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The new age of economic warfare – and why America is playing with fire
Nations have long weaponised trade and finance to get what they want. What’s new is the scale, the speed and the risk of blowback.
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Few people are thinking harder about these questions than Moghadam Family Professor of Finance Matteo Maggiori of Stanford University.
PHOTO: NAZRI KAMURI
Over the past decade, economic coercion has become the foreign policy tool of choice for the world’s great powers. The US has weaponised the dollar and the SWIFT financial messaging system to bend Iran to its will and cripple Russia’s war machine. It has imposed sweeping semiconductor export controls on China to slow its rise as a technological power. Since 2025, it has slapped tariffs on much of the world in pursuit of favourable trade deals. China, in turn, spent three years throttling Australia’s commodity exports after Canberra called for an independent investigation into the origins of Covid-19. For years before its invasion of Ukraine, Russia held Europe hostage with its control of natural gas supplies, periodically cutting – or threatening to cut – the flow.
Such behaviour has revived a field of study that mainstream economics had allowed to atrophy: geoeconomics, the discipline that examines how hegemonic countries leverage financial and trade relationships to achieve geopolitical ends.
