UK’s status on the CFIUS ‘whitelist’ [which exempts UK investors from FDI screening],” they wrote. 

The UK government, which had initially cleared the transition, launched a full probe on security grounds in May.  

Choosing sides has already translated into the proliferation of new geopolitical platforms with the most disparate purposes. Among others, the US has proposed the Chips 4 alliance with Japan, South Korea and Taiwan to secure the supply of semiconductors and prevent it from falling under Chinese influence. Similarly, the White House has launched the Minerals Security Partnership to bolster critical mineral supply chains among partner countries, while the UK has tried to resurrect the idea of D-10 — a proposed platform for 10 democracies to set the rules on 5G technology. None of these initiatives have lived up to their original ambitions so far. 

But tribalism is a domestic play too. Major economies the world over are doubling down their efforts to bring back manufacturing to their countries. They all share great ambitions of developing local supply chains in strategic industries, meaningful expenditure of public money and the overarching goal of disengaging with China. 

No matter the level of public funding and political weight governments are willing to throw at these plans, they are all playing a tricky catch-up game with China. Its outcome is set to define the contours of the tribal economy of tomorrow.

This article first appeared in the October/November 2022 print edition of fDi Intelligence.