In his 2025 book Chokepoints: American Power in the Age of Economic Warfare,
former US State Department Official Edward Fishman lays out the history of
modern US economic statecraft and the rise of tools that have become central
to contemporary geopolitics, from financial sanctions to export controls.1
The book is an indispensable guide to the logic, institutional foundations and
strategic assumptions behind these instruments.

In this interview, Fishman explains the modern explosion of US sanctions and
the evolution of Trump’s China policy. He also provides a clear account of the
US economic statecraft system and a useful heuristic for understanding the
structural anxieties driving the use of coercive economic tools.

The interview was conducted in January 2026 and has been edited for length
and clarity.

Varg Folkman: What are some of the main tools of economic statecraft available
to US authorities and what are they designed to achieve?

Edward Fishman: There are different ways that you can look at the levers
of economic statecraft. I think traditionally the way that most people in the
United States look at it is through the specific legal mechanism that’s used.

We have sanctions that tend to be imposed by either the Treasury
Department or State Department that cut individuals and companies
off from the US financial system. You have export controls, which are
administered by the Commerce Department, which restrict the sale of
specific technologies and goods to other countries. You have tariffs, which
are implemented by several different agencies, including the US Trade
Representative and the Commerce Department.

There are also investment restrictions. The Committee for Foreign Investment
(CFIUS) in the United States restricts the ability of foreign investors to buy
assets in the US. There’s a whole agency body that oversees that.

I actually think that, as an official, it’s useful to understand these different tools and
levers, it can actually confuse more than it clarifies. Part of what I try to do in
my book, Chokepoints, is to really look at the sources of economic leverage as
opposed to looking at it through a legal mechanism of which agency is doing
what, or what specific laws are being used.

So what levers of economic power does the United States have? The
framework I use is what I call chokepoints. These are areas of the
global economy where one country has a dominant position, and there are
few, if any, substitutes. For the US, the most important chokepoints are
primarily, first and foremost, the US dollar, used in 90% of foreign exchange
transactions. If you want to operate as a global financial institution, or even a
multinational corporation, or if you want to trade across borders, most of the
time you need access to the dollar. That is the key chokepoint the US has, and
financial sanctions are used to exploit that chokepoint.

Other important chokepoints at the US disposal are a lot of the technologies
coming out of Silicon Valley, like the designs for AI chips. Nvidia is designing
something like 80% of the world’s advanced AI chips. Semiconductor
manufacturing equipment from companies like Applied Materials and Lam
Research and KLA can be quite important to manufacturing semiconductors.

Economic pressure is a coercive tool of statecraft. You’re trying to force
other countries to do something they otherwise wouldn’t want to do. There
are actually not that many coercive levers of statecraft. At the lowest end of
the intensity scale, you have just words of condemnation, social pressure or
stigmatisation. At the highest end, you have kinetic force – using the military.
And in between, you have economic pressure.

So I think a major reason why we’ve seen the proliferation of economic
warfare is that you have great power competition that’s returned with a
vengeance against a backdrop of economic interdependence, which means
there are a lot of chokepoints that can be exploited.

VF: In the past, there was a lot of uncertainty whether sanctions worked or not.
Then, during the Bush years, the use of sanctions exploded and have remained
high. Why this change?

EF: I tend to view things primarily from the lens of history, and I always
think that individuals matter. It is important to understand the contingent
historical factors that have led to the rise of economic warfare. And I think a
major one in the United States was in 2005, when Mahmoud Ahmadinejad was
elected president of Iran and restarted the country’s nuclear enrichment.

The US was already fighting two wars, one in Afghanistan and one in Iraq.
Neither was going very well. There was no appetite in the United States for
another war in the Middle East ... against an even bigger country like Iran. I do
think there’s that historically contingent factor that when Iran shoots to the
top of the US national security agenda after 2005, military force just seemed
like a bad option. So economic pressure became a bit of a default option.

If you look back over the last two decades, you have seen this secular trend
of exponential growth in the use of economic warfare on the US side, but
increasingly also internationally. And so I think it is important to look beyond
history and look for structural drivers. The way I think about this is through a
framework I call the ‘geoeconomic impossible trinity’, in which you have these
three factors: economic security, economic interdependence and geopolitical
competition. You really can only fulfil two of them at the same time. During
the Cold War, the West and the Soviet Union were intense geopolitical rivals,
but they had very little economic interdependence. And so, the two sides still
felt a sense of economic security.

When the Cold War ends in the 1990s, we no longer have geopolitical
competition to speak of. The US starts viewing Russia and China more as
potential friends than rivals. We feel free to embrace economic interdependence
without losing our sense of economic security. There is a period in the 90s in
which US and European companies started relying on ‘just-in-time’ supply
chains from China. You can get inputs from China that are cheap and efficient,
and you’re not worried that you’re going to lose access to them. Why would
the Chinese government cut off your access? They’re your friend. Or if you’re
Europe, why not buy cheap natural gas from Russia? Because it wouldn’t make
any sense for Russia to cut off your access. They’re your friend.

Then what happened in the last 10-15 years is that geopolitical competition
has come back with a vengeance while economic interdependence has
persisted, and so we’ve lost our sense of economic security. And when I say
‘we’, it’s definitely true in the United States where one of the few things
that Democrats and Republicans agree on is that we have a deficiency of
economic security. We’re vulnerable to Chinese weaponisation of rare earth
minerals and pharmaceutical additives. And it’s not something that makes us
comfortable. And I think it’s true in Europe. It’s true in Japan, where they have
a cabinet minister for economic security. This is true everywhere.

I don’t think it’s politically tenable for most countries to feel this lack of
economic security. I think it’s a very disconcerting position to be in. In
some ways you can view the proliferation of sanctions and export controls
and tariffs and all these various restrictions as sort of a haphazard effort by
countries around the world to retrofit the global economy to align with the
new geopolitical reality. In my view, the likely scenario in the coming decade
is that you’ll see less economic interdependence – that’ll be the part of the
trinity that’s sacrificed in the name of economic security.

VF: Sanctions on Russia and Iran aim to cut them out of the global economy,
while measures on China focus on halting its technological development and
restricting key technologies. What challenges arise when shifting from traditional
sanctions to this kind of technology-focused economic pressure?

EF: I go back to even my own experience in government. If anyone were to
say that we’re imposing sanctions to punish some other country or to restrict
their economic development for its own sake, you would be shot down. They’d
say, no, the whole point of sanctions is behaviour change, right? The normal
assumption of economic relations between any two countries is open trade
and open finance. Being sanctioned is sort of like being put in the penalty box,
and you will stay in the penalty box until you fix your behaviour. But then you
come out and you’re welcomed back into the ordinary global economy.

I do think that something significant changed during Trump’s first term
with the export controls and tariffs on China, because they did not have any
behavioural calculus. The idea was to try to restrict China’s technological
development, to try to rebalance the US-China trading relationship, and to
move manufacturing jobs away from China to the United States. These are
structural goals. They’re not behavioural goals. What these are really doing
is use economic statecraft to try to remake an economic relationship, as
opposed to trying to pressure China to do something different. I do think
in some ways that inaugurated a whole new model of economic warfare – a
new paradigm where some sanctions and export controls are intended to be
permanent. And I’d argue that the Russia sanctions of 2022 are similar.
 

When you [sanction] for the sake of technological competition it can feel quite
aggressive to those on the receiving end. The Chinese have not liked this, and
they view it as a technology blockade. What it also means for the US is that
it’s not enough just to restrict. You also have to invest at home because if
you’re in a tech race, one part of the dynamic is about holding your opponent
back, but the other is about running faster. The US and Europe haven’t been
particularly practiced in this kind of industrial policy, and the Chinese have
done it a lot more. It’s a terrain that they have an advantage on.

VF: So, it’s about remaking the economic relationship between China and the US,
but part of it is also about maintaining the chokepoints the US already has?

EF: Definitely. I think there is an understanding now that these chokepoints
aren’t just profit centres. Chokepoints are formed by businesses for economic
reasons. The businesses that seize the most valuable chokepoints – whether
it’s controlling the reserve currency, the international financial system (which
I would say Wall Street really has accomplished) or large parts of the global
technology ecosystem, which Silicon Valley has accomplished – make an
incredible amount of money.

Governments have come to appreciate that these chokepoints can either be
used as economic leverage if you possess them, or they can be weaponised
against you [if you don’t]. This knowledge has now proliferated all around the
world. And I think the US government is aware that other countries are trying
to reduce the salience of some of the chokepoints the US has. In the financial
system, that’s very clear with China building their own central bank digital
currency and platforms like mBridge to try to clear cross-border payments
without touching the dollar. The Trump administration is trying to create new
models for dollar dominance through dollar-pegged stablecoins.

VF: From Europe, it’s hard trying to gauge what the reasoning behind Trump’s
policy is right now. Especially when it comes to containing China. During his first
presidency, he was torn between economic containment and striking a deal to be
the one who brings China back into the fold. That seems to be the case now as
well. What is Trump’s strategy?

EF: China is a special case. I think that the pattern on China policy that’s
played out over the last year is not all that different from how China policy
worked during the first Trump term.

Trump is of two minds and always has been on China. He’s not a
straightforward China hawk. I think he likes Xi Jinping. He sees the benefit
of trade with China. I don’t think he really cares that much about the
Chinese national security threat to the US. I think in this first term, you did have a
sort of factionalism where you had a China Hawk faction – people like Bob
Lighthizer, the US Trade Representative and Matt Pottinger, the Deputy
National Security Advisor – and then you had a Dove faction that was
primarily led by Steven Mnuchin from the Treasury and Gary Cohn, the
Director of the National Economic Council.

There were moments where one faction had the leg up and the other didn’t.
And it was only in a few spurts of aggressive behaviour that Trump really
lashed out against China. You had the Huawei export controls in 2019
that were driven by frustration that Xi Jinping had reneged on some of the
agreements that he had made on trade, and then you had the substantial
ramp up of export controls in the summer of 2020, including the foreign direct
product rule, which I think were driven in large part by COVID.

But really, other than that, a lot of his first term was about chasing a trade
deal. It’s not dissimilar from this term. There has been a similar pattern in
which you have a China Hawk faction, though it is less powerful than in
the first term because no members have the stature of Lighthizer in this
administration. You’ve got Peter Navarro, and I think he drove the Liberation
Day tariffs in April 2025, including the tariffs that eventually went up over
100% on China. But we all know what happened. We imposed tariffs on China.
China imposed tariffs on the US. They imposed these export controls on rare
earth minerals that shut down some factories in the US, and the stock market
collapsed. It raised trillions of dollars of value in the stock market. You had
analysts saying that the US might fall into a recession.

I think two things happened there that were important for China policy. One,
I think it freaked Trump and other elements of his administration out about
the leverage China might have. This wasn’t just the US bashing China; it was
actually a two-way situation. China was quite well prepared for economic
warfare in 2025. They had been preparing since the first Trump term. Then I
think the second thing that happened is that it empowered the China doves.
It discredited Navarro. We haven’t heard very much from him since April of
2025, and you’ve heard a lot more from people like Scott Besson and David
Sachs, who are much more dovish on China policy.
 

I think that’s where we are. The China Hawk faction is weaker than it was
during the first term. I think it was discredited by Liberation Day, and I think
China has shown that it can retaliate effectively. For the time being, the US
has completely taken its foot off the gas on economic warfare with China.
We’ve actually reversed course. We started authorising the sale of powerful AI
chips to China. And it seems like absent some major dust-up between Trump
and Xi at one of their many tête-à-tête plans for 2026, that this could be the
case moving forward.

VF: In your book, you write that we have lived through the golden age of economic
warfare. As you note, this has potentially led to a burgeoning regionalisation or
fracturing of the world economy into blocks of likeminded countries. Since you sent
the book to print, how would you say the situation has developed?

EF: I do think that it’s not tenable for countries to feel like they lack economic
security. You can get rid of geopolitical competition and say we’re all friends
again to maintain economic interdependence, but I think it’s likelier in the
next 10 years that you have substantially less economic interdependence.

There are two possible outcomes. One is you do move to a block-based
global economy in which there’s a big US block that sees even deeper
interdependence with Canada, Mexico, Europe, India, Japan, but less with
China, Russia, etc. And then you have the non-aligned countries in the middle
that may play both sides. That’s kind of where I saw things headed during the
Biden administration.

But I think there’s another possibility. I think Trump is taking us more
in a second direction, which is more like every nation for itself. Here, the
US says friendshoring is not sufficient. We want onshore. We want to do
everything ourselves. We don’t even feel comfortable relying on Canada for
pharmaceuticals. We want to make them all in the US. And that’s more like
autarky. The thing I worry about is that, historically, when the mentality
of a leader is autarky, where we can’t access resources or markets through
trade agreements and alliances, you’re tempted into things like imperialism
and conquest. You’re tempted into invasion. From the beginning, I was a
little worried about Greenland – as soon as Trump started talking about the
mineral resources.

Territorial expansion hasn’t made sense for Western statecraft for a long
time because we felt like we had an open economic system. But in a closed
economic system, territorial aggrandisement does make sense. That’s how
you expand your market. That’s how you expand your resources. I worry that
even if you don’t see Trump launch some sort of imperialist war during his
tenure, the trend towards a global economy that is much more autarkic in
nature will make kinetic warfare more likely. I hope that even if the US moves
in that direction, other countries can come together and say they are actually
going to integrate with each other. This was the plea that Mark Carney made
at Davos. I think it’ll be hard, though.