America's Economic Arms Race: Losing Ground in Global Warfare

The Dawn of Economic Warfare

• ⚡ The US has initiated an economic arms race, which other countries, particularly China, have recognized and are now actively participating in.
• 🌍 This shift is driven by the lowered threshold for engaging in economic warfare, making it more accessible.

Global Economic Weaponry

• 🇨🇳 China has enacted new laws allowing sanctions on foreign companies, recently targeting major US firms like Skideo (drone manufacturer) and PVH (apparel).
• 🇪🇺 The EU has developed an anti-coercion instrument as a defense mechanism, initially against China, but now potentially against US tariffs.

Drivers of Increased Economic Warfare

• 🌐 Hyper-globalization in the '90s created "chokepoints" that enable the use of economic tools like the dollar.
• ⚔️ The return of great power competition with nations like China and Russia pushes countries to find alternatives to military conflict.
• 🇺🇸 A domestic backlash against prolonged military interventions (Iraq, Afghanistan) has reduced public support for military force, leading both US parties to coalesce around economic warfare.
• 📈 Economic sanctions have seen exponential growth across US administrations, with each president imposing them at twice the rate of their predecessor.

The Iran Sanctions: A Case Study

• 💡 The Iran sanctions initiated under the Bush administration and culminating in the Obama-era Iran nuclear deal are considered the origin story of the modern age of economic warfare.
• 🏦 A novel strategy, pioneered by Stuart Levy, involved persuading international banks to cut ties with Iran, threatening those who refused with exclusion from the US dollar system.
• 🤝 This approach successfully isolated Iran financially, providing the leverage needed for a diplomatic resolution and fostering a consensus in Washington on the utility of economic power.

TPP and Geopolitical Strategy

• 🌏 The Trans-Pacific Partnership (TPP) was partly shaped by the lessons learned from isolating Iran, particularly the difficulty in influencing major economies like China and India.
• 🤝 The TPP aimed to build a counter-China coalition by offering benefits to Asian countries, recognizing that a "stick" approach alone was insufficient against larger economies.
• ⚖️ While the TPP's substance is debatable, its geopolitical intent was to create an alternative framework for alliances, acknowledging the need for both incentives and pressure in international relations.