Tariffs, sanctions, export controls and critical minerals are increasingly shaping geopolitical outcomes, demonstrating that influence is no longer measured solely by military strength, but by the ability to weaponise interdependence without firing a shot.
Ambassador Sushil Kumar Singhal, IFS (R) | For The News Analytics Herald
3 mins read.
For much of the post-Cold War period, globalisation rested on the belief that countries connected through trade, investment and technology would have fewer reasons for confrontation. That separation between economics and strategy is now fading.
Governments increasingly treat economic policy as an instrument of national security. Tariffs pressure trading partners, sanctions weaken adversaries, export controls restrict access to advanced technologies, and critical minerals provide leverage over dependent industries. Supply chains are judged not merely by efficiency, but increasingly by resilience.
This is the return of economic statecraft—the deliberate use of economic instruments to influence other states and protect national interests. It has emerged not because globalisation has ended, but because governments recognise the vulnerabilities created by interdependence.
The battle for global influence is increasingly being fought through markets, supply chains, finance and technology rather than battlefields.
TARIFFS AS PRESSURE INSTRUMENTS
Tariffs, once associated mainly with protecting domestic industry, have become bargaining weapons. U.S.-China trade confrontation reflects concerns extending beyond trade deficits to industrial subsidies, technology, manufacturing dependence and strategic rivalry.
Tariffs can encourage relocation of production and reduce dependence on competitors, but they also raise costs, invite retaliation and may protect inefficient industries. Nevertheless, their growing use demonstrates that trade policy can no longer be separated from foreign policy.
WEAPONISING INTERDEPENDENCE
Sanctions allow states to impose significant costs without direct military action. Measures against Russia following its invasion of Ukraine demonstrated this financial power through restrictions on banks, sovereign assets and advanced technologies.
They also exposed limitations. Russia redirected trade and expanded economic relationships with countries outside Western restrictions. Sanctions can weaken an economy without necessarily changing political behaviour, while excessive use may encourage alternative payment systems and reduced dependence on Western financial networks.
Export controls provide a more targeted instrument. Restrictions on advanced semiconductors and chipmaking equipment to China seek to exploit technological chokepoints affecting artificial intelligence, military systems and advanced manufacturing. Yet such controls can also accelerate indigenous alternatives, making coordination among allied suppliers essential.
Lithium, cobalt, nickel, graphite and rare-earth elements have become critical to batteries, semiconductors, renewable energy, aerospace and defence. China’s strong position in processing several critical minerals provides significant influence over global supply chains.
Countries are responding through alternative mines, recycling, strategic reserves and partnerships with trusted suppliers. Critical-mineral diplomacy is increasingly assuming the strategic importance that oil diplomacy held in the twentieth century.
Economic coercion can also occur below formal sanctions through customs delays, regulatory pressure, licence denials and other measures that impose costs while retaining plausible deniability.
REBUILDING RESILIENCE
The response is not deglobalisation, but de-risking—reducing excessive dependence in sensitive sectors without abandoning international trade. Companies are diversifying suppliers and adopting “China-plus-one” strategies, while governments increasingly promote friend-shoring among trusted partners.
Industrial policy has consequently returned. Major economies are supporting semiconductor, battery, defence and critical-mineral industries through subsidies, incentives and procurement policies.
The result is an interconnected global economy that is becoming more selective, fragmented and strategically managed.
INDIA’S STRATEGIC BALANCE
India must reduce vulnerabilities while continuing to attract investment, secure energy and access advanced technology. Its approach combines greater domestic capability with strategic autonomy rather than alignment with a single economic bloc.
Atmanirbhar Bharat and Production-Linked Incentive schemes seek both domestic capacity and India’s emergence as an alternative manufacturing base. The India Semiconductor Mission addresses dependence in a strategically vital technology sector, while the National Critical Mineral Mission focuses on exploration, processing, recycling and overseas acquisition.
India is simultaneously strengthening supply-chain partnerships through the Quad and other arrangements while expanding economic relations with the Gulf, Europe and Indo-Pacific.
Its approach to sanctions reflects similar autonomy: India has generally resisted automatically adopting restrictions not authorised by the United Nations while continuing economic relationships that serve national interests.
Globalisation has not ended; it is being reengineered around resilience, trusted partnerships and national security priorities.
WIDER TRANSFORMATION
The return of economic statecraft represents a deeper transformation in international politics. Tariffs create bargaining pressure, sanctions exploit financial power, export controls constrain technological capability, and critical minerals provide leverage over essential industries.
The emerging order will therefore not be defined by the end of globalisation, but by a more guarded form of it in which national security increasingly shapes economic decisions.
Countries combining industrial strength, technological capability, resource access and trusted partnerships will possess significant strategic advantage. Diplomacy has not disappeared; increasingly, it is being conducted through markets, supply chains, financial networks and control over technology.
(Ambassador Sushil Kumar Singhal, IFS (R), former Ambassador to Angola. He has served in Tanzania, Belgium, Bangladesh and Hungary. The views expressed are of the author and do not necessarily reflect the views of The News Analytics Herald.)
