Think about the last time you bought a high-end smartphone. You probably didn't think about the Office of Foreign Assets Control (OFAC) or the intricacies of the Dutch lithography giant ASML. But you should have. We've entered an era where the most potent weapons aren't necessarily hypersonic missiles or carrier strike groups, though those still matter. Instead, the real "big sticks" are often lines of code, banking clearinghouses, and the chemical composition of photoresist. This is the reality of chokepoints of American power in the age of economic warfare, a landscape where being the world's policeman means controlling the plumbing of the global economy.
It's weird. We used to think of globalization as this great, flat plain where everyone traded freely and boundaries blurred. That was the 90s dream. Today, we realize the global economy isn't a flat plain; it's a series of narrow funnels. If you control the funnel, you control the flow. The United States has spent the last eighty years building, maintaining, or dominating almost every single one of these funnels. Whether it's the dollar, the undersea cables that carry the internet, or the specific patents required to make a 3-nanometer chip, Washington sits at the center of a web that is increasingly being used as a tool of coercion.
The Dollar as the Ultimate Kill Switch
Most people think of the U.S. dollar just as money. It’s way more than that. It’s an operating system. Because the dollar is the world's reserve currency, almost every international transaction eventually touches a U.S. bank. This gives the Treasury Department a "god view" of global trade. When the U.S. decided to cut Russia off from SWIFT—the messaging system banks use to talk to each other—it wasn't just a diplomatic snub. It was an attempt to delete an entire G20 economy from the global ledger.
Honestly, it’s a bit terrifying how much power this is.
When a country gets hit with primary and secondary sanctions, they aren't just blocked from trading with America. They're effectively blocked from trading with anyone who wants to keep their access to the U.S. financial system. Which is basically everyone. If a French bank facilitates a trade for a sanctioned Iranian entity, that French bank can lose its ability to clear dollars. For a major bank, that's a death sentence. It’s why you see European companies pulling out of deals even when their own governments tell them it’s legally fine to stay. They know where the real power lies.
But there's a catch. You can only use a weapon like this so many times before people start looking for an alternative. We’re seeing "de-dollarization" talk everywhere now. Brazil and China are settling trades in Yuan. India is trying to use the Rupee for oil. It’s slow, and the dollar is still king by a long shot, but the chokepoint is starting to show some wear and tear. If the plumbing gets too politicized, people will eventually build new pipes.
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Silicon Sovereignty and the Tech Funnel
Then you have the chips. This is probably the most aggressive application of chokepoints of American power in the age of economic warfare we’ve seen in decades. It isn't just about what America makes; it's about what America allows others to make.
The Foreign Direct Product Rule is a wild piece of legal engineering. It basically says that if a product is made using U.S. software or technology, the U.S. government has a say in where it goes. Even if the product is made in Taiwan or South Korea by a non-U.S. company. Since almost every advanced semiconductor factory in the world uses American Electronic Design Automation (EDA) tools (like those from Cadence or Synopsys) or U.S.-origin equipment (like Applied Materials), the U.S. effectively has a veto over the entire global AI industry.
Take Huawei. They were on track to be the biggest smartphone maker in the world. Then the U.S. cut off their access to high-end chips and Google’s Android ecosystem. Their consumer business cratered. It was a demonstration of "weaponized interdependence." The U.S. didn't have to out-compete them in the market; they just turned off the tap at the source.
The Narrowness of the Funnel
It’s not just the big stuff. Sometimes the chokepoint is incredibly niche.
- ASML: This Dutch company is the only one in the world that makes Extreme Ultraviolet (EUV) lithography machines. You need these to make the fastest chips. The U.S. pressured the Dutch government to block exports of these machines to China.
- Subsea Cables: About 99% of international data travels through fiber-optic cables on the ocean floor. The U.S. has been very active in ensuring that new cable projects avoid Chinese landing points or use Western-made equipment to prevent eavesdropping and maintain "data sovereignty."
- Cloud Infrastructure: AWS, Azure, and Google Cloud are the backbones of the modern internet. If you're a startup in a country that falls out of favor with Washington, your entire digital infrastructure could technically be switched off overnight.
Why "Friend-Shoring" is the New Trade Policy
We're seeing a massive shift from "efficiency" to "resilience." For thirty years, the goal was to make things as cheaply as possible. Now, the goal is to make things where they can’t be held hostage. Treasury Secretary Janet Yellen calls this "friend-shoring." It's the idea that supply chains should only run through countries that share your values—or at least your geopolitical interests.
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This is a direct response to the realization that chokepoints work both ways. China has its own levers. They control a massive percentage of the world's rare earth mineral processing. They dominate the production of lithium-ion batteries and the active pharmaceutical ingredients (APIs) used in everything from antibiotics to blood pressure meds.
If the U.S. uses the dollar as a weapon, China might use its grip on the green energy transition as a shield. It's a game of "mutually assured economic destruction." Everyone is trying to map out their vulnerabilities, realize they're exposed, and then desperately try to build their own domestic versions of these critical industries. It's incredibly expensive and highly inflationary, but in the minds of policymakers, it's the price of security.
The Human Element: When Policy Hits the Street
It’s easy to talk about this in terms of "grand strategy" and "geopolitics," but these chokepoints have real-world consequences for regular people. When sanctions hit a country, it's rarely the elites who suffer first. It’s the small business owners who can’t import spare parts. It’s the patients who can’t get specific cancer drugs because the supply chain is gunked up by compliance fears.
There's also the "chilling effect." Global companies are becoming terrified of getting caught in the crossfire. We’re seeing "over-compliance," where banks just stop doing business with entire regions because the risk of a U.S. fine is too high. It creates a bifurcated world where some people have access to the "global" system and others are forced into a secondary, shadow economy that's less efficient and more dangerous.
Misconceptions about Economic Warfare
A lot of people think economic warfare is just "trade wars" or tariffs. It’s not. Tariffs are a blunt instrument—they’re like a hammer. Chokepoints of American power in the age of economic warfare are more like a scalpel. You aren't just taxing a product; you are identifying the one specific, non-substitutable component that makes the whole system work and denying access to it.
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Another misconception is that the U.S. can do this alone. While the U.S. has the most levers, it increasingly needs the "G7 plus" to make it stick. If the U.S. bans a technology but Japan and Germany keep selling it, the chokepoint fails. This is why we're seeing a flurry of new "coordination bodies" and "technology councils." Diplomacy is no longer just about peace treaties; it's about aligning export controls.
Navigating the New Economic Reality
So, what does this mean for you, whether you’re an investor, a business leader, or just someone trying to understand why the world feels so chaotic?
First, we have to accept that the "Golden Age of Globalization" is over. It’s not that trade is stopping—it’s actually still growing in many areas—but it’s becoming "de-risked." We are moving toward a world of "trusted corridors."
Second, the definition of national security has expanded to include almost everything. Food, energy, data, and chips are now seen through the same lens as tanks and planes. This means government intervention in the private sector is going to be a permanent feature of the economy, not a temporary bug.
Actionable Insights for a Fragmented World
If you're looking at how to position yourself in this environment, consider these steps:
- Map your dependencies. If you run a business or manage a portfolio, you need to know where your "single points of failure" are. Do you rely on a single factory in a geopolitically sensitive area? Is your software stack vulnerable to export shifts?
- Watch the "Neutral" Powers. Keep an eye on countries like India, Vietnam, and the UAE. These "multi-aligned" states are trying to play both sides, becoming the new hubs for trade that bridges the gap between the U.S.-led system and its competitors. They are the new "middlemen" of the global economy.
- Monitor the "Tech-Financial" Nexus. The most important news isn't coming from the State Department; it's coming from the intersection of Silicon Valley and the Treasury. Watch for new regulations on "outbound investment"—the U.S. is starting to limit not just what we sell to rivals, but what we invest in their companies.
- Hedge against balkanization. We are likely heading toward a world with two or more "tech stacks." One based on Western standards and one based on Chinese standards. Companies that can operate across both—or provide the "bridge" between them—will be the winners, though the legal tightrope they have to walk will be incredibly thin.
The reality of chokepoints of American power in the age of economic warfare is that the world is getting smaller and more complicated at the same time. The "pipes" of the global economy are being used as leverage, and while that gives the U.S. an incredible amount of influence, it also creates an immense responsibility to manage those systems without breaking them entirely. We're in the middle of a massive experiment to see if you can weaponize the global economy and still keep it functioning. The jury is still out on that one.