As U.S. President Donald Trump strengthens "diplomacy by force," fronted by tariff and military power, rivals such as Iran and China are moving to counter with the "choke points" of the global supply chain as weapons, according to an analysis.
The New York Times (NYT) reported on the 2nd (local time) that Trump's aggressive foreign strategy is instead prompting other countries to test new tools to pressure the U.S. economy. Countries that once accepted U.S. demands are now using key nodes in supply chains to strike back, it said.
A prime example is Iran. Iran accounts for less than 1% of the global economy, but it holds the Strait of Hormuz, through which about one-fifth of the world's oil and gas passes. After the U.S. and Israel attacked Iran in late Feb., the closure of the Strait of Hormuz blocked shipments of key goods such as fuel and fertilizer, and international energy prices surged. International crude oil prices soared 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 system for exports of rare earth minerals and magnets, beginning to control a core supply chain of global manufacturing. Because advanced industries across the board—such as autos, semiconductors, and fighter jets—depend on rare earths, this is seen as a move aimed at the U.S. industrial base.
In fact, some manufacturers are already reported to be experiencing shortages. In particular, China is escalating pressure by blocking rare earth exports to companies that have a transaction with U.S. defense corporations. As a result, corporations are struggling to find alternative supply chains.
This trend also underscores the structural vulnerabilities of the U.S. economy, some noted. The U.S. economy is dominant in size, but because it is tightly enmeshed in global supply chains, it is hard to avoid damage when specific nodes are blocked, they said. Edward Fishman, an economic security expert, said, "The most effective way to respond to U.S. economic pressure is to hit back," adding, "Iran is showing that again." He said that after Trump signaled an intention to control Greenland, even European countries are looking for "choke points" to pressure the United States. A choke point is a strategic stronghold where passage is very difficult or bottlenecks occur.
Warning signs are appearing in actual economic indicators as well. Investment firm Evercore ISI lowered its forecast for U.S. economic growth this year to 2.2% from 2.8% due to the current war and the energy shock. By contrast, inflation was expected to rise by 0.2 percentage points.
In a recent speech, President Trump said, "The United States brings in almost no oil through the Strait of Hormuz," adding, "Countries that depend on the strait should protect it themselves." He also said, "When the conflict ends, the strait will naturally reopen."
The NYT analyzed that "after Trump's speech, international oil prices soared and stock prices 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 hindering the path to the midterm elections."