When Donald Trump enters the Oval Office on January 20, he will take control of a global economic governance apparatus to project American influence abroad more powerful than anything the United States has had since the Cold War . But despite Joe Biden's efforts to create a counterpart to China's multifaceted geopolitical force, combining economic, technological, intelligence and military might, the US structure lacks coherence and purpose and Trump himself will prove compromised on several fronts in its development and deployment. .
The rise of China pushing the United States to act could be compared to the threat of the Soviet Union, which prompted Washington to abandon its prewar isolationism and create a national security state. But its modern counterpart, what experts Henry Farrell and Abraham Newman call the State of economic security has been hampered by poor coordination and competing political priorities.
The political unity and speed with which the post-war security state was built remains breathtaking. The US Army in mid-1939 was smaller than Portugal; by the end of World War II it was one of the largest. In 1929, Henry Stimson, US Secretary of State, disbanded US military cryptology agency with the optimistic and endearing assertion that gentlemen don't read each other's mail, a sentiment roundly rejected with the creation of the CIA in 1947 and the National Security Agency in 1952.
Politically, the vestiges of interwar isolationism within the Republican Party were abruptly removed. Former Republican World War II general Dwight Eisenhower, elected president in 1952, enthusiastically pursued an active foreign policy.
As the United States accelerated economic security state building in the 2010s, an idea developed by the State Department under Barack Obama's administration under the rubric of “economic governance,” China was become a more formidable economic rival than the stultifying Soviet Union. He controlled supply chains for highly sensitive inputs like critical minerals and established leaders in several high-tech industries. Even if it had been desirable, it was not practical to impose trade embargoes on China as the United States did on the USSR and Soviet satraps like Cuba.
Instead, the United States used tools, as Farrell and Newman point out, sometimes reusing old Cold War instruments, such as the Defense Production Act of 1950, to impose financial sanctions using the dollar payment system, selective trade restrictions and technology export controls.
Given the size of China and the complexity of the modern global economy and financial system, these projects were always going to require formidable technocratic expertise, with some ministries much more advanced than others. The U.S. Treasury's Office of Foreign Assets Control, for example, has far more experience and authority to impose financial sanctions than the Commerce Department's Bureau of Industry and Security has to control the technology.
The U.S. federal government is a clumsy, many-headed beast. Governments with a more agile economic security capacity, notably Australia, tend to have more centralized power and ministries that work very closely together.
Even to the untrained eye, the limitations of these attempts to create persuasive or coercive tools are obvious, not least because their repeated use can weaken their impact. Financial sanctions have prevented Russian companies from trading in dollars, but they have not stopped Vladimir Putin's war machine in Ukraine. China, Russia and India now exchange a little more in their own currency to avoid restrictions.
The Biden administration's low-barrier, high-barrier strategy on technology controls was a catchy slogan but difficult to implement. U.S. controls on semiconductor know-how may have delayed Chinese chip development, but they also encouraged the latter to develop its own capabilities.
The United States has also been sidetracked from its economic policy by more parochial protectionist concerns. Using specious national security justifications to prevent allies from selling steel and aluminum to the United States or taking over American steel companies does not give the impression of a country putting all its nerves on the line. tough test to carry out an economic security operation in good faith.
However incomplete and imperfect it may be, we are probably at the top of the multifaceted practice of American economic policy. Trump is clearly not the president to consolidate and exercise good judgment in America's economic security powers, unless you count bizarre initiatives like his threat to use trade or military coercion to seize Greenland from Denmark.
Trump has already proposed replacing the precise targeting of financial sanctions with clumsy tariffs. He and those around him, like Elon Musk, are compromised by their predilection to cozy up to China rather than confront it. His administration will be filled with enthusiasts for cryptocurrencies that can be used to circumvent the dollar payment system and weaken its influence.
You can easily imagine Trump angrily ordering a series of financial sanctions that countries are increasingly evading or unleashing volleys of tariffs whose only lasting impact is to further marginalize the United States in the global trading system.
This is not the equivalent of the 1950s, and Donald Trump is certainly not Dwight Eisenhower. Patient and patient technocratic work has gone into building an admittedly imperfect economic security state. It is not very pessimistic to imagine that a large part of this project will be destroyed.
