**Introduction** Geopolitical rivalry increasingly shapes the design and use of trade policy. Governments use tariffs, export controls, subsidies, investment screening, and regulatory measures not only to influence market access but also to secure technological leadership, reduce strategic dependence, and strengthen strategic positioning. Trade has become a primary arena through which geopolitical competition is operationalized, particularly in advanced technology, clean energy, and critical input sectors. **Contextual background** Since the late 2010s, trade policy has expanded beyond tariff liberalization toward managing strategic vulnerability and technological competition. Supply-chain disruptions, intensifying major-power rivalry, and the growing security relevance of advanced manufacturing and digital infrastructure have accelerated this shift. Trade instruments are increasingly embedded within broader strategic frameworks, contributing to fragmentation across production networks and governance structures[1]. **How geopolitical rivalry shapes trade policy** **1.** **Technology controls as tools of strategic competition** Geopolitical competition increasingly manifests through restrictions on advanced technology trade, cross-border investment, and sensitive data flows rather than through tariffs alone. Export controls, investment screening mechanisms, and licensing regimes limit access to technologies with military, dual-use, or strategic industrial applications. These measures alter global value chains by prompting firms to adjust sourcing, production, and market access decisions based on regulatory and geopolitical risk considerations, rather than solely on cost or efficiency. **Examples** * US export control measures introduced and expanded between 2022 and 2024 restricted the export of advanced logic chips, high-performance AI accelerators, and semiconductor manufacturing equipment to China. The rules extend to certain foreign-produced items made with US-origin technology, affecting suppliers in allied economies and prompting adjustments in sourcing and production structures across the semiconductor value chain[2]. * Outbound investment restrictions announced in 2023 limit US capital participation in selected Chinese semiconductor, quantum computing, and artificial intelligence sectors. These measures constrain cross-border equity investment, venture capital activity, and related technical services, increasing regulatory separation between technology ecosystems[2]. **2.** **Industrial****policy as a driver of trade realignment** Geopolitical rivalry has expanded the use of industrial policy to influence production location, supply chain configuration, and market access. Large-scale subsidies, tax credits, preferential financing, and local content requirements are increasingly framed in terms of resilience, strategic autonomy, or national security. These measures shift investment and sourcing decisions toward domestic or partner-country production, altering trade flows and manufacturing geography. Rather than encouraging alignment around updated multilateral disciplines, parallel subsidy frameworks across major economies have contributed to policy competition and retaliatory trade responses. **Examples** * Tax credits under the US Inflation Reduction Act tied to North American final assembly and battery sourcing requirements have redirected investment in electric vehicle and battery production toward the United States, Canada, and Mexico. Firms have expanded or relocated production to qualify for consumer and manufacturing subsidies, reshaping trade flows in automotive components and battery materials[3]. * China’s large-scale fiscal support, preferential financing, and local government incentives for electric vehicle and battery manufacturers have contributed to rapid export growth in these sectors. The expansion has prompted anti-subsidy investigations and provisional tariff measures in the European Union and other markets, illustrating the spillover effects of subsidy competition[3]. * Local content requirements embedded in renewable energy procurement and infrastructure programs in several emerging and advanced economies require minimum domestic input thresholds. These rules influence sourcing decisions by limiting eligibility for public contracts to domestically produced components, reducing import penetration in targeted sectors[3]. **3.** **Critical mineral controls as geoeconomic leverage** Trade in critical minerals demonstrates how geopolitical rivalry operates through concentration in key stages of global supply chains. While extraction is geographically dispersed, processing and refining capacity for several minerals is heavily concentrated in a small number of economies. This concentration creates strategic vulnerabilities that can be shaped through export controls, licensing requirements, investment restrictions, and state-directed capacity management. Mineral trade is increasingly incorporated into industrial and national security planning, influencing sourcing strategies and prompting diversification efforts among importing economies. **Examples** * China’s export controls introduced in 2023 on gallium and germanium, two inputs critical for advanced semiconductors and defense electronics, required exporters to obtain government licenses. The measures affected global supply availability and pricing, prompting firms and governments to reassess sourcing strategies[4]. * Export licensing requirements imposed on graphite in 2023, a key input in lithium-ion battery anodes, introduced additional compliance steps for foreign buyers and reinforced concerns about concentration in battery material processing[4]. * Critical mineral partnership agreements and long-term offtake contracts between advanced economies and lithium-, nickel-, and rare-earth-producing countries have sought to secure alternative supply channels. These arrangements redirect investment and trade toward partner jurisdictions to reduce exposure to concentrated processing capacity[5]. **4.** **Unilateral trade measures and the constraints on rules-based trade** Geopolitical rivalry has increased reliance on unilateral trade measures and reduced adherence to multilateral dispute discipline. Governments invoke national security, resilience, or strategic concerns to justify tariff increases and regulatory restrictions that extend beyond negotiated commitments. The reduced effectiveness of dispute settlement lowers the legal and political costs of maintaining contested measures. As a result, enforcement outcomes increasingly reflect relative economic leverage rather than binding adjudication. Trade-restrictive measures have risen in recent years, and many remain in place without final resolution[6]. In the absence of fully operational appellate review, panel findings do not consistently lead to policy reversal, allowing contested measures to persist. **Examples** * Tariffs imposed under Section 232 of US trade law on steel and aluminum imports, justified on national security grounds, remain partially in effect. These measures affected both strategic competitors and allied economies and triggered retaliatory tariffs and negotiated quota arrangements[6]. * Plurilateral initiatives such as the Joint Statement Initiative on e-commerce have advanced digital trade rulemaking outside full multilateral consensus, reflecting the difficulty of updating World Trade Organization disciplines under conditions of geopolitical disagreement[7]. **Conclusion** Across technology controls, industrial policy, critical mineral supply chains, and unilateral trade measures, geopolitical rivalry increasingly operates through trade policy rather than alongside it. Trade policy now serves as a primary channel for managing technological competition, reducing strategic dependence, and projecting economic influence. This shift carries enduring implications for supply chain configuration, rule-based governance, and the trajectory of global economic integration.
