The term ‘diplomacy’ originates from the ancient Greek word diplōma, meaning “an object folded in two,” referring to a document granting travel or special privileges to diplomats. Statecraft is defined as the art of governing state affairs, encompassing diplomacy, economic statecraft, military strategy, and intelligence. Economic statecraft is defined as “the use of economic means to pursue foreign policy goals,” including foreign aid, trade, sanctions, tariffs, and investment to achieve foreign policy goals. While diplomacy relies on negotiation and alliances to further foreign policy, economic statecraft, on the other hand, relies on economic power to achieve foreign policy objectives.

In early human history, relations between groups were often conflictual, with armed confrontation serving as the primary means for achieving strategic advantage. Yet, even in antiquity, diplomacy emerged as a vital tool for negotiation and conflict resolution. The rivalry between the United States and China, unlike ancient rivalries, did not evolve solely due to military power; rather, it is a hybrid of trade, investment, alliances, and military strength.

China has rooted its diplomacy in trade and economics, stretching its relationships from Asia to Africa and reviving the old Silk Road that was once a symbol of China’s economic dominance. By using economic diplomacy as its foreign policy tool, China can open new markets and build alliances. Elsewhere in the Western Hemisphere, China is becoming the most important trade partner, with the likes of Argentina, Brazil, and Colombia now shifting towards China despite being traditional allies of the United States.

The United States’ current diplomacy is evolving in the use of economic statecraft as well, through sanctions, tariffs, and foreign investment based on coercion and compliance. If that can be successful in achieving the U.S. foreign policy objective and the interest of the U.S. national security, it is apparent that the strategy is limited, as it does not have global reach. While states may comply with the U.S. policy based on fear of retaliation, success from this method can be limited; as in international relations, states can balance or bandwagon. By analyzing the global politics of small states in the south, the U.S. economic statecraft and boat diplomacy may push them towards balancing towards China.

Robert J. Art and Robert Jervis, in International Politics: Enduring Concepts and Contemporary Issues, argue that “force can be used to take or to bargain. If you can take what you want, you do not need your adversary’s cooperation and do not have to bargain with him. A country may use force to seize disputed territory just as a robber may kill you to get your wallet. Most of the things people and nations want, however, cannot be taken in this way. A nation may want others to stop menacing it; it may even want others to adopt its values. Brute force alone cannot achieve these goals.”

Coercion has been a tool of U.S. economic statecraft in foreign policy for a long time. However, history shows that it has clear limitations, especially in great power rivalry. In the U.S.-Japan rivalry leading to World War II, Japan achieved early military successes, but its overextension and limited industrial base prevented long-term strategic victory. Rather than deterring Japan, U.S. sanctions intensified its aggression, illustrating again that economic pressure can provoke escalation rather than prevent it. Coercive tools such as economic sanctions and tariffs, while a game-changer, cannot alone secure a strategic victory.

For deterrent purposes, economic sanctions historically have not prevented rogue states from changing their behavior. It did not prevent North Korea from developing long-range ballistic missiles, just as it was not successful in changing Iran’s human rights behavior and nuclear ambitions. Rather than punitive deterrence, what ultimately works in Iran is deterrence by denial, as initial punitive measures did not suffice highlighting the limitations of economic statecraft in power competition. Punitive deterrence will not prevent a new power from rising, as described by Alison in Thucydides’ Trap, nor will it prevent weaker states from balancing against strong ones. It did not prevent the rise of China, and it will not prevent the rise of other future powers. What has and will make deterrence effective is the innovation of the U.S. nuclear triad, extended deterrence, and international cooperation through diplomacy.

Contemporary politics reflects the same pattern. Russia’s military power has not secured a decisive victory in Ukraine, and economic sanctions, either targeted or sectoral, have not changed Russia’s posture. As noted by the Council on Foreign Relations, “The United States began its 2022 barrage of sanctions by freezing $5 billion of the Russian central bank’s U.S. assets, an unprecedented move to prevent Moscow from using its foreign reserves to prop up the Russian ruble.” While sanctions in other sectors, such defense and energy, have been seriously targeted, the war is still ongoing. In the same vein, the U.S.–China competition and tariffs imposed on Beijing have failed to change China’s behavior as described by Global Trade Magazine, “China’s annual trade surplus passed $1 trillion, a record high, with a GDP growth remained steady at around 5%.”

It is paramount that the United States develop a hybrid strategy, combining diplomacy and other tools of statecraft to keep its leadership on the global stage, as opposed to relying on power.

While coercion and deterrence are important in great power rivalries, the current global landscape does not favor such a posture. There is a need to consider economic diplomacy as the main tool of U.S. foreign policy and economic statecraft as a second, as a future war will not be determined by military strength but by the mixture of both economic and military might.

Hafiz Ibrahim is a Ph.D. student at Virginia Tech’s School of Public and International Affairs, specializing in political economy, global security, and African-U.S. affairs. His professional experience includes serving as a Defense Trade Analyst government contractor at the U.S. Department of State, as well as working previously at Deloitte Consulting as a Sanctions Analyst. Views expressed in this article are the author’s own. 

Diplomacy in Great Power Competition and the Limits of Economic Statecraft was originally published on Global Security Review.

As great powers become entangled in trade disputes, the spillover effects threaten to undermine the cooperative spirit essential for effective arms control. These economic conflicts erode bilateral relationships, making it even more challenging to negotiate future agreements on critical and emerging domains such as artificial intelligence, cyber warfare, and the militarization of outer space.

Tariffs can disrupt trade, increase prices, stifle innovation, and agitate the supply chain. Moreover, it can weaken American global leadership as long-term allies face an American president unwilling to accept high tariffs on American exports while guaranteeing low tariffs on imports. American efforts to counter China are disrupted by tariff disputes as well, as allies and foes coordinate their strategies for countering President Trump’s effort to reduce tariffs on American exports. The president’s actions erode the confidence of allies in extended nuclear deterrence because allies begin to question whether the United States will continue to subsidize security, if they are demanding an end to protective tariffs.

The tariff dispute between China and the US, two large trading partners, severely affects arms control and strategic stability. It exacerbates crisis, heightens mistrust, undermines confidence-building measures, and curtails the possibility of a constructive arms control framework. It is, however, not unexpected. The United States long tolerated protective tariffs and poor intellectual property protections by the Chinese. Thus, rebalancing should not come as any surprise, even if it is disconcerting.

American technological superiority, innovation, cutting-edge military and civilian technology, and significant soft-power influence are the key components of its hegemonic status. Central to this dominance is access to rare earth minerals, which are critical for producing advanced weaponry, including missiles, drones, artificial intelligence (AI)–driven systems, and cutting-edge civilian technologies. However, the US faces a growing vulnerability in this domain, as China currently controls approximately 70 percent of the global supply of rare earth elements. This strategic dependency seriously challenges American innovation and military effectiveness.

However, the American military is already in decline according to a report from the US Army Science Board, which reveals the limitations of the American industrial base. The report warned that the US may be “incapable of meeting the munitions demand created by a potential future fight against a peer adversary.”

The conflict in Ukraine underscores this concern, as the US struggles to maintain adequate production levels of artillery shells, drones, rockets, and missiles primarily due to insufficient stockpiles of critical components. Furthermore, structural deficiencies are increasingly evident within the US Navy. As of 2023, less than 68 percent of surface fleet ships were rated “mission-capable,” with only 63 percent of attack submarines meeting the same standard. Compounding these challenges, American shipyards are currently unable to produce more than three destroyers annually. By contrast, China possesses 13 shipyards capable of constructing large and deep-draft vessels one of which reportedly surpasses the entire US shipbuilding capacity.

The ongoing US-China tariff dispute reflects a zero-sum strategic mindset, intensifying hostilities and reducing incentives for restraint or cooperation. This economic confrontation has already narrowed the space for meaningful arms control dialogue. The imposition of sanctions on each other’s officials and entities alongside increasingly provocative rhetoric from senior officials risks further erosions of the fragile trust necessary for future diplomatic engagement, particularly in arms control and emerging domains such as AI, cyber warfare, and outer space.

Traditionally, China rejects arms control as the US had far more weapons than China. Tarriff disputes reinforce the narrative that the US is using economic means to contain China’s rise, making China less likely to engage in future arms control discussions. Moreover, diplomatic relations and multilateralism will weaken and increase mistrust—leaving no room for constructive future arms control talks.

Arms control forums are increasingly fragile as mutual trust and respect for arms control and disarmament among the great powers declines. Tariff disputes create mistrust, which complicates the verification process, and the supply chain supporting the global cooperative arms control verification limits the ability to enforce or verify compliance with arms control agreements.

Trade disputes deepen mistrust and normalize confrontation over cooperation, secrecy over transparency, and arms racing over arms control. This leads to proliferation while making accountability less relative and paves the way for a fragmented world order with little or no hope for future arms control.

Moreover, it increases the chances future administrations face a backlash for rolling back policies that demand equitable treatment of American trade goods, fearing internal backlash for being soft on China. This will permanently lock both states into an adversarial stance, reducing any flexibility in arms control. Moreover, if the US wants to reconsider any future arms control discussion, political costs may prove too high, leaving fewer options to prevent an arms race.

In 2019, President Donald Trump withdrew the United States from the Intermediate-Range Nuclear Forces (INF) Treaty, after Russian cheating became too hard to ignore.  Meanwhile, the future of New START remains uncertain and fragile.

At such a critical juncture, President Trump’s demand that American exports sent to foreign markets receive equal treatment to those foreign imports entering the United States, penalizing both allies and adversaries who enact punitive tariffs, may be unsettling for recipients of increased tariffs, but it should come as no surprise that an American president elected to stop the outflow of American wealth would seek equal treatment for American exports.

Many Americans are willing to see the subsidies to foreign nations—that are brought about by high tariffs on American exports and American extended deterrence—come to an end. This may lead to an erosion of confidence in American benevolence by some states.

South Korea, for example, was shocked that the United States took offense to the very protectionist policies that allowed South Korea to become the third largest auto producer in the United States, all while effectively preventing American automobile sales in South Korea. Thus, South Korea is reconsidering their non-nuclear status and exploring an independent nuclear deterrent. As President Trump seeks to level the playing field by forcing down the tariffs of trade partners, under the threat of higher tariffs on imported goods, allies should come to understand that the United States is increasingly unwilling to subsidize others. While this may be a jarring fact, it is not a purposeful effort to destabilize arms control.

Thus, trade disputes may cause allies and adversaries to reconsider American willingness to accept unequal trade and disproportionate burden sharing. In the long run, equilibrium will return. It is just a matter of what that equilibrium may look like.

Muhammad Shahzad Akram is a Research Officer at the Center for International Strategic Studies, Azad Jammu Kashmir. He holds an MPhil in International Relations from Quaid-i-Azam University, Islamabad. He is an alumnus of the Near East South Asia (NESA) Center for Strategic Studies, National Defense University (NDU), Washington, DC. His expertise includes cyber warfare and strategy, arms control, and disarmament.

How Trade Disputes Threaten the Future of Arms Control was originally published on Global Security Review.

Vice President Kamala Harris certainly grasps the fact that voters respond to promise that their cost of living will come down, but they rarely understand the implication for the economy of government intervention. Harris’ calls for price controls on drugs and groceries and promises of tax cuts for the poor or benefits increases fails to explain how and who will pay for them.

At the same time, Donald Trump’s call for 10 percent tariffs on all imports and 60 percent tariffs on Chinese goods, plus his threat to deport many of the estimated 20 million illegal aliens currently in the United States, not only amounts to higher prices, but it will devastate the agricultural, restaurant, construction, and hospitality industries. It is certainly not a free trader perspective. Thus, neither party’s perspective offers a clear path to growth, offsetting tax hikes, like tariffs, or increased federal revenue with which to pay for all the benefits they are offering.

Since the US is both the principal and ultimate arbiter of international order, whose power rests on the sound management of its economy, both examples of this illiteracy endanger not just the American economy, but that of other states around the world. Worse yet, these examples of misconceived economic thinking come at a time when international challenges are rapidly multiplying. Indeed, bipartisan reports describe the American military as increasingly maladapted to contemporary and future threats.

These reports underscore the urgent need for comprehensive modernization, recapitalization, and increases of both conventional and nuclear arsenals due to mounting challenges from the axis of authoritarianism: China, Iran, North Korea, and Russia. Indeed, even the Biden administration, which cannot be accused of partiality towards nuclear weapons, has stated the need for modernization and investment in newer and more nuclear weapons and, recently, went so far as to alter nuclear employment guidance.

At the same time, Americans have equally urgent domestic pressures that must be seriously addressed but are not discussed. These include the need to reduce deficits, ensure long-term non-inflationary growth, increase the labor participation rate, maintain technological leadership, reform and simplify the tax code, and apply existing immigration law while determining if new laws are needed. Yet nobody is seriously raising these domestic issues let alone addressing the fact that a strong economy is needed to address defense challenges—and build the military needed.

For example, neither campaign mentioned that servicing the national debt, for the first time in history, exceeded defense spending in 2024. This fact represents an unmistakable sign of decline and is a canary in the coal mine that the nation must reduce domestic redistribution programs while also carefully employing military force when absolutely necessary.

Neither should a response to these challenges lead the nation, as some Republicans argue, into a new unilateralism that would isolate the US from its allies and lead to further chaos. Nor can the nation afford a progressive policy of ever greater spending on redistribution programs—without paying for them.

Both sets of delusional thinking ultimately bring about the worst of all possible outcomes. Americans will find themselves with a greater probability of war and lower economic growth.

It is time both campaigns’ economic policies are subjected to tougher scrutiny by the media and voters. They must be persuaded, if not compelled, by the exigencies of politics, to explain how they will pay for future needs, balance the budget, and confront well-known challenges.

This requirement should apply to defense modernization as well. If history is any guide, only a serious threat to the nation motivates government and industry to mobilize capability for the required defense buildup. The bipartisan reports, mentioned above, clearly suggest the United States is facing a similar threat to that faced by imperial Japan and Nazi Germany before World War II began.

Vice President Harris and former President Trump must address questions going far beyond the partisan bickering that is endemic of this election. Perhaps the September 10 presidential debate will offer some clarity on important issues.

Commentators suggest that this election is about generational change. This, however, is no guarantee that change is for the better. Eastern Europe experienced great change after 1945, but it was decidedly for the worse.

Thinking strategically about medium- and long-term challenges and consequences is imperative. The abiding delusion that American prosperity, world leadership, and security is unending and self-sustaining deserves a much more rigorous evaluation. The nation may very well be standing on a precipice, and it will be the next president who either pulls the nation back or sends it over the edge. Let’s hope it is the former.

Stephen Blank, PhD, is a Senior Fellow at the National Institute for Deterrence Studies. The views expressed are his own.

Our Delusional Presidential Campaigns was originally published on Global Security Review.