This is one of those ideas that sounds like common sense when you hear or think about it the first time, but falls apart on scrutiny. Ryan Sleevi has done a much better job picking it apart than I can here, but among the numerous problems with it:
* The most important TLDs are transnational, and their trust hierarchies back into corporations (corporations, I will cheerfully and without irony point out, who are subject to the whims of the FVEY IC).
* It's jingoistic, suggesting we should base trust decisions not on technology or even, really, on policy, but rather on nationalism.
* It consigns residents of countries with oppressive governments to total control by their governments, while at the same time making usage constraints based on those TLDs (such as local mandates to use services whose names end in .XX for XX in $bad_countries) much more powerful.
* It further promotes the idea that security should somehow be tied to the DNS, despite the fact that the DNS is itself not transparently managed, and is often managed at odds with the interests of Internet users as a whole.
* By factionalizing Internet trust, it harms interoperability and also makes it harder to introduce further constraints into the certificate system by essentially declaring up front that we're conceding Internet trust policy to individual nations.
* It greatly complicates the security stories of companies that have adopted vanity domain names in random countries, which, whatever you think of those companies (koff! Pinboard), is an unforced error.
Of all the things we can spend time on to improve Internet security, this is not one of the better ones.