Global Economy

The Double-Edged Sword of U.S. Economic Power

Published

8 months ago

December 8, 2025

The United States has increasingly utilized its economic might as a tool of statecraft in the twenty-first century.

The United States has increasingly utilized its economic might as a tool of statecraft in the twenty-first century. Washington has employed tariffs, sanctions, and military force to influence the actions of its adversaries. Two of the most significant instances of this tactic are the tariffs placed on China during the trade war and the sanctions placed on Russia after it invaded Ukraine.

The goals of both actions were to safeguard American interests and exert influence overseas. However, the ramifications of their actions have been far more intricate than Washington policymakers may have expected. They have expedited the disintegration of the international order, tested relationships, and changed global markets.

In 2022, the United States and its allies imposed an unprecedented set of sanctions in response to Russian tanks rolling into Ukraine. Energy corporations were subject to restrictions, Russian banks were shut out of the global financial system, and the assets of oligarchs were frozen. The objective was clear: to put pressure on President Vladimir Putin to alter the path of the war and to make it harder for Moscow to finance it.

The sanctions have produced a range of economic outcomes. Although Russia’s GDP shrank precipitously in the immediate aftermath, the nation turned out to be more resilient than many had anticipated. Moscow was able to lessen the impact by shifting oil exports to China, India, and other ready consumers.

Despite its volatility, the ruble did not completely collapse. But there is no denying the long-term harm. Russia has been compelled to rely on Beijing, denied access to cutting-edge technology, and shut out of Western financing markets. In order to preserve cash flow, its energy industry, which was formerly the foundation of its worldwide dominance, is now selling at a discount. The largest trading bloc in the world, the Regional Comprehensive Economic Partnership (RCEP), provided China with new ways to counteract American pressure.

However, there have been notable global consequences. Europe’s severe reliance on Russian gas led to an energy crisis and a sharp increase in costs. Developing countries, already struggling with post-pandemic inflation, saw increases in the cost of food and petrol. The world was also affected by sanctions meant to punish Moscow, raising questions about whether the West had underestimated the collateral damage.

Russia’s resolve has been diplomatically reinforced by sanctions. Instead, the Kremlin has stepped up its depiction of Western hostility. For many in the Global South, the sanctions regime has reinforced perceptions of a divided international order, where Western values are selectively implemented.

Tariffs on China were the result of rivalry, whereas sanctions on Russia were the result of conflict. Citing unfair trade practices, intellectual property theft, and a widening trade deficit, Washington levied broad duties on Chinese goods starting in 2018. The purpose of the tariffs was to safeguard American industries and restore economic equilibrium. The immediate result was a dramatic rise in hostilities between the United States and China. Beijing responded by imposing tariffs of its own on American manufacturing and agriculture.

Customers suffered at the checkout counter, supply networks were interrupted, and business expenses increased. Although the tariffs hindered China’s economy, they also encouraged adaptation. By making significant investments in domestic technology and extending commercial relations with ASEAN countries, Beijing strengthened its commitment to independence.

China now has additional ways to counteract pressure from the United States thanks to the Regional Comprehensive Economic Partnership (RCEP), the largest trading grouping in the world. The trade imbalance was not significantly reduced by the tariffs for the US.

Rather, they emphasized how closely the two economies are interdependent. Farmers that depended on Chinese markets suffered from retaliatory actions, while American businesses that relied on Chinese production had to pay more.

Above all, the tariffs possibly sped up the decoupling process. As Beijing and Washington started to reconsider their mutual dependence, global supply chains gradually changed. Reshoring and diversification helped some industries, but overall, the impact was increased costs and more unpredictability.

Both measures disrupted global markets, imposed costs on both allies and adversaries, and produced mixed results in terms of changing behavior. China has not fundamentally changed its industrial policies, and Russia has not withdrawn from Ukraine. Instead, both countries have adapted, finding ways to mitigate the pressure while strengthening ties with alternative partners.

At first glance, tariffs on China and sanctions on Russia may seem like different tools aimed at different problems; one targeted geopolitical aggression, the other economic competition. However, both measures reflect a broader U.S. strategy: using economic leverage to achieve political ends without resorting to military force.

But the distinctions are just as significant. Global manufacturing has changed as a result of tariffs on China, while global energy markets have changed as a result of sanctions on Russia. Tariffs are transactional and competitive, whereas sanctions are punitive and isolating. When taken as a whole, they demonstrate the flexibility—and constraints—of economic pressure.

The indirect effects of U.S. sanctions and tariffs on the global system may be more important than their direct effects on China or Russia. Washington has made it clear that political alignment is required to gain access to its markets and financial networks by weaponizing economic interdependence.

This has caused competitors to look for other options. While China is establishing alternative organizations like the Asian Infrastructure Investment Bank and encouraging the use of the yuan in international trade, Russia is becoming more and more dependent on China. To avoid getting caught in the crossfire of great-power conflict, even allies of the United States are hedging.

As a result, the liberal economic system that the US helped establish is gradually being undermined. We might be heading towards a fractured world of rival blocs rather than a single, cohesive global organization. This results in increased expenses and uncertainty for firms. Governments will have to make more difficult decisions between conflicting areas of power.

The lesson is not that tariffs and sanctions don’t work. They have the power to signal resolve, inflict actual costs, and influence rivals’ calculations. However, they are not panaceas. Economic coercion has the risk of turning into a blunt tool that emboldens adversaries and alienates allies in the absence of diplomacy, coalition building, and long-term planning.

Additionally, Washington needs to understand the boundaries of its power. Although the dollar still holds sway, excessive use of financial sanctions may hasten the development of substitutes. Tariffs might shield some industries, but they can’t undo decades of globalization in a single day.

The United States must ultimately find a balance between engagement and pressure. Instead of being the toolkit itself, sanctions and tariffs ought to be a component of a larger one. If not, the United States runs the risk of eroding the same framework of free markets and partnerships that has long served as the basis for its dominance.

Both the potential and the danger of economic statecraft are demonstrated by the tariffs on China and the sanctions on Russia. They show that without firing a shot, the United States can nevertheless influence world events. However, they also demonstrate that, similar to military might, economic might has unforeseen repercussions.

Washington needs to use its economic powers more accurately, modestly, and strategically if it hopes to survive this new era of great-power competition. Otherwise, America itself could be harmed by the two-edged sword of tariffs and sanctions, not only its enemies.

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Markets & Finance

FTC Scrutiny of Prediction Markets: What Traders Need to Know

Published

23 hours ago

August 16, 2026

Abdul Rahman

A multi-billion-dollar betting platform just quietly deleted an entire category of contracts. No press release. No warning to users. Just gone — the same week federal regulators started asking questions.

The CFTC is reviewing prediction betting platforms’ so-called “mention markets,” according to people familiar with the matter. In response, Kalshi has taken down its sports-related mention exchanges, while all mention-based contracts on Kalshi remain paused, with no indication of when — or whether — they will return.

The Story

Mention markets let traders bet on whether a specific word or phrase gets said publicly — a broadcaster’s name-drop, a politician’s talking point. Federal regulators and Kalshi’s own lawyers have growing concern that betting on certain kinds of speaking events attracts possible manipulators, since the markets are potentially very easy to manipulate, which is precisely the vulnerability regulators are now probing.

The Numbers Behind the Panic

The trading volume at stake is small relative to the broader industry, which is exactly what makes the regulatory reaction notable.

Kalshi’s Trump-related markets alone accounted for 82% of the roughly $1.16 million in visible mention-market volume still listed on the platform after the sports category was pulled.
Bernstein estimates total prediction market trading volumes will reach $240 billion in 2026 and could hit $1 trillion a year by 2030, a roughly 80% compound annual growth rate.
Polymarket offers mention markets on its offshore platform, but its smaller CFTC-regulated U.S. exchange does not currently list them — a jurisdictional split regulators are watching closely.

A Regulator Playing Both Sides

The CFTC’s posture is more complicated than a simple crackdown. The same agency conducting this review has separately challenged several state actions in court, arguing that prediction markets fall under exclusive federal jurisdiction rather than state gambling law. In other words: the CFTC wants prediction markets to exist under federal rules — it just wants them cleaner.

Regulators Are Already Tightening Language

CFTC staff issued an advisory reminding designated contract markets of their regulatory obligations when self-certifying rules for market-maker, liquidity, and incentive programs — specifically warning prediction markets against promising “risk-free” incentives, unlimited payouts, or promotions that could guarantee profits or offset losses, language that echoes terms regulators have long sought to eliminate from state-regulated sportsbook marketing.

The Solution — What Traders and Investors Should Watch

This isn’t the end of prediction markets. It’s the industry’s first real collision with federal derivatives law, and the outcome will shape whether prediction markets scale as a legitimate financial product or stay a regulatory gray zone.

Check before you trade: If you hold open positions in mention markets on any platform, confirm current contract status directly with the exchange — several categories have been paused industry-wide with no public timeline for resumption.

Watch for further CFTC guidance on how the agency plans to formally regulate event contracts tied to speech, media, and public figures.
Watch the ongoing state-vs-federal litigation over CFTC jurisdiction — its outcome determines whether prediction markets face one federal regulator or a patchwork of state gambling rules.
Watch Polymarket’s offshore mention-market offerings as a test case for whether U.S. regulatory pressure simply pushes this activity outside U.S. jurisdiction rather than eliminating it.

Frequently Asked Questions

What are “mention markets”? Prediction market contracts that let traders bet on whether a specific word or phrase will be said during a broadcast or public event.

Why did Kalshi remove its mention markets? The CFTC opened a review of the category, and Kalshi removed all of its mention markets for sporting events in response.

Is prediction market trading legal in the U.S.? Prediction markets operate under CFTC jurisdiction as regulated event contracts, though the agency has separately sued states that have attempted to apply their own gambling laws to these platforms.

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Analysis

How Malaysia “Shrugged Off” Trump’s Tariffs — and What Comes Next

Published

5 days ago

August 12, 2026

Abdul Rahman

When the Trump administration’s tariff regime rattled export-dependent Asian economies in 2025, Malaysia’s finance ministry response stood out for its composure. “We didn’t panic,” the finance minister told reporters, describing a deliberate strategy of diversification and negotiation rather than reactive concessions (Fortune).

From crisis response to execution agenda

That composure has carried into 2026. Malaysia’s economy minister has described this year explicitly as one of “execution,” as the Anwar Ibrahim administration works to lock in the policy gains built through 2025’s trade turbulence (Fortune). The framing matters: it signals Putrajaya sees 2026 less as a year of new initiatives and more as a year of delivering on commitments already made — the Johor-Singapore Special Economic Zone chief among them.

The semiconductor exposure that both helps and constrains

Malaysia’s electrical and electronics sector accounts for roughly 40% of total exports, with semiconductors alone comprising about 65% of E&E exports (J.P. Morgan Private Bank). That concentration is precisely why Malaysia benefited from 2025’s tariff exemptions on semiconductors, electronics and pharmaceuticals, and precisely why any future change to those exemptions carries outsized risk for Malaysian growth relative to more diversified regional peers (J.P. Morgan Private Bank).

The Johor-Singapore SEZ as the structural bet

Johor’s 7,300-acre innovation sandbox, part of the new special economic zone with Singapore, is Malaysia’s clearest attempt to convert its manufacturing base into a higher-value regional hub rather than remain a low-cost assembly point (Fortune). The zone’s stated ambition — combining Johor’s “land and scale” with Singapore’s “capital and speed” — positions the region to capture AI-linked infrastructure and hardware investment that would otherwise bypass both countries individually (Fortune).

Corporate consolidation follows the growth signal

Confidence in Malaysia’s execution story is visible in corporate activity too: two Southeast Asia 500 companies are reportedly exploring a merger that would form Malaysia’s largest construction conglomerate, a scale bet that typically follows — rather than precedes — genuine confidence in a multi-year infrastructure pipeline (Fortune).

The regulatory friction points

Not every 2026 storyline is frictionless. Malaysia has moved to temporarily block the Grok AI platform alongside Indonesia following a sexual-deepfake scandal, illustrating that Malaysia’s AI-forward economic strategy is running in parallel with an increasingly assertive AI-governance posture — a tension regional investors should track as a signal of how Malaysia intends to regulate the same technology sector it is courting for investment (Fortune).

What “execution” needs to mean by year-end

For Malaysia’s 2026 narrative to hold, three things need to materialise beyond announcements: measurable Johor SEZ tenant commitments, continued semiconductor export resilience against any tariff-exemption rollback, and a construction-sector consolidation that actually delivers infrastructure rather than simply consolidating market share.

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Analysis

Why Global Family Offices Are Converging on Dubai in 2026

Published

6 days ago

August 11, 2026

Abdul Rahman

Dubai’s transformation from oil-adjacent trading post to global capital hub is no longer a talking point — it is a measurable trend. The emirate’s newly launched Economic Survey 2026 shows GDP climbing to $265 billion alongside rising employment, while international family offices are gathering for the Family Office Summit Dubai 2026 as the city cements its position as a family-wealth hub (Gateway Group; Arabian Business).

The non-oil growth engine

The UAE enters 2026 with the World Bank projecting national growth of roughly 5%, well above the global average, driven substantially by 5.3% expansion in the non-oil sector (Barchart). Technology, green energy and healthcare are the top-performing sectors, and 64% of UAE executives expect trade volumes to exceed 2025 levels — confidence underpinned by the country’s expanding network of Comprehensive Economic Partnership Agreements (Barchart). Historically, oil production accounted for half of Dubai’s GDP; today it contributes less than 1% (Wikipedia/Economy of Dubai).

Why family offices specifically are relocating

The Family Office Summit Dubai 2026 is drawing international participants precisely because the emirate has built regulatory infrastructure — inside jurisdictions like the DIFC — designed to attract exactly this category of capital. As one DIFC executive noted, incentives alone are no longer enough to win global finance; institutional credibility and regulatory clarity now matter more, which explains why firms such as Sixth Street have opened Abu Dhabi offices as global investment houses deepen their Middle East presence (Gateway Group).

Infrastructure is compounding the pull

Beyond finance, the UAE’s infrastructure build-out is reinforcing the wealth-hub thesis. Etihad Rail’s Abu Dhabi–Fujairah passenger service and the Madinat Zayed and Liwa station openings, arriving ahead of schedule, signal a state execution model that investors increasingly cite as a differentiator versus regional peers (GCC Business Watch). Dubai has also rolled out a AED 1 billion economic support package aimed at business liquidity and resilience amid regional geopolitical headwinds (GCC Business Watch).

The regional competition for capital

Dubai’s rise is happening alongside — not in isolation from — a broader Gulf capital race. Saudi Arabia’s economy is set for stronger growth per IMF assessments, and Gulf sovereign and corporate capital is increasingly being deployed across sectors from AI infrastructure to green growth commitments, meaning Dubai’s wealth-hub status will need continual reinforcement rather than passive maintenance (GCC Business Watch).

The bottom line for investors

For family offices weighing jurisdiction, Dubai’s pitch in 2026 combines three elements rarely available together: near-zero effective taxation, a non-oil economy growing faster than most G20 peers, and physical and financial infrastructure being built ahead of demand rather than in reaction to it. That combination — not simply low tax rates — is what is now pulling global family wealth toward the emirate.