Over the past two decades, the U.S. has built a formidable economic arsenal that has shaped its foreign policy, drawing from both Republican and Democratic administrations. These administrations have shared a common vision: to wield financial sanctions, export controls, and the development of key technologies to maintain U.S. power on the global stage. Each new administration has expanded on the tools it inherited, strengthening the nation’s economic leverage.
But as we prepare for a potential second term of President Trump, we’re about to witness a dramatic shift in the way these economic weapons are wielded. The question is how a disruptive administration—one that inherits these tools without the same sense of responsibility—will manage this power.
While there are still traditional economic-security technocrats in the Trump administration, they are only one faction among many, including crypto enthusiasts, Wall Street supporters, and “America First” advocates. With these conflicting interests, combined with Trump’s unpredictable approach to international relations, the U.S. could see its once-central economic machinery begin to fray, while other countries seek to distance themselves from American dominance.
Before leaving office, the Biden administration had laid out a plan to maintain U.S. control over emerging technologies like A.I., a culmination of decades of using economic tools to solidify America’s position on the global stage. However, when Trump took office, his approach to policy took a different turn. A recent example was his response to Colombia, a key ally. When the country refused to accept deportees, Trump quickly imposed sweeping sanctions and tariffs, only to backpedal after a brief diplomatic spat. His approach, marked by social media outbursts and heavy-handed tactics, seemed more like outdated gunboat diplomacy than the strategic, nuanced economic diplomacy of the past.
This unorthodox style may temporarily force other countries to comply with Trump’s demands, but in the long term, it risks pushing them away from the U.S. It’s not just Trump’s erratic policy positions that pose a challenge; it’s the deepening divide within his administration between various factions with conflicting visions of America’s interests. Should the U.S. embrace decentralized crypto technologies that resist government control? Should it loosen or tighten restrictions on A.I. and semiconductor exports? Should it prioritize short-term deals with autocratic regimes?
These questions diverge sharply from the past bipartisan consensus on the importance of maintaining U.S. power over global finance and technology. After the September 11 attacks, both parties recognized the threat posed by an unregulated global financial system and began shaping it to enhance American security. This led to the use of sanctions and export controls as economic tools to limit the financial reach of rogue states and ensure that technology flows aligned with U.S. interests.
Trump’s administration didn’t deviate from this trajectory, but his erratic leadership often put him at odds with his own officials. His desire to exert pressure on China led to the expansion of export controls, which became a tool for leveraging trade negotiations. Biden’s administration continued these policies, especially against Russia and China, using measures created under Trump’s Commerce Department.
But a second term under Trump will likely change the game entirely. His administration’s policies may no longer be constrained by the traditional checks that once existed. For instance, while Trump once considered banning TikTok due to security concerns, he later appeared to soften his stance after speaking with a major investor. His relationship with the crypto world is similarly complicated. Trump has expressed interest in making crypto a national priority, even appointing a crypto advocate to a key position and signaling support for decentralized technologies. Yet, these interests directly conflict with America’s ability to maintain control over its financial and technological infrastructure.
The clash between crypto advocates, A.I. companies, semiconductor manufacturers, and national security hawks within Trump’s government will create internal battles over the future of U.S. economic power. Should America hold tight to A.I. and semiconductor production or ease restrictions to favor powerful corporations? Will national security concerns take precedence, or will business interests win the day?
As President Trump navigates these competing pressures, his administration is likely to weaken America’s economic security. Sanctions and export controls could become tools for personal or political gains, applied indiscriminately to countries or organizations that anger Trump. This unpredictability will make other nations reconsider their dependence on the U.S., as they start to view American power as unreliable.
Over time, countries and global businesses may seek to distance themselves from the U.S. economic orbit, diversifying their supply chains and forging new alliances. Even America’s European allies are quietly considering closer ties with China, as the costs of maintaining strong economic ties with the U.S. grow more apparent. As Trump’s second term progresses, it’s increasingly clear that the foundation of U.S. economic dominance may begin to erode, as adversaries capitalize on the shifting dynamics and uncertainty surrounding American leadership.