Highlights
- Trump’s economic nationalism echoes late 19th-century protectionist strategies, seeking to reclaim American global economic supremacy.
- China’s near-monopoly on rare earth elements and critical minerals presents a significant challenge to U.S. economic independence.
- The geopolitical landscape is shifting from post-World War II multilateralism towards a more fragmented, nationalism-driven global economic order.
Newly re-elected U.S. President Donald Trump is not hiding the paradigm behind his strategy to reclaim world supremacy on the economic front. That would be economic nationalism of the type that was popular during the latter half of the 19th century. But is such an approach sufficient in 2025, a period marked by intense change, major diversification among national and regional economies, a Chinese stranglehold on the rare earth and critical mineral sphere?
Before delving into the troubles likely ahead for America, a review of the concept and a snippet of history.
The Age of American Nationalism
During the latter half of the 19th century, the United States embraced an economic doctrine known as “economic nationalism”, rooted in protectionism, industrial expansion, and territorial acquisition. This period saw America rise as a global economic power fueled by high tariffs, natural resource exploitation, and aggressive foreign policy. And it is this period that inspired Donald Trump with his “Make America Great Again” or “MAGA” movement economically. Reclaim the Panama Canal, secure Greenland for its Arctic sea lanes and, of course, large deposits of rare earth elements and critical minerals, and use myriad tariffs against any and all countries, forgetting the strategic alliances and traditional post-World War 2 networks that have essentially run the free world. Gone are the sway of free market economists as well, and their theories, in favor of something very different.
A defining feature of this economic nationalist era was the protective tariff system, championed by the Republican Party and industrialists who sought to shield American manufacturers from foreign competition.
The McKinley Tariff of 1890 (which Trump has referred to) and the Dingley Tariff of 1897 exemplified this approach, raising import duties to historic levels. These policies helped domestic industries thrive, particularly in steel, railroads, and manufacturing, ensuring that American goods dominated the home market while fostering the rapid rise of industrial giants like Carnegie Steel and Standard Oil.
The Alaskan Gold Rush (1896–1899) further bolstered the economy by injecting vast amounts of gold into the financial system. The discovery of gold in the Klondike and later in Nome, Alaska, contributed to stabilizing the gold standard and reinforcing confidence in U.S. currency. This influx of wealth also spurred investment in infrastructure, particularly railroads and shipping, linking resource-rich western territories to eastern financial centers.
Meanwhile, the Spanish-American War (1898) marked a pivotal shift in U.S. economic and geopolitical influence. The war’s outcome granted the United States control over vast swathes of territories, from Puerto Rico to Guam and the Philippines, while securing a dominant position in the Caribbean and the Pacific. These acquisitions opened new markets for American goods and secured key naval bases, positioning the U.S. as a rising imperial power with economic interests stretching beyond its borders. We must also mention the trove of resource riches American capitalists could then exploit. It was the beginning of a golden era, recapturing aspects of the “gilded era’ from earlier in the century.
By the early 20th century, the U.S. had firmly established itself as an industrial and military powerhouse. Leveraging protectionist policies, resource expansion, and strategic territorial gains, it fuelled its rapid ascent. This era laid the foundation for the country’s 20th-century dominance in global trade and finance.
Emergence as the American Superpower
After the era of economic nationalism in the late 19th century, the United States emerged from World War I as a financial and industrial powerhouse, but it was not yet the dominant global superpower. The war had devastated European economies, while the U.S. became the world’s leading creditor, supplying arms, food, and industrial goods to the Allies. By the 1920s, America’s economy was booming, driven by mass production, technological advancements, and consumer spending. However, this prosperity was built on speculative investments and an unstable financial system, leading to the Great Depression of 1929, which crippled the economy and shook confidence in capitalism.
The economic collapse of the 1930s forced the U.S. government to intervene through Franklin D. Roosevelt’s New Deal, which expanded federal oversight, established social safety nets, and initiated large-scale public works programs. Although these reforms helped stabilize the economy, it was World War II that fully revived American industry. The war effort transformed the U.S. into the “arsenal of democracy,” with its factories producing weapons, vehicles, and supplies on an unprecedented scale. By the war’s end, the U.S. accounted for nearly half of global industrial output, and its military was the most powerful in the world.
Unlike Europe and Japan, which were left in ruins, the United States emerged from World War II with a booming economy, intact infrastructure, and a vast global influence. The Bretton Woods system established the U.S. dollar as the world’s reserve currency, reinforcing American financial dominance. The Marshall Plan rebuilt war-torn Europe, securing markets for U.S. exports while containing Soviet influence. The Cold War solidified America’s superpower status, as it led global alliances like NATO, dominated technological innovation, and extended its military reach worldwide. By the mid-20th century, the United States was the undisputed economic, military, and cultural leader of the free world.
Collapse of Multilateralism under American Supremacy, Rise of China & Resurgent Economic Nationalism
With the collapse of the Soviet Union in 1991, the United States emerged as the world’s sole superpower, ushering in a period of uncontested global dominance. The 1990s saw the acceleration of globalization, driven by free trade agreements like NAFTA, the expansion of multinational corporations, and the rise of the digital economy. The U.S. promoted liberal democracy and open markets, while its military interventions, such as in the Gulf War, reinforced its global influence. However, this unipolar moment was short-lived.
The War on Terror following the 9/11 attacks in 2001 shifted U.S. focus toward prolonged military conflicts in the Middle East, particularly in Afghanistan and Iraq. These wars drained resources and attention while China emerged as an economic powerhouse, leveraging globalization to build its industrial and technological dominance. It was during this time, as Rare Earth Exchanges delineated, that China’s three-phased strategy to world economic leadership emerged, built on near-monopolistic control of rare earth elements and critical minerals, among other factors such as mass outsourced production for Western corporations.
The 2008 financial crisis further weakened confidence in the U.S.-led global order, exposing the vulnerabilities of deregulated markets and excessive financial speculation.
In the 2010s, rising nationalist and populist movements in the U.S. and Europe challenged the post-Cold War economic consensus. The Arab Spring of late 2010 disrupted the Middle East and Northern Africa.
Discontent with globalization led to Brexit, the election of populist leaders, and increasing trade protectionism, culminating in U.S.-China trade tensions and a shift away from multilateralism. The COVID-19 pandemic accelerated economic fragmentation, highlighting supply chain vulnerabilities and reinforcing regionalization in trade and production. It was during COVID-19 that acute awareness of supply chain domination concerning critical minerals and rare earth elements became palpable for more of the population.
Today, the world is transitioning away from the post-World War II globalization era into a period defined by a seeming resurgent of economic nationalism, technological competition, and geopolitical realignments. The U.S. is adapting to a more multipolar world, balancing domestic economic priorities with global leadership while emerging powers and shifting alliances redefine the future of international trade and security.
The Perils of Economic Nationalism: How Trump’s America-First Approach Could Strengthen China’s Rare Earth Dominance
The resurgence of economic nationalism under Donald Trump’s “America First” policies presents a critical challenge to the United States’ ability to counter China’s near-total dominance in rare earth elements (REEs) and critical minerals. While Trump’s aggressive trade stance aims to insulate American industries from global dependencies, it risks isolating the U.S. from the very alliances necessary to combat China’s control over these strategic materials.
This could paradoxically strengthen Beijing’s grip on the world’s critical supply chains while weakening America’s long-term economic and geopolitical positioning.
China’s Rare Earth and Critical Minerals Monopoly
China has evolved an intricate, state-backed rare earth and critical minerals complex that controls nearly all aspects of the supply chain, from mining and processing to value-added manufacturing of components like magnets and semiconductors.
The absence of a true free market for rare earths means that China’s Communist Party effectively dictates global access to these essential materials, providing the country with leverage over industries ranging from renewable energy and high-tech electronics to advanced military systems.
The U.S., on the other hand, remains at a disadvantage. Decades of offshoring and regulatory hurdles have left America with insufficient mining, refining, and processing capabilities. Despite recent efforts to boost domestic supply chains, the sheer scale of investment and expertise required to match China’s dominance remains daunting as Rare Earth Exchanges has articulated in numerous articles. The logical counterstrategy would be a robust multilateral effort with traditional allies like Canada, Australia, and the European Union—an approach that aligns with the vision of organizations such as Rare Earth Exchanges, which advocate for a transparent and diversified global market.
The Contradiction of Trump’s Economic Nationalism
Trump’s economic nationalism, however, undercuts this potential strategy, harkening back to the late 19th century.
His past and likely future trade policies—including tariffs and disputes with Canada and Mexico—risk alienating the very nations the U.S. needs to build a viable rare earth supply chain. For example, Canada is one of the few Western nations with substantial rare earth deposits, while Mexico’s lithium reserves could be crucial for battery production. Mexico’s surging productive capacity in it’s economy could become mission-critical for a unified alliance to develop a true rare earth element and critical mineral market.
The U.S. risks pushing them toward alternative partnerships by antagonizing these neighbors rather than fostering cooperative supply chains, possibly even with China.
Furthermore, Trump’s tariff-centric approach is ill-suited to breaking China’s monopoly. Unlike traditional industries where tariffs can encourage domestic production, rare earth refining and manufacturing require decades of investment and technological advancement. Simply imposing trade barriers without a comprehensive industrial strategy will do little to build the sophisticated infrastructure necessary to rival China’s state-backed rare earth empire.
Counterargument: Could Trump’s Hydrocarbon Strategy Undermine China?
On the other hand, Trump’s push to revive the American oil and gas sector—through policies like “drill, baby, drill”—could upend global green energy strategies, indirectly challenging China’s economic dominance.
China’s rare earth strategy is closely tied to its control of green energy supply chains, including solar panels, wind turbines, and electric vehicles. If the U.S. successfully shifts the global energy balance back toward hydrocarbons, it could possibly disrupt China’s plans to dominate the energy transition market.
Moreover, by reasserting American control over fossil fuel production, Trump could weaken China’s ambitions for a digital yuan-backed global trade system. As Rare Earth Exchanges has explained, this ambition is built on rare earth and critical mineral hegemony and the monetization of value-added production. A world more reliant on U.S. oil and gas could bolster the dollar’s supremacy, undermining China’s attempts to create an alternative economic order based on its own currency and supply chain control.
The Cost of Getting This Wrong
While Trump’s energy strategy may offer some leverage against China, many economists say the risks of an isolationist trade policy far outweigh the potential benefits. Without deep strategic alliances, the U.S. will likely remain woefully unprepared to compete with China’s juggernaut of rare earths and critical minerals.
A failure to engage in deep, integrated multilateral cooperation based on industrial policy specifically established to take on China’s quasi-monopoly could leave America permanently dependent on China for the materials essential to its military, technology, and green energy sectors. If the U.S. alienates its allies while failing to build the infrastructure necessary for rare earth independence, it could cement China’s dominance for generations.
China faces many problems, including highly damaged ecosystems and a far more ailing economy than the world can understand due to the lack of transparent market structures and ever-intensifying social, cultural, economic, and political tensions. Some of these were on display during the COVID-19 pandemic. The growing unemployment among young people, pockets of truly oppressive state controls, and a growing social, economic, and political malaise among the population represent opportunities for the West. China’s demography does not favor another 50 years of ascendancy at all, either.
But they also have amassed enormous capital, continue to develop a large, mostly defensive military presence, and now trade about twice as much with Asia alone than the U.S. and Europe combined. They are a force that must be fully understood and recognized. Rare Earth Exchanges has suggested there may even be options for Trump to do creative deal-making directly with the Chinese in some sort of great compromise. If there were an individual to pull something like this off, it would be a Trump-like figure. But the odds of this are exceedingly low.
The question America faces is not whether to embrace energy independence or counter China—it must do both, somehow, in some way. However, Rare Earth Exchanges suggests a misguided economic nationalism that fractures alliances and will likely strengthen Beijing’s position, ceteris paribus, turning what should be a strategic advantage for the U.S. into a potential catastrophic miscalculation. A rational, open, and inclusive U.S.-minded policy remains instrumental for the survival of the world as we know it today in the West.
Daniel
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