The post-1980s neoliberal consensus of small government and free trade is being replaced by a mercantilist approach. Governments, particularly the U.S., now actively intervene to protect domestic industries and secure geopolitical strength, treating trade as a zero-sum game. This represents a fundamental economic shift for investors.

From China's perspective, producing more than it needs and exporting at cutthroat prices is a strategic tool, not an economic problem. This form of industrial warfare is designed to weaken other nations' manufacturing bases, prioritizing geopolitical goals over profit.

The concept of 'weaponized interdependence,' highlighted by China's use of export controls, is driving Asian nations like Japan, India, and South Korea to implement economic security acts. This shifts investment toward domestic supply chains in critical minerals, semiconductors, and defense, creating state-backed opportunities.

Modern global conflict is primarily economic, not kinetic. Nations now engage in strategic warfare through currency debasement, asset seizures, and manipulating capital flows. The objective is to inflict maximum financial damage on adversaries, making economic policy a primary weapon of war.

PGIM's Daleep Singh argues that the risk of mutually assured destruction prevents direct military conflict between nuclear powers. This channels confrontation into the economic sphere, using tools like sanctions and trade policy as primary weapons of statecraft.

In a world of aging, export-dependent economies like China and Korea, the U.S. is the only large, first-world nation that is a net consumer. This makes access to its market an incredibly powerful negotiating tactic, allowing the U.S. to leverage its consumer base as a tool of foreign policy.

Unlike previous administrations that used trade policy for domestic economic goals, Trump's approach is distinguished by his willingness to wield tariffs as a broad geopolitical weapon against allies and adversaries alike, from Canada to India.

Each time the U.S. uses financial sanctions, it demonstrates the risks of relying on the dollar system. This incentivizes adversaries like Russia and China to accelerate the development of parallel financial infrastructure, weakening the dollar's long-term network effect and dominance.

The U.S. government is actively promoting stablecoins and U.S.-based AI to extend its global influence. This strategy shifts from projecting power through military presence to technological and financial dominance, ensuring the dollar and American culture remain central to the global system.