Let us return to the broader picture. First, there is a global landscape marked by sound and fury (to borrow from the title of William Faulkner’s fourth novel, in which the characters are unable to escape from a gruesome fate). In its 2025 annual report, Amnesty International described today’s world as a “predatory global order”. Multilateralism is being challenged. International law is weakening. War increasingly substitutes for diplomacy. Authoritarian regimes, such as Vladimir Putin’s Russia, play a central role, but so too do democracies, including Donald Trump’s United States and Benjamin Netanyahu’s Israel, both displaying illiberal tendencies. Second, there is an economic environment defined by ambiguity. Should one take comfort in resilient growth and buoyant equity markets? Or worry about mounting trade barriers and ever-rising public debt? Set side by side, these realities are hardly reassuring. Defence spending is rising sharply, but how will it be financed? And what will be the consequences for macroeconomic balances?
One senses an underlying connection between international and economic equilibria. International cooperation appears to be a condition for economic stability, and the reverse may also hold true. This invites a deeper question: could economic instability itself undermine relations between states, whether directly or via weakened international institutions? To answer this, we must first clarify the concepts of international cooperation and economic stability, before explaining the relationship between them.
International cooperation refers to the process by which countries work together to achieve shared objectives, whether promoting global public goods (such as public health), managing shared resources (water), or addressing collective challenges (climate change). While some of these goals may generate rivalry, others do not. Interdependence encourages cooperation, but diverging interests can just as easily hinder it.
Economic stability, meanwhile, corresponds to the sustained achievement of Kaldor’s “magic square”: growth close to potential, price stability (or, more precisely, well-anchored inflation expectations), full employment and balanced external accounts. It underpins long-term prosperity.
How do these two dimensions interact? Given the reality of trade flows and global public goods, international cooperation should, in theory, support economic stability. Yet experience over recent years or even decades tells a more nuanced story. The spread of neoliberal rules and globalisation was expected to foster cooperation and shared prosperity, reinforcing each economy’s stability. In practice, outcomes have been more uneven. Greater openness to trade, even within a framework of common rules, has often destabilised domestic social, political and even environmental equilibria. In some cases, this has undermined economic stability itself, triggering backlash against the very global order founded on cooperation. The lesson is sobering: applying uniform international rules to diverse domestic realities can generate disruption. Labour markets, in particular, may bear the brunt through rising unemployment or shifts towards lower-skilled, lower-paid jobs. Social and political tensions naturally follow.
If international cooperation is not a universal guarantee of stability, it becomes tempting to prioritise national interests. This shift implies a greater role for the state relative to markets, even at the cost of strained international relations. China under President Xi has long pursued such a strategy. The United States, under President Trump, is now moving in a similar direction, albeit through different means. Each nation, after all, follows its own path.
Welcome to the age of geoeconomics. The concept can be defined as the use of economic strategies by states to protect domestic industries, help their national champions to secure control over key technologies and/or capture strategic segments of global markets in connection with the production or marketing of a critical product or product range, the ownership or control of which grants an element of power and international influence to the state or national champion and contributes to the strengthening of its economic and social potential (cf. Pascal Lorot, 2009; de la géopolitique à la géoéconomie).
But do such strategies actually work? Globalisation has, in many respects, morphed into economic warfare. As Canada’s Prime Minister Mark Carney recently put it at the World Economic Forum in Davos: economic integration is increasingly being weaponised, through tariffs, financial infrastructure and supply chains. This observation leads us to another: in today’s world, all countries – large or small – feel vulnerable. The major powers, particularly China and the United States, set the tone. Others must respond as best they can. The US, for example, imposes tariffs on many partners while simultaneously seeking cooperation to circumvent China’s dominance in rare earths. China, for its part, is reorienting trade and financial flows away from the United States and promoting the internationalisation of the renminbi.
Is there a playbook for economic warfare? Not exactly. But a recent Foreign Affairs article (“How to Fight an Economic War”, May–June 2026) outlines several guiding principles:
- Identify strategic chokepoints, characterised by:
- dominant market share
- lack of short-term alternatives
- the ability to exert asymmetric pressure (considerable damage for the target, minimal damage for the attacker).
- Semiconductors (for the US) and rare earths (for China) are prime examples. By contrast, tariffs do not meet these criteria: the United States accounts for only around 14% of global imports, too little to prevent substitution.
- Prepare for retaliation. Offensive measures are insufficient on their own. States must anticipate the countermeasures that targeted countries will inevitably activate. They must identify their own vulnerabilities, where adversaries will apply pressure, and develop fallback strategies.
- Define clear objectives before the use of these weapons. These can fall into three categories and can be ranked by ambition. The least ambitious is signalling or condemnation, which involves publicly condemning the misconduct of the country in question. The next level is restriction, essentially restricting access to technology, markets and/or capital and financial infrastructure. The highest level is coercion, which uses economic pressure to bring about a change in policy. Crucially, the tools deployed must match the intended objective.
This framework sheds light on the relationship between international and economic dynamics. Poorly managed globalisation has contributed to today’s tensions, but does this imply an ineluctable escalation? Behaviourally, perhaps: conflict often breeds excess. Analytically, less so. Economic exchange remains governed by comparative advantage (David Ricardo and with/after him the classical theory of international trade), which constrains the scope for extreme outcomes. Unlike military conflict, where escalation can become total – as theorised by Clausewitz – economic confrontation has structural limits.
The framework governing international trade (and likely finance) is set to evolve – perhaps more in practice (de facto) than in law (de jure). Rules are becoming less universal, varying across partners; less stable, more sensitive to political and economic cycles; and less market-driven, with national interests increasingly taking precedence. The global economic landscape is shifting: “hypoglobalisation” is replacing “hyperglobalisation”. World trade growth is now lagging behind global GDP growth, rather than exceeding it, and with that shift comes a new reality: a less stable relationship between the two.
Hervé Goulletquer, Senior Economic Adviser, Accuracy