Tariffs, sanctions and supply-chain diversification as tools in a fragmenting economic order

Tariffs, Sanctions, and Supply-Chain Diversification in a Fragmenting Global Economy

As the international landscape becomes increasingly fractured by geopolitical tensions and technological competition, tools such as tariffs, sanctions, and supply-chain diversification have emerged as central strategies for nations seeking strategic advantage and resilience. The evolving use of these measures reflects a broader trend of fragmentation within the global economic order, driven by the race for technological sovereignty, resource control, and military dominance.

The Role of Tariffs and Trade Policies in Geopolitical Competition

Tariffs remain a potent instrument of economic statecraft. Recent events highlight their significance: U.S. President Trump’s decision to raise tariffs from 10% to 15%—defying a Supreme Court ruling—underscores how tariffs are used not just for economic leverage but also as political tools. Such moves can disrupt global supply chains, increase costs for firms, and escalate trade tensions.

Similarly, China has leveraged U.S. tariffs to build a parallel global trade order, promoting its own digital and manufacturing ecosystems, particularly in critical sectors like semiconductors and rare earth elements. These tariffs serve as a catalyst for decoupling, prompting countries and corporations to rethink supply chain dependencies and pursue diversification strategies.

The recent blocking of tariffs on Canada, amid broader political tensions, exemplifies the fragility and politicization of trade measures. These decisions influence alliance cohesion and market stability, especially as nations navigate the delicate balance between economic openness and strategic autonomy.

Sanctions as Strategic Leverage

Sanctions have become a key instrument in the geopolitical toolkit, used to pressure states and influence behavior without resorting to military conflict. In an era of geopolitical disruption, sanctions intersect with technology controls to restrict access to critical resources and advanced technologies. For instance, sanctions targeting Russian and Chinese technological and military assets aim to curb their strategic capabilities, while also complicating international cooperation.

However, sanctions also risk fragmenting global markets, creating resilience needs for firms to adapt to a landscape where access to certain technologies and resources is limited or highly regulated. This has accelerated supply-chain diversification efforts, with countries and corporations seeking alternatives in resource-rich regions such as Greenland and Somaliland, aiming to reduce dependence on Chinese-controlled critical minerals like rare earth elements.

Supply-Chain Diversification in a Geopolitical Era

In response to these challenges, supply-chain resilience has become a priority. The diversification of critical resources—from rare earths to energy supplies—is now a strategic imperative. The arctic melting and new shipping routes have increased geopolitical interest, with Russia and China expanding military and infrastructure investments to secure strategic access.

Companies are increasingly hardening their supply chains, moving production away from politically unstable regions and investing in technologies for autonomous, resilient logistics. The goal is to mitigate risks posed by cyberattacks, sanctions, and militarized space domains, which threaten global communication and economic stability.

The Broader Context: Fragmentation, Norms, and Future Risks

This strategic environment is marked by fragile alliances and the rise of minilateral coalitions—issue-specific partnerships among like-minded nations focusing on cybersecurity, space security, and technological sovereignty. Europe, for example, is investing in space infrastructure and cyber defenses to bolster independence from US and Chinese influence, while actively participating in norm-setting efforts to prevent space militarization.

The weaponization of space and autonomous cyber capabilities increase escalation risks, especially as nations develop offensive AI-driven cyber tools and militarize domains like the Arctic and maritime regions. The recent cyber intrusions into satellites and space assets highlight vulnerabilities and the potential for conflicts to escalate rapidly due to misperceptions or miscalculations.

Conclusion

In 2026, tariffs and sanctions are no longer merely economic tools—they are integral to the strategic competition shaping the fragmented global order. Nations employ these measures to assert sovereignty, control critical resources, and defend technological advantages. However, the increasing reliance on such tools risks further fragmentation and escalation, especially if norms and diplomatic channels fail to keep pace with technological advancements.

The future of international stability hinges on the ability of global actors to develop cooperative norms, confidence-building measures, and multilateral frameworks that manage these contestations peacefully. Without such efforts, the pursuit of strategic dominance through tariffs, sanctions, and supply-chain control may lead to broader conflicts, undermining the very stability they aim to secure.