As U.S. President Donald Trump doubles down on a "diplomacy of strength" centered on tariff and military power, rivals such as Iran and China are pushing back by weaponizing global supply chain "choke points," analysts say.
The New York Times (NYT) reported on the 2nd that Trump's aggressive foreign strategy is prompting other countries to test new tools to squeeze the U.S. economy. Countries that used to accede to U.S. demands are now striking back by leveraging key nodes of supply chains.
A prime example is Iran. Iran accounts for less than 1% of the global economy, but it controls the Strait of Hormuz, through which about one-fifth of the world's oil and gas passes. After the United States and Israel attacked Iran in late February, the closure of the Strait of Hormuz blocked shipments of key goods such as fuel and fertilizer and sent international energy prices soaring. Global oil rose to around $110 per barrel. As a result, anxiety is spreading among U.S. farmers and manufacturers.
China has also pulled out another "retaliation card." After President Trump imposed high tariff, China introduced a licensing regime for exports of rare earth minerals and magnets, starting to control a core supply chain of global manufacturing. Because advanced industries across the board—autos, semiconductors, and fighter jets—depend on rare earths, this is seen as a move targeting the U.S. industrial base.
In fact, some manufacturers are already reported to be facing shortages. In particular, China is ratcheting up pressure by cutting off rare earth exports to firms that have a transaction with U.S. defense contractors. As a result, corporations are struggling to find alternative supply chains.
Observers say this trend exposes structural vulnerabilities in the U.S. economy. The U.S. economy is massive, but because it is tightly enmeshed in global supply chains, it is hard to avoid damage when specific nodes are blocked. Edward Fishman, a geoeconomic security expert, said, "The most effective way to respond to America's economic pressure is reciprocal pressure," adding, "Iran is showing that again." He said that after Trump signaled an intention to dominate Greenland, even European countries have been exploring "choke points" to pressure the United States. A choke point is a strategic bottleneck where passage is very difficult or congestion occurs.
Warning signs are appearing in actual economic indicators. Investment firm Evercore ISI cut its forecast for U.S. economic growth this year to 2.2% from 2.8% due to the current war and energy shock. By contrast, inflation is expected to be 0.2 percentage points higher.
In a recent speech, President Trump said, "The United States imports almost no oil through the Strait of Hormuz," adding, "Countries that rely on the strait must protect it themselves." He also said, "When the conflict ends, the strait will naturally reopen."
The NYT said, "After President Trump's speech, international oil prices surged and stocks fell," adding, "Rising global energy prices and shortages of fertilizer, aluminum, and helium from the Middle East are pushing up prices in the United States, slowing economic activity, and becoming an obstacle on the path to the midterm elections."