The Hard Limits of Economic Statecraft

How sanctions and tariffs slow the global economy and increase political instability

Since the nuclear bombings of Hiroshima and Nagasaki nearly 80 years ago, no major powers have dared to wage war with each other. Instead, they have engaged in a series of proxy battles around the world, many of which have devolved into permanent quagmires. Understandably, US support for foreign conflicts has waned. This downward trend in public opinion that began during the Vietnam War has persisted in US policy towards Ukraine, with no end in sight. Whether the US public will support going to war with China to protect Taiwan is open to discussion.

Instead of direct military confrontation with Russia, China, Iran, and North Korea, the US and its allies have repeatedly tried to use economic tools to achieve their foreign policy goals. At the G7 meetings in Italy earlier this month, one of the primary items on the agenda was figuring out ways to redirect the earnings of seized Russian assets to Ukraine—without damaging the trust of other nations in the global financial system.