On Friday Donald Trump threatened to cut off all trade with nations with which the United States runs a trade deficit. His demand, oddly, was directed at the Federal Reserve: He would impose trade embargoes unless the Fed cuts interest rates. I won’t even try to untangle his logic, if there is any, because today’s primer isn’t about Trump. It is, instead, about how to think about a world in which governments — even the government of the United States, which created the rules-based trading system that prevailed until recently — increasingly use threats to cut off international trade as a tool of coercion.
“Geoeconomics” — the study of the ways governments can use national economic strength in pursuit of geopolitical objectives — is a hot topic right now, both among scholars and at international institutions. The International Monetary Fund made geoeconomics the theme of the June issue of its F&D magazine. Geoeconomics is the theme of the European Central Bank’s annual research conference, taking place next week, at which I’m giving a talk on “economic size and economic power.” Back in August I posted a primer on relevant measures of economic size. Today, continuing my homework for the talk, I’m writing about economic power.
Specifically, I want to talk about “weaponized interdependence,” a term coined in 2019 by the political scientists Henry Farrell and Abraham Newman. Farrell and Newman focused mainly on national governments’ efforts to exploit their control of international networks, such as America’s use of the dollar’s central role in the international monetary system to impose sanctions on nations it considers hostile. At this point, however, weaponized interdependence is everywhere: Iran attempting to force the United States to call off its war by closing the Strait of Hormuz, China threatening the West with a cutoff of rare earths, the Trump administration using the threat of tariffs to pressure Canada to remove cultural protections for French — or become the 51st state?
But how should we think about weaponized interdependence? There is a rapidly burgeoning theoretical and empirical research literature on geoeconomics, surveyed for example by Mohr and Trebesch (2025.) I am not a contributor to this literature, just a consumer! But this rapidly growing field isn’t yet part of the standard way we teach international economics, let alone the way people influential in policy discuss the world. So what I thought I could do today is lay out in a very simple, maybe simplistic way what I believe to be some of the main insights from thinking about international trade as a potential tool of coercion — and what it says about the current global situation.
Beyond the paywall I will address the following:
1. What is weaponized interdependence, and how does it differ from “trade war”?
2. The sources of trade-related power
3. The special case of depression economics
4. Who has economic power in today’s world?
5. Trade in a weaponized world
Facts Only
* Donald Trump threatened to cut off trade with nations maintaining a trade deficit with the United States.
* Trump directed this demand to the Federal Reserve, linking trade embargoes to interest rate cuts.
* Geoeconomics is the study of using national economic strength for geopolitical objectives.
* The International Monetary Fund featured geoeconomics in its June issue of F&D magazine.
* The European Central Bank is hosting an annual research conference on geoeconomics.
* "Weaponized interdependence" is a term coined in 2019 by Henry Farrell and Abraham Newman.
* Examples of weaponized interdependence include US sanctions via the dollar, Iran's threats regarding the Strait of Hormuz, and China's threats regarding rare earths.
* The Trump administration used tariff threats to pressure Canada regarding French cultural protections.
* Mohr and Trebesch (2025) provide a survey of geoeconomic theoretical and empirical research.
Executive Summary
Global trade is increasingly being utilized as a tool of geopolitical coercion, a shift termed "geoeconomics." This approach involves governments leveraging their national economic strength and control over international networks to achieve political goals. A specific mechanism within this framework, "weaponized interdependence," occurs when a state exploits its central position in a global network—such as the United States' role in the international monetary system—to impose sanctions or pressure other nations.
Recent examples include the use of tariffs as diplomatic leverage, threats to close strategic maritime chokepoints like the Strait of Hormuz, and the potential restriction of critical raw materials like rare earths. While academic literature on these dynamics is growing, these concepts are not yet integrated into standard international economics curricula or widely adopted in policy discussions. There remains an unresolved tension between the historical rules-based trading system and the current trend toward economic coercion.
Full Take
The strongest version of this narrative is that the world is transitioning from a rules-based trade order to a power-based geoeconomic order, where interdependence—once viewed as a deterrent to conflict—has been inverted into a vulnerability to be exploited.
The framing relies on a transition from "economic size" to "economic power." The narrative implies that the traditional understanding of international economics is obsolete, positioning the author as a conduit for a "burgeoning" new literature that policymakers have yet to grasp. By juxtaposing a specific political actor's erratic demands with academic frameworks, the text seeks to legitimize the study of coercion as a necessary survival skill for the modern era.
Patterns detected: none
The driving paradigm is "Realism" applied to economics: the assumption that states will inevitably use every available lever of power to secure their interests, regardless of established international norms. This echoes the mercantilist patterns of the 19th century, where trade was a zero-sum game rather than a mutual benefit. The second-order consequence is a "security dilemma" in trade; as nations attempt to "de-risk" or "de-couple" to avoid weaponized interdependence, they may inadvertently trigger the very instability they seek to avoid.
If this were an influence campaign, the playbook would involve "Academic Sanewashing"—taking volatile political rhetoric and wrapping it in scholarly terminology (like "geoeconomics") to make extreme policy shifts seem inevitable or scientifically grounded. The actual content does not match this pattern; it remains an introductory primer that acknowledges its own simplicity.
Bridge Questions:
1. Does the conceptualization of "weaponized interdependence" describe a new phenomenon, or simply provide a new name for traditional economic statecraft?
2. If interdependence is weaponized, is the only rational response total autarky, or is there a third path of "resilient interdependence"?
3. Who defines the "rules" in a rules-based system, and does the shift toward coercion represent a failure of the rules or a rebellion against a specific set of rulers?
Counterstrike Scan: The content is a clean educational primer; it does not align with a coordinated influence playbook.