Ajay Banga said that the economic fallout from the conflict is already feeding into weaker global expansion, with both developed and emerging economies expected to feel the ripple effects in the coming days. It is worth mentioning that the ceasefire, announced by United States President Donald Trump last week, fell through as Tehran and Washington failed to reach a consensus in Islamabad.

“The risks deepen significantly if the conflict drags on. In a prolonged-war scenario, global growth could decline by as much as 1 percentage point, underscoring the fragility of the recovery and the sensitivity of markets to geopolitical shocks,” Ajay Banga said.

In fact, the World Bank sees emerging markets and developing economies bearing a disproportionate share of the global slowdown, with the projected growth rate now estimated at 3.65%, down from an earlier estimate of 4% made in October 2025. If the conflict continues, growth could fall sharply to 2.6%.

On the other hand, the emerging economies also need to deal with growing inflationary pressures, with the World Bank now forecasting the ratio at 4.9%, up from a previous estimate of 3%. In a worst-case scenario, inflation could surge as high as 6.7%, reflecting supply disruptions and higher energy costs linked to the Middle East conflict.

Ajay Banga’s comments come ahead of the crucial meeting in Washington, where top global finance professionals will meet to discuss the Iran war’s cascading effects, with a section of the analysts even calling the crisis the “third major shock,” after the COVID pandemic and the Russia-Ukraine war.

Top International Monetary Fund (IMF) and World Bank officials will be downgrading their forecasts for global growth and raising inflation predictions due to the war, keeping in mind factors like higher energy prices and supply disruptions.

Before the beginning of the Iran war on February 28, both global institutions were expected to lift their growth forecasts given the resilience of the global economy. However, the regional conflict, which is now steadily leaving its global imprints, has changed the equations.

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“Takaichi may seek the BOJ’s help in keeping yen from falling in check, as the fact that Washington conducted rate checks to prop up the yen last month signals its preference for the currency to strengthen against the dollar,” Makoto Sakurai remarked.

“Currency intervention has only a temporary effect in combating yen-selling pressure. The best way to counter a weak yen is for the BOJ to raise interest rates. A renewed yen slide would push up inflation through higher import costs and offset some of the downward pressure from government fuel subsidies,” said Makoto Sakurai, who reportedly retains close contact with the central bank’s incumbent policymakers.

“If the need to combat sharp yen falls emerges, the BOJ can justify raising rates as soon as March by pointing to prospects of strong wage growth in annual spring wage talks between companies and unions. It would make better sense to wait until April, but depending on yen moves, there’s a chance the BOJ could raise rates in March,” the former board member added.

Sakurai served as a BOJ board member from 2016 to 2021, the timeframe that saw the central bank shift its policy focus away from huge asset purchases toward controlling long-term interest rates through the introduction of bond yield control.

He stated that the BOJ may need to raise its policy rate twice in both 2026 and 2027, increasing it from the current 0.75% to 1.75%. This rate will neither cool nor overheat the Japanese economy.

“Hiking rates at a faster pace could hurt Japan’s banking system by increasing bankruptcies among small firms and hurting the balance sheets of regional lenders,” Makoto Sakurai added.

The year 2024 saw a massive change in the BOJ’s policy approach, with the central bank ending a decade-long massive stimulus programme, apart from raising rates several times, including in December, when it took its short-term policy rate to a 30-year high of 0.75%.

With inflation exceeding the BOJ’s 2% target for nearly four years, Governor Kazuo Ueda has signalled the apex institution’s readiness to keep raising rates if its economic projections materialise. The BOJ’s next policy meeting will be held on March 18-19, followed by the board meeting on April 27-28, during which it will also make fresh quarterly growth and inflation forecasts.

A weak yen has become both an economic and political headache for Japanese policymakers, with the phenomenon hurting households and retailers by pushing up imported fuel and food costs. Since Takaichi’s ascendancy as the country’s Prime Minister in October 2025, the currency has fallen about 8% against the dollar to an 18-month low of 159.45 in January. In fact, according to reports published in The Mainichi daily, one of Japan’s major newspapers, Takaichi, during her meeting with BOJ Governor Ueda in February, expressed “reservations” about additional interest rate hikes.

While there hasn’t been any proper clarification from either of the two personalities, the report signals potential friction over monetary policy that could complicate the BOJ’s coordination efforts with the newly strengthened administration. While Ueda described the meeting as a “general exchange of views on economic and financial developments,” apart from refuting rumours of the PM making specific monetary policy requests, Takaichi said that she hoped the central bank would work closely with the government to durably achieve its 2% inflation target, accompanied by wage gains.

According to the BOJ governor, when he met Takaichi in November 2025, she was told that the central bank was gradually raising interest rates to guide inflation smoothly toward its 2% target and ensure the economy achieves sustainable growth.

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The recent defeat is reflected in the significant decline of US diplomatic expectations. Wendy Cutler, a former US trade negotiator, confirmed to the Wall Street Journal that current trade negotiations have entirely set aside structural matters.

The objective is no longer advancing the relationship through fundamental change but achieving mere de-escalation and stability. Uncle Sam’s strategy has devolved from demanding systemic change, such as forcing a shift to domestic consumption or ending industrial subsidies, to simply managing crisis stability, confirming that years of tariff warfare yielded nothing but tactical adjustments and an exhausted diplomatic corps.

The US trade war’s unintended primary achievement was proving that China could withstand external economic pressure. By lowering expectations from achieving profound structural reform to settling for simple relationship stabilisation, the United States has signalled to Beijing that its state-led economic model, driven by the Chinese Communist Party, is unassailable.

This undermines the US’ credibility in future negotiations globally, a geopolitical price that far outweighs any temporary trade concessions. The US deployed its greatest economic weapon, access to its immense market, to demand change.

When Beijing retaliated by weaponising its dominance over rare-earth metals and disrupting the US’ agricultural sector, the cost of sustained friction became politically prohibitive for the American system, forcing this abandonment of structural goals. This tactical surrender is a direct, quantifiable measure of the effectiveness of China’s counter-coercion tactics.

The decades-long faith in engagement, pursued through successive US administrations, was a profound political delusion, an act of intellectual self-comforting that ignored the clear warning signs.

The historical premise of this policy rested on the belief that drawing China into the global trading system, notably through its accession to the World Trade Organisation in 2001, would inevitably lead to political liberalisation.

That hope has been comprehensively dashed. The ensuing decades saw not political openness, but the reverse. Chinese leader Xi Jinping, who consolidated power in 2012, has systematically tightened his control over the domestic political system and civil society more broadly.

This failure was inherently ensured by Beijing’s rigid political identity. Evidence suggests that the Chinese Communist Party fundamentally rejects the idea that the rule of law should take precedence over the Party’s leadership role in governing the state. This stance creates significant obstacles to any transition toward a true, open market economy.

Furthermore, the failure of engagement was significantly exacerbated by the failure of global enforcement. The US and the international community failed to utilise the tools available under the WTO to hold China rigorously accountable for its commitments, providing Beijing the space to pivot sharply toward a state-centric, CCP-run economy.

This political tragedy confirms that the US supported China’s entry on terms that proved wholly ineffective in securing Beijing’s embrace of an open, market-oriented trade regime. China weaponised the benefits of global integration to strengthen its state apparatus and industrial planning. The policy of engagement was a Trojan horse that ceded geopolitical advantage and accelerated CCP power.

Predictable collapse of tariff warfare

The Donald Trump administration, armed with tariffs and rhetorical fury, thought its economic might could intimidate history and force a fundamental shift in Beijing’s economic DNA. They were tragically, predictably wrong. The flawed strategy sought to move China away from what was correctly identified as a mercantilist policy of subsidised manufacturing and export focus.

The mechanism was based purely on market mechanics, imagining that tariffs would squeeze exports and compel Beijing to initiate painful social reforms, specifically overhauling health and social welfare systems, which would allow China’s 1.4 billion consumers to spend more and save less. The idea was that by pressuring exports, China would be forced to find new sources of growth at home, boosting global consumption and shrinking its massive trade surplus.

This strategy failed catastrophically because it entirely ignored China’s ideological commitment to its state model. Oliver Melton, a director at Rhodium Group, states plainly that Washington has very little ability to influence China’s macroeconomic strategy because the two nations hold fundamentally different ideological understandings of what drives economic growth and development.

China’s commitment to manufacturing and industrial production as the wellspring of national prosperity is absolute. Beijing viewed the trade war not as a simple economic negotiation over market access, but as a severe test of national will and security.

The failure of tariffs to achieve structural change confirms that Beijing is willing to absorb immense short-term economic pain and dislocation to defend its foundational industrial state model, a resolve the US completely underestimated.

Why Beijing refuses to spend

The weak level of household consumption in China is a deliberate political choice essential for funding the industrial state apparatus. Analysis confirms that China’s long-term economic stability absolutely requires a transition to household consumption as its investment-led model yields diminishing returns. Even some Chinese officials grudgingly acknowledge that the country’s consumption is far too weak and express a desire for some rebalancing.

However, the necessary structural reforms are gargantuan, requiring a fiscal overhaul that Beijing views as politically unacceptable. Meaningfully boosting consumption requires structural reforms to address issues like the rural-urban divide, the precarious position of migrant workers, and the deep misallocation of capital currently controlled by state-owned enterprises and banks.

The total fiscal resources required to fund social infrastructure, public services, and ongoing social transfers needed for a durable shift would amount to tens of trillions of RMB, approximately 30% of China’s GDP.

Such a massive fiscal commitment is an existential threat to the powerful nexus of state-owned enterprises, local governments, and central planners that currently control the flow of capital. The efforts seen so far have been piecemeal, stymied by ideological attachment to industrial production and wariness of politically painful reforms in taxation, healthcare, and social welfare.

For Xi Jinping and the Chinese Communist Party, redistributing 30% of the nation’s capital to the populace to boost consumption is perceived as an act of weakness that would destabilise the existing political system and threaten the Party’s command over the economy, hence the resolute refusal to change the growth model.

Beijing’s response to the American tariff assault was immediate, disciplined, and ruthlessly strategic, a calibrated move that forced the United States onto the defensive and rapidly exposed the limitations of American economic coercion.

Rather than capitulating, Beijing retaliated with stiff countermeasures, using its leverage over critical supply chains and strategically targeting politically sensitive US sectors, such as halting purchases of soybeans to punish America’s agricultural ecosystem.

This counter-coercion was built upon decades of deliberate industrial policy aimed at securing dominance in strategic materials. China weaponised its near-monopoly position on rare-earth elements, critical minerals essential for defence, electric vehicles, advanced semiconductors, and green energy technology.

China established its leverage through decades of concerted industrial policy and now accounts for approximately 91% of global rare-earth refining. When the trade war heated up, Beijing imposed stringent export controls on these critical materials, establishing an economic weapon that allows it to inflict targeted pain directly on American companies reliant on these inputs.

The American assumption that high tariffs alone would secure surrender proved far less damaging than China’s targeted, chokepoint-based retaliation, cementing China as an economic peer rival capable of defying the world’s longstanding superpower.

The systematic failure of the United States to achieve its stated goals is laid bare by key economic metrics, which confirm the persistence of China’s export-driven imbalance and the scale of the necessary, yet politically impossible, consumption reforms.

Xi’s chokepoint strategy

Henry Farrell, a professor of international affairs, argues that the trade war taught Xi Jinping the necessity of reducing reliance on the United States in critical areas such as semiconductors, confirming that Washington’s pressure was entirely counterproductive.

In response, Beijing strategically hardened its system. China systematically identified perceived “chokepoints,” sectors where it was reliant on foreign inputs, and launched a determined, whole-of-nation strategy to achieve self-sufficiency, rapidly building up domestic industries, developing alternative sources for inputs, and carefully husbanding its strengths.

The ultimate geopolitical goal articulated by this strategy is not improved trade balance, but political autonomy. Beijing seeks to maximise its freedom to pursue its own national interests without the United States being capable of determining its destiny through technological or economic coercion. This shift elevates industrial policy from a matter of economic efficiency to a core mandate of national security and geopolitical warfare.

Beijing’s official policy response to American pressure, the “Dual Circulation Strategy,” is a fortress doctrine designed for resilience and siege, not for peace or global integration. The blueprint for China’s future was made clear in its latest five-year plan, which confirmed Beijing’s absolute intention to double down on this path. The plan reemphasised its commitment to technological self-sufficiency, pledging to pour more investment into advanced manufacturing and boosting exports.

The “Dual Circulation Strategy” aims to insulate the domestic market from external shocks by vertically integrating production and eliminating bottlenecks in technology and natural resources. This involves focusing heavily on the internal market while leveraging the Belt and Road Initiative to secure reliable external demand and open markets in the emerging world.

This inward pivot, born from the pressures of the trade war, is a powerful dual threat to the global economy. By aggressively seeking self-sufficiency in high-end inputs, China deliberately cuts off major high-tech exporters like the United States, Japan, and Germany.

Simultaneously, the external circulation component ensures China will use its growing geopolitical reach to export its industrial overcapacity and deflationary pressures globally, creating new and pervasive structural trade friction worldwide.

Controlling the global component chain

While Washington obsessed over tariffs and finished goods, Beijing executed a strategic masterstroke by weaving itself so deeply into the core machinery of global production that true decoupling became an impossibility. China has strategically shifted its focus from being merely the final assembler of finished products to dominating intermediate goods and core components.

Dinny McMahon, head of markets research at Trivium China, told the Wall Street Journal that the consequence is pervasive; virtually any manufactured goods purchased globally, no matter origin, now carries some exposure to Chinese supply chains.

This dominance is structural and non-replicable in the short term. China holds dominant positions in multiple critical electronic products and raw materials. Mainland China hosts over 50% of global manufacturing for Printed Circuit Boards (PCBs), the fundamental backbone of all electronics.

Furthermore, China’s chemical industry alone contributes over 40% of global chemical production, a critical input for countless industrial processes.

Experts confirm that relocating final assembly processes is relatively straightforward, but the real obstacle, the “difficult middle stages,” lies in replicating China’s established infrastructure and expertise in complex component production, such as metal moulding and speciality chemicals.

The US strategy fundamentally failed to comprehend that the centre of global manufacturing gravity had moved. China has successfully forced the world into a state of strategic interdependence where Beijing holds the most essential chokepoints, allowing it to overcome decoupling efforts and export restrictions by leveraging its deep local supply chains.

China is suffering from domestic economic malaise and is actively weaponising its internal crisis, exporting deflation and systemic instability to the world. The rampant, state-subsidised production in China continues to far outstrip weak domestic consumption, leading to menacing domestic deflationary pressures. China is an exceptional case, the first G20 economy to report a year-on-year decline in consumer prices since August 2021.

This crisis is now a global problem. China’s export prices are collapsing, pushing inflation rates down globally. Between April and December 2023, Chinese export prices fell by 6%. Crucially, prices for machinery and electrical equipment, inputs essential for Western industry and technology, dropped 8.4%.

This overproduction, particularly in sectors like steel, aluminium, and advanced clean energy technology, is now flooding global markets and aggressively suppressing prices. The systematic undercutting of global prices in key strategic future industries, such as electric vehicles and solar panels, is an effective extension of China’s mercantilist industrial policy.

This forces foreign firms into unhealthy, unsustainable competition, capturing global market share by systematically destroying the profitability of rival industries in advanced economies. This is economic warfare waged with weaponised low prices, supported by state funding, subsidies, and cheap financing.

Perhaps the most profound moral indictment of China’s rigid, export-focused system is its detrimental effect on the development pathways of poorer nations.

Eswar Prasad, a professor of trade policy, notes that China’s ballooning goods surplus and resolute refusal to rebalance its model actively stifles manufacturing in other countries.

This specifically targets poorer economies trying to nurture a domestic factory sector, as China refuses to cede significant ground in lower-value manufacturing, even as it achieves dominance in high-value goods like aircraft and chips.

The historical promise that China’s rise up the value chain would create growing markets for labour-intensive manufactured goods from other emerging markets has been systematically dashed. Developing economies are being crowded out of manufacturing by Chinese overcapacity, blocking their essential path up the value chain.

China increasingly competes head-on with these nations in the low-tech and mid-tech space. The consequence is a global South dilemma, where China remains primarily a source of supply, not a reliable source of demand, creating profound structural imbalances and mounting trade friction even with its supposed developing partners. Beijing must undertake aggressive reforms, including allowing the renminbi to strengthen and boosting imports, to ease the intense pressures these trade flows are creating.

The trade war was doomed before the first tariff was levied because Washington and Beijing are locked in a conflict between two mutually exclusive economic ideologies. The US insists on painful reforms toward consumption-led growth, but Beijing’s leadership reemphasises its absolute commitment to industry-led technological self-sufficiency and boosting exports. This is the unmovable object meeting the unstoppable force.

The structural reality is clear: without aggressive, politically traumatic reforms to restructure the economy, China’s growth trajectory will inevitably slow while trade friction with every trade partner, both in the North and the South, will increase dramatically.

The world must now prepare for a future defined by China’s chronic structural imbalances, a reality created by the failure of the United States to understand the ideological foundations of its rival. The quantitative evidence for China’s systematic export of its industrial surplus and deflationary pressure is overwhelming.

Necessity of a new strategy

The US trade war achieved nothing of its stated goals, confirming only the profound political and ideological resilience of China. The American effort resulted in the confirmation of China’s resolve, cementing its status as an unyielding peer rival fully capable of determining its own destiny.

Uncle Sam’s objective was inverted. Washington now accepts tactical de-escalation, having squandered years on a flawed, unilateral campaign that only taught Beijing how to harden its system and solidified its commitment to industry-led growth.

The comprehensive failure of unilateral American tariffs against a centrally controlled, cohesive state apparatus demands a multilateral reckoning. The only viable path forward in response to China’s entrenched industrial model and its resulting weaponised deflation requires coordinated, unified action. This unified front must encompass Europe, Japan, and other critical partners globally.

The strategy should go beyond simply applying tariffs. It must focus on systematically neutralising China’s leverage at critical points, countering the systemic instability caused by its enforced overcapacity, and offering alternative development paths for emerging economies that are currently being overwhelmed by Chinese overproduction.

This is the final verdict on the grand delusion, the profound political naïveté that defined decades of US-China engagement. The geopolitical tragedy is that China leveraged that era of hope to construct a state fully immune to American economic coercion. The trade war showed Xi Jinping how essential it is for China to reduce reliance on the US and develop economic weapons to strike back.

China, having successfully defied the world’s superpower on the matter of structural reform, now moves forward along an unchangeable path of technological autonomy and industrial dominance. The world must now adapt to China’s reality, a geopolitical shift that ensures escalating global friction and will redefine the structure of the 21st-century economy.

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Since Saudi Arabia became a kingdom in 1931, Washington has provided diplomatic support. In the 1940s, President Franklin D. Roosevelt and King Abdulaziz formalised the oil-for-security deal aboard the USS Quincy, with the US promising military protection in exchange for a steady oil supply, an arrangement that continues to this day.

But the world of oil is slowly fading and making way for renewable energy. Crown Prince Mohammed Bin Salman, a visionary young leader, sees this truth. His oil-rich country has an advantage that won’t last forever, so he’s working hard to modernise and industrialise the Kingdom’s economy.

The headlines are staggering: Crown Prince Mohammed Bin Salman pledged to increase Saudi Arabia’s planned investments in the United States from $600 billion to $1 trillion.

During the meeting, both sides acknowledged shifting global realities. America wants fresh capital and supply chain security in a world that is quickly turning multipolar. The Saudis, on the other hand, have a deadline to meet. The Kingdom’s “Vision 2030” is as ambitious as they come.

They plan to be leaders in AI and aviation, produce nuclear energy, and build breathtaking cities in the desert. But it requires advanced technology and industrial partnerships that only American firms can provide for now. This partnership is a win-win for these G20 economies.

The Saudi-US partnership is not an alliance of convenience built on oil and security. They are now strategic partners with aligned goals of economic and technological supremacy. As they posed for pictures in front of the White House, it was clear to the whole world that the Saudis and Americans had tightened their alliance.

Data blooms in the Arabian deserts

Technology was at the heart of the conversation between the two world leaders. The Saudis expressed their desire to be the global hub of AI and data. It seems this visit to America has brought that vision closer to reality, with pacts that would place the Kingdom as a central node in the global AI infrastructure.

At the heart of this transformation is authorisation by the US Commerce Department for the export of advanced AI chips to Saudi Arabia. This decision effectively clears the way for the shipment of up to 35,000 Nvidia Blackwell chips to HUMAIN, a Saudi-backed national AI champion. This authorisation is more than just a trade deal.

It represents a stamp of approval from Washington that brings Saudi Arabia into the trusted circle of American technological partners. It addresses the long-standing bottleneck of access to high-performance compute power, which is the lifeblood of the modern AI economy.

HUMAIN was the undeniable star of the investment conference that ran parallel to the political meetings. The company, backed by the immense resources of the Public Investment Fund (PIF), announced a flurry of partnerships that read like a who’s who of the American tech sector.

The most headline-grabbing of these was the partnership with Elon Musk’s xAI. The two companies signed a framework agreement to build a massive network of low-cost GPU data centres within the Kingdom.

This project, which includes a flagship 500-megawatt facility, aims to leverage Saudi Arabia’s abundant and low-cost energy resources to power the energy-hungry training and inference workloads of the next generation of AI models.

The logic behind this partnership is compelling. As AI models grow exponentially in size, the cost of electricity becomes a primary constraint. Saudi Arabia offers some of the lowest energy costs in the world, making it an ideal location for what industry insiders are calling computer factories. By pairing American innovation with Saudi infrastructure and capital, the xAI-HUMAIN alliance seeks to lower the barrier to entry for advanced AI development.

HUMAIN also signed a separate agreement with Groq, a company famous for its ultra-fast AI inference chips. This deal will see HUMAIN triple the Kingdom’s Groq-powered inference capacity. This is a crucial distinction.

Nvidia makes the best chips in the world. There is no doubt about it. Groq has technology optimised for running models in real-time applications. The Saudis have made deals with both the hardware and software developers. They are going to alchemise the union between xAI and Nvidia in their energy-rich and spacious deserts.

This isn’t a one-way street. HUMAIN and Global AI also plan to build high-density AI data centres in the US, using top-of-the-line Nvidia technology. The Saudis are reciprocating capital flow and will soon lay the foundations of the great American digital economy.

In the venture capital space, the visit saw a major validation of the American startup ecosystem. Luma AI, a San Francisco-based startup working on Artificial General Intelligence (AGI), raised USD 900 million in a Series C funding round. HUMAIN led the round, with participation from major players like AMD Ventures, Andreessen Horowitz, Amplify Partners, and Matrix Partners.

This investment highlights the PIF’s strategy of taking significant equity stakes in companies that are defining the future of technology. It provides Luma AI with the runway to compete with giants like OpenAI and Google while giving Saudi Arabia a seat at the table of frontier AI research.

Microsoft also cemented its role in the Kingdom’s digital transformation. The tech giant signed a Memorandum of Understanding (MoU) with the PIF and the Saudi Information Technology Company. The agreement explores the delivery of Microsoft’s sovereign cloud services in Saudi Arabia.

The sovereign cloud restricts data to national borders and subjects it to local laws. It is essential technology for governments and sensitive industries. Microsoft has secured a lucrative deal with one of the world’s wealthiest clients and will provide services in the Kingdom’s administration, healthcare, and finance sectors.

These agreements collectively signal a pivot. Saudi Arabia is moving beyond being a passive consumer of technology. It is positioning itself as a co-creator and a critical infrastructure provider for the global AI ecosystem. The Silicon Desert is no longer just a marketing slogan. With billions of dollars in hardware and infrastructure now in the pipeline, it is rapidly becoming a physical reality.

Powering future partnerships

While technology captured the imagination, energy remained the bedrock of the discussions. However, the conversation has moved far beyond the traditional barrel of crude oil. The visit marked a historic turning point in energy cooperation with the announcement of a new agreement on civil nuclear cooperation.

This agreement has been years in the making. It establishes a framework for the United States to support Saudi Arabia in developing a civilian nuclear energy programme. For Riyadh, nuclear power is essential to its domestic energy strategy.

The Saudi plan is clever. With a rapidly growing population and expanding industry, the country needs more energy. They decided to build nuclear power plants to provide safe, low-cost energy while exporting oil to other countries, reducing their own carbon footprint. The Saudis aim to be the world’s largest oil exporter while using less oil at home.

The US sees this as a win. Without this deal, Saudi Arabia might have turned to Russia or China for their energy needs, which could have caused concern in Washington. Now, the Saudis are more likely to follow nuclear safety standards, and the agreement boosts US nuclear exports while strengthening long-term energy ties between the two countries.

The deal includes strict safeguards and non-proliferation standards. It addresses security concerns while allowing the Kingdom to join the club of nations with peaceful nuclear capabilities. At the same time as the nuclear deal, Saudi Aramco, the world’s largest oil producer, used the visit to grow its presence in the American energy sector.

Aramco announced 17 MoUs and agreements with a potential total value of more than USD 30 billion. These agreements were signed with major US companies and cover a diverse range of activities.

The deals are also about Liquefied Natural Gas (LNG). The world is moving away from coal to greener alternatives. LNG is now the critical transition fuel. The Saudi gas giant, Aramco, often cited as one of the most valuable companies in the world, is expanding its global portfolio aggressively. New partnerships are being made with MidOcean Energy and Commonwealth LNG.

This might involve offtake agreements and equity stakes in US LNG export terminals. It is a powerful move to become a major trader of US gas by leveraging its global marketing network to sell American LNG to buyers in Europe and Asia.

Aramco is signalling the corporation’s supply chain resilience. The oil titan has signed important contracts with US oilfield services companies such as SLB, Baker Hughes, and Halliburton. Most of them are procurement deals. It is a strategic move that ensures continued access to reservoir management technologies and advanced drilling techniques. It is a vital step for maintaining production capacity and efficiency.

Furthermore, the energy partnership is increasingly looking at new vectors such as hydrogen and carbon capture. The investment conference featured discussions on how US technology can help Saudi Arabia achieve its goal of becoming the world’s largest exporter of clean hydrogen. Saudi Arabia brings low-cost gas and renewable energy potential. The US brings expertise and the machines, like electrolysers and carbon capture technologies, needed to make it viable.

This diversified energy portfolio reflects a mature relationship. It is no longer just about the US importing Saudi oil, which it does in far smaller quantities than in the past. The US and Saudi Arabia are partnering to address the global energy transition. Both countries want to maintain the lead they have held in the energy industry for the past century. They are investing heavily in cleaner and cheaper hydrocarbons, as well as nuclear and renewable energy. The MoUs signed during this visit lay the legal and commercial groundwork for this multi-decade collaboration.

Backbone of modern economy

The third pillar of the visit focused on the physical backbone of the modern economy. Global trade tensions are at an all-time high, and supply chain threats are an existential crisis. The United States and Saudi Arabia took decisive steps to strengthen their networks in critical minerals, aviation, and defence.

There was a lot of talk about critical minerals. This is an important conversation for the US, considering its tariff wars and China’s decision to cut the US supply of rare earth minerals. Minerals such as cobalt, lithium, and rare earth elements are essential for making semiconductors and batteries that power AI and robotics. Most of these are mined in China.

Washington and Riyadh are seeking to diversify this dependency. Saudi Arabia sits on an estimated USD 2.5 trillion worth of untapped mineral resources. The new framework agreement aims to unlock this potential. It facilitates US investment in Saudi mining projects and encourages the transfer of American processing technology to the Kingdom.

The mineral corridors are a boon to America. They are very timely, and without them, the US would have lagged in the chip wars. Both the United States and Saudi Arabia are preparing for potential geopolitical meltdowns. Both parties also discussed their commitment to meeting high environmental standards. Mineral mining was first sent to China decades ago because the work is dangerous for both the environment and local communities.

In the aviation sector, the visit yielded a major win for American manufacturing. Saudia Group, the owner of the Kingdom’s national flag carrier, entered into a strategic agreement with GE Aerospace. The deal will see GE equip the airline’s fleet with GEnx 1B engines. This covers the carrier’s 2023 order of 39 Boeing 787-9 and 787-10 aircraft.

This agreement is significant for several reasons. American aerospace technology gets to shine in one of the fastest-growing aviation markets. Saudi Arabia is soon to be a global leader in tourism and logistics and aims to triple tourist footfall by 2030. The Saudia-GE deal is a guarantee that American engines will power this transition.

The deal is also likely to have long-term maintenance and service contracts, which generate recurring revenue for GE and create high-skilled jobs in both countries. It’s a clear example of how one country’s growth can also benefit another, bringing real advantages to both industrial bases.

Minerals and aviation are becoming key areas of mutual reliance. Saudi Arabia will mine and export minerals, which will be used in batteries for American cars. In return, American jets and planes will transport global leaders and businesspeople to Saudi Arabia, fuelling the next stage of economic growth. It’s a mutually beneficial relationship that connects the industrial and physical needs of both countries.

An ally in the Middle East

Economics aside, Saudi Arabia is an important ally to the United States. It is a neutral neighbour to Israel, a nation that America has special interests in protecting. Before the attacks on October 7, Saudi Arabia and the UAE were contemplating the Abraham Accords and were willing to partner with Israel.

After the issue in Gaza began, Saudi Arabia withdrew its interest, and peace in the Middle East became a dream once again. But there is good news this time. Crown Prince Mohammed Bin Salman has renewed his interest in a partnership with Israel on the condition that the two-state solution be implemented.

America also has a special interest in Saudi Arabia because the Al-Saud family is the custodian of the two holiest mosques of Islam in Mecca and Medina. It also provides some soft power and legitimacy. The new economic, technological, and defence deals have interwoven the destinies of the two countries tightly than ever before.

The gateway to 2030

As the Crown Prince’s jet lifted off from Andrews Air Force Base, the significance of the visit began to settle in. This was not a transactional meeting to fix oil prices or address a singular geopolitical crisis. It was a strategic alignment of two nations looking toward the next decade.

The pledge to increase investments to USD 1 trillion is a testament to the scale of the ambition. It signals that the Public Investment Fund (PIF) and other Saudi entities view the US economy as the primary engine for their capital deployment. The large number of American CEOs at the investment conference signals that Wall Street and Silicon Valley view Saudi Arabia as the world’s most exciting growth market.

The visit serves as a key opportunity. For the United States, it opens the door to the Gulf’s vast capital and infrastructure projects. It’s a chance to revitalise parts of the American economy through foreign investment and secure future supply chains.

For Saudi Arabia, it is a gateway to the technology and expertise required to realise Vision 2030. The Kingdom knows that it cannot build a post-oil economy in isolation. It relies on Nvidia’s AI chips, Microsoft’s cloud infrastructure, GE’s engines, and the innovation from American startups.

The warm personal dynamics between the leadership provided the necessary political cover for these deals to flourish. It smoothed over bureaucratic friction and signalled to the bureaucracies in both capitals that getting to yes was the priority. The result is a roadmap that is ambitious, detailed, and remarkably comprehensive.

We are witnessing the birth of a new economic corridor. It is a corridor where data flows as freely as oil once did. It is a partnership defined by gigawatts of computing power, fleets of modern aircraft, and the secure supply of critical minerals.

The November 2025 visit will likely be remembered as the moment when the United States-Saudi Arabia relationship finally stepped out of the shadow of the twentieth century and firmly embraced the opportunities of the 21st century.

The success of this visit will be measured not just in the dollars pledged but in the execution of these vast projects. Building data centres, nuclear plants, and mineral supply chains takes time and persistence. However, the foundation laid in Washington this November is solid. The “Trillion Dollar Handshake” has set the stage. Now the real work of building the future begins.

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Experts believe that the American tariff is causing fundamental shifts in the economic and political relationships between nations.

Free trade movement

Free trade imagines that goods and services move freely across borders with few restrictions, as opposed to protectionist policies that may include tariffs or import quotas. Yet free trade has never been pure.

After the Second World War, a rules-based global trading system emerged from the ashes. These rules, implemented by various organisations, helped countries maintain their sovereignty and reduce trade barriers.

The first-ever rules-based global trading system started with the 1947 General Agreement on Tariffs and Trade. This was signed in Geneva, Switzerland, by 23 countries. All the countries, through mutual talks and agreements, brought about significant tariff reductions on merchandise goods. These significant rounds of talking led the way for the creation of the World Trade Organisation (WTO) in 1995.

Setting up the trading system

The World Trade Organisation incorporated binding mechanisms to resolve trade disputes between countries, extended rules-based trade to services, intellectual property and investment measures, and allowed global trade to expand dramatically: merchandise exports increased from $10.2 trillion (A$15.6 trillion) in 2005 to more than $25 trillion (A$38.3 trillion) in 2022.

Yet, despite decades of liberalisation, truly free trade has remained beyond reach, with protectionism continuing through traditional tariffs and non-tariff measures such as technical standards, and increasingly, national security restrictions.

Trump’s trade doctrine

One of the economists who has argued that this current trade disruption is based on a ‘grievance doctrine’ is Richard Baldwin, who wrote that the Trump administration does not see trade as a way to benefit from exchanging goods and services between two countries, but instead sees it as a zero-sum game in which one country is stealing from another.

Baldwin stated that, in the world of tariffs, other nations are ripping off the United States. Trade deficits occur when a country’s imports exceed its exports. These deficits are often viewed not just as economic outcomes of the trade system, but rather as a form of theft. Similarly, international agreements are not treated as tools for mutual advantage, but as tools of disadvantage.

US rewrites global trade order

Trump has portrayed himself as a resetter of a system he says is rigged against the world’s largest economy. What used to be delivered by the United States in the form of defence, economic and political security, stable currency arrangements, and predictable market access now seems to be delivered more and more in the form of an economic bully demanding absolute advantage. This shift from global insurer to extractor of profit has generated uncertainty in relations with individual countries that goes well beyond the relationship itself.

Trump has also challenged the very basis of the World Trade Organisation: its principle of ‘most-favoured nation’ treatment, under which no country can make different rules for different trading partners, and “tariff bindings”, the limit on global tariff rates.

Even some analysts of American trade policy have argued that the United States might withdraw from the World Trade Organisation, an act that would formally repudiate the rules-based order of global trade.

US-China trade war

The rise of China as the manufacturing superpower of the world has completely transformed the landscape of international trade.

China is expected to make up 45% of global industrial output by 2030, with its manufacturing surpluses currently around $1 trillion (A$1.5 trillion) annually. This is largely due to substantial subsidies and market protections. This situation poses a fundamental challenge to American market capitalism, particularly for the Trump administration, as it contrasts sharply with China’s state capitalism.

While the year 2025 saw the trade war between Washington and Beijing dominating the media headlines, with tariffs and counter-tariffs taking the shape of an aggressive boxing match, there is no positive headway as despite the ongoing truce, analysts caution that the detente remains fragile in a rivalry that also involves fierce geopolitical and strategic angles, with China now firmly challenging United States’ established global hegemony.

Such was the ferocity of the trade war that it almost caused a near stoppage of the American manufacturing ecosystem, with China imposing strict controls over its rare earth exports. It took a meeting between Donald Trump and Xi Jinping last month in South Korea to cool things off to some extent. While the United States has halved fentanyl- linked tariffs on imports from China to 10% and extended for a year a truce that lowered the reciprocal tariff rate from 34% to 10%.

In return, China’s Ministry of Commerce rolled back export restrictions on critical minerals and rare earth materials to Uncle Sam. Those curbs, first imposed on October 9, had targeted materials vital for military hardware, semiconductors, and other high-tech industries. Beijing also reversed retaliatory limits on exports of gallium, germanium, antimony, and other so-called super-hard materials such as synthetic diamonds and boron nitrides. Those measures, introduced in December 2024, were widely seen as a response to Washington’s expanded semiconductor export restrictions on China.

However, Morgan Stanley economists said that Beijing has not completely relaxed the export-control framework it introduced in April and is likely to maintain a “calibrated choke-point” meant to preserve leverage in case the trade war resumes. China is also reportedly developing a so-called “validated end-user” system, or VEU, to block rare earth exports to companies with ties to the American military set-up.

According to the Wall Street Journal, if strictly implemented, the move could make it more difficult for automotive and aerospace companies with both civilian and defence clients to import certain Chinese materials.

How are countries responding

This polarisation puts pressure on many countries to pick sides, and Australia illustrates these tensions, with defence and security ties to the United States as part of the AUKUS agreement (a security pact between Australia, the United Kingdom, and the United States), but also strong economic ties with China, which has been the country’s largest two-way trading partner even during recent disputes.

While this fragmentation offers opportunities for cooperation between “middle powers,” particularly between European and Asian countries that are increasingly looking for alternative frameworks that do not always require American leadership, it cannot replace the scale and benefits of the United States-led system.

Ways to fix this?

In a recent summit in China, other non-Western members of the Shanghai Cooperation Organisation (SCO) also expressed support for the multilateral trading system, issuing a joint statement reiterating World Trade Organisation principles and criticising unilateral trade measures. This is a bid to assert global leadership while the United States negotiates with individual countries.

This has been regularly opposed by the ‘BRICS+ bloc,’ a larger group of countries, along with the BRICS countries. They were always against the Western-dominated institutions and advocated for alternative governance structures. The countries that raised their voice include Brazil, Russia, India, China, South Africa and Indonesia.

Experts stated that countries lack the institutional depth to serve as an alternative to the World Trade Organisation-centred trading system, absent enforceable trade rules, systematic monitoring mechanisms, or conflict resolution procedures.

Where is it heading?

Since 1990, more than one billion people have been lifted out of extreme poverty thanks to the global trading system. However, the era of United States-led multilateralism is coming to an end, and it is unclear what will take its place.

One possible scenario is that global institutions, such as the World Trade Organisation, may weaken over time. In contrast, regional trade agreements could become more important, maintaining some degree of rules-based trade while also accommodating great power competition.

It is likely that other countries might be willing to join like-minded countries. The countries that set high policy standards in certain areas, such as freer trade, regulatory harmonisation, or security restrictions, allow them to set up a global trade system.

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The Republican, speaking at a Saudi Arabia-backed investment forum in Washington, also urged Treasury Secretary Scott Bessent to accelerate the hunt for a successor for Jerome Powell, whose term as Fed chair ends in May 2026. His term as Fed governor ends in 2028.

“You’ve got to work on him, Scott. The only thing Scott’s blowing it on is the Fed. The rates are too high, Scott, and if you don’t get it fixed fast, I’m going to fire your a**,” Donald Trump said about Bessent, who was in the audience for the event at the Kennedy Centre in Washington.

The next chair is likely to be named to a 14-year Fed governor term that begins February 1. The term that expires then is now held by Stephen Miran, who is on unpaid leave from his role as head of the White House Council of Economic Advisers.

Bessent, who is leading the search for a new Fed chair, recently told Fox News that Donald Trump is slated to meet the three finalists for the job after Thanksgiving, November 27, with a new pick likely to be announced before Christmas. Bessent has named five finalists: White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh, current Fed Governor Christopher Waller, Fed Vice Chair for Supervision Michelle Bowman, and BlackRock executive Rick Rieder.

Donald Trump has repeatedly praised Bessent’s work and has said the US Treasury secretary would be his pick for the Fed chair job, although Bessent has told him he would rather remain at his current role, overseeing both the Treasury and Internal Revenue Service (IRS).

Trump, during one of his media interactions, reiterated that Bessent did not want the job and continued to berate Jerome Powell, whom he nominated for the job during his first term.

The US President has hammered Jerome Powell since before taking office in January about his Fed leadership, describing him as incompetent and questioning his handling of a Fed renovation project that he says is billions of dollars over budget.

Jerome Powell rejected that claim, arguing that Trump is adding the renovation cost for another central bank office that was completed five years ago.

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As space is set to become the new battlefield for defence missions and commercial exploration (including space tourism), governments and private companies around the world are steadily increasing their research, development, and infrastructure-related spending.

Staying true to this trend, the fundraiser saw additional backing from Washington Harbour Partners and General Innovation Capital Partners, along with existing investors, including 776, Breakthrough Energy, Glade Brook Capital, and Toyota Ventures.

Commenting on the news, Michael Ashley Schulman, partner at Running Point Capital Advisors, told Reuters, “Investors, especially those who may have missed out on SpaceX, are still very much in the mood for moonshots despite gravity, interest rates, and valuations. Stoke is building as if it expects… a future where sending cargo to orbit becomes as routine as shipping boxes through UPS or FedEx.”

Stoke Space has made headlines in 2025, as earlier in the year, the venture was awarded a “National Security Space Launch” contract by the United States Space Force, joining the likes of Elon Musk’s SpaceX, Jeff Bezos’ Blue Origin, Rocket Lab USA, United Launch Alliance, and others, with the common goal of strengthening Washington’s space launch capabilities.

Making The Space Sector Green Again

There is a growing demand for medium-lift launch capacity for defence, with the Donald Trump administration backing the Golden Dome missile defence system, in which space-based assets—whether offensive or defensive—will play a huge role in the early detection and neutralisation of enemy warheads. In line with Washington’s requirements, Stoke Space is developing the fully reusable Nova Rocket for frequent, low-cost space launches. However, the start-up aims to implement its plan in an eco-friendly manner.

“Our 168,000-square-foot headquarters is home to our vertically integrated design and manufacturing operations. Leveraging next-generation tools and methods, Stoke’s rocket engines, structures, and avionics are built in days, not months or years. And with our test facility just a three-hour drive away, we test and iterate with unprecedented speed,” the start-up commented.

Since its inception in 2019, Stoke Space has been setting new benchmarks for sustainability over the last seven years, reducing atmospheric impact by 98% compared to the 21st century’s most prolific rockets. The company’s long-term vision is to foster a booming space economy that not only propels human ambition but does so with an unwavering commitment to environmental stewardship, making the space economy both sustainable and scalable.

Central to Stoke’s mission of making the space industry sustainable and scalable are the start-up’s high-efficiency engines, which significantly reduce harmful emissions, thereby creating the lowest environmental impact of any existing rocket. According to the American Geophysical Union, the current crop of rockets relies on solid rocket boosters or kerosene-based engines, both of which release harmful emissions into the upper atmosphere.

While kerosene engines account for 70% of all rocket-driven global warming impacts, emitting black carbon soot (fine particles resulting from the incomplete combustion of fossil fuels, biofuels, and biomass) that traps heat 500 times more effectively than aviation emissions, solid rockets account for 28% of rocket-based warming and release ozone-depleting chemicals like chlorine and aluminium oxide.

To steer the space sector in a greener direction, Stoke’s breakthrough product has been its Nova Rocket, powered by liquid natural gas/liquid oxygen in the first stage and liquid hydrogen/liquid oxygen in the second stage, combining to form one of the world’s most efficient fully reusable rockets. These clean fuels are known for eliminating black carbon emissions, the single most damaging factor in today’s orbital launches, while also reducing rocket-driven global warming by 98%.

Knowing Nova In Detail

Talking about its flagship product, the start-up stated, “Nova’s fully reusable design changes the fundamentals of cost, availability, and reliability of launch. Full reusability means production costs are amortised across launches, and flight frequency isn’t limited by production rates. And with 100% reusability, every mission uses flight-proven hardware.”

The 100% reusable model also enables return shipments from space to Earth, unlocking new mission types and business opportunities. Not only does the rapidly reusable model make economic sense for today’s emerging market, but it is also the only approach to sustainably scaling the industry. Stoke Space’s reusable upper stage features a liquid, regeneratively cooled metallic re-entry heat shield with an integrated modular liquid hydrogen/liquid oxygen (LH2/LOX) rocket engine. It’s robust, resilient to damage, and operates with passive failure modes.

Designed for minimal refurbishment between flights, the second stage unlocks rapid turnaround and offers direct access to GTO (Geostationary Transfer Orbit), TLI (Trans-Lunar Injection), and other high-energy orbits, unlimited engine restarts, and return from orbit to the launch site: precision-powered vertical landings.

Stage one, known as full-flow staged combustion (FFSC) and powered by liquefied natural gas/liquid oxygen (LNG/LOX), is the pinnacle of rocket engine cycles, providing high performance and efficiency while stressing the engine less than other, simpler engine cycles. FFSC has the highest ceiling for performance, efficiency, long life, and rapid reusability.

Stage two is the expander cycle with an integrated heat shield. Powered by liquid hydrogen/liquid oxygen (LH2/LOX) fuel, which offers 30% higher efficiency and five times better cooling than conventional hydrocarbon fuels. With highest-in-class performance and unlimited restarts, the start-up’s stage two engine enables missions directly to high-energy orbits. The nozzle accommodates deep throttle operation even in the presence of atmospheric pressure and serves as an actively cooled metallic heat shield during atmospheric re-entry.

“Our dynamic approach to design, testing, and production enables us to deliver high-quality, efficient, and fully reusable rockets at an unmatched pace. We build in long life and rapid reusability from the start, using steel rather than carbon composite to give Nova’s tanks exceptional thermal properties, strength, and ductility. Steel tanks are better able to endure the multiple cycles of pressurisation, high and low-temperature cycles, and mechanical stresses of rapid reusability,” the start-up stated.

Central to Stoke Space’s R&D efforts is the start-up’s private test facility in Moses Lake, Washington, just a three-hour drive from the company’s vertically integrated design, development, and manufacturing facility, enabling the company to test, learn, iterate, and test again faster than its industry peers.

“Our state-of-the-art vertical test stand for our stage one engine is designed to qualify our full-flow staged combustion engines at full thrust and full duration—in the orientation in which they’ll launch. Our Moses Lake test facility has an ever-expanding selection of test cells for testing structures, pumps, combustion devices, engines, and more,” the start-up noted.

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Orion Critical Mineral Consortium (Orion CMC or the consortium), formed with Orion, an investment firm specialising in metals and materials, along with the US International Development Finance Corporation (DFC), will deploy the fund to support the world’s largest economy and its partner nations to develop supply chains for critical minerals.

“The DFC, which is the international investment arm of the US government, has made an initial capital commitment, which has been matched by both funds managed by Orion and ADQ, bringing the current size of the consortium to USD 1.8 billion, with a USD 5 billion target,” a statement read.

Led by Orion, the consortium will be bringing together metals, mining investors and operators to create a multi-billion-dollar platform for critical minerals investments, apart from investing in and developing critical minerals in emerging and other market jurisdictions, managing offtake, developing domestic processing, and integrating and scaling cost-effective minerals technological solutions.

“The initiative represents a significant step forward in bridging the substantial funding gap needed to accelerate investment in the critical minerals supply chain, while at the same time boosting US economic growth,” said Orion Resource Partners CEO Oskar Lewnowski.

The mega initiative comes amid Washington’s broader efforts to counter Beijing’s dominance over global mineral supply chains, particularly in materials such as copper, cobalt and rare earth elements (REEs), which are essential to the defence industry and the global energy transition.

It is worth mentioning that China has tightened mineral export controls, particularly on REEs and magnets, citing responses to tariffs and broader trade tensions with the Donald Trump administration.

The new controls, which will be fully effective by December 2025, will require foreign firms to obtain Chinese government approval to export magnets and products made with Chinese technologies or REEs, even in trace amounts.

Fearing REE-related disruptions from China, Washington has already moved to strengthen mineral ties with allies. The Trump administration has already signed a landmark agreement with Australia to boost access to rare earths and other critical materials.

It is also negotiating a similar bilateral deal with the Democratic Republic of Congo (DRC), the world’s largest cobalt producer and a key copper supplier. Since Trump’s return to the White House, the Republican government has been making direct equity investments in mining companies to secure strategic resources.

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With Alaska Air Group seeing strong momentum, with a stock return of 56.51% in 2024 and 27.81% revenue growth in the last twelve months, Birkett Rakow will take over an airline with strong metrics. She will remain based in Honolulu and report to Ben Minicucci, CEO of Alaska Air Group.

Joe Sprague, who was named CEO of Hawaiian Airlines after Alaska Air Group completed its acquisition of the carrier in September 2024, will stay on during the transition. Before that, he was an executive at Alaska Airlines and president of regional subsidiary Horizon Air. Alaska Air Group has a strong financial health score and is considered undervalued based on InvestPro’s “Fair Value Assessment.”

The company’s success is reflected in its attractive 0.56 Price/Earnings-to-Growth ratio. The leadership change comes as Alaska Airlines and Hawaiian Airlines near completion of their integration into a single mainline operating carrier under one Federal Aviation Administration (FAA) operating certificate, expected in the next few months.

Alaska Air Group also announced that Kyle Levine will be promoted to a position overseeing public and government affairs. He will assume the role of executive vice president of corporate and public affairs, chief legal officer, and corporate secretary. The company, which serves over 140 destinations across North America, Latin America, Asia, and the Pacific, will begin its European service in spring 2026.

Meet Diana Birkett Rakow

Diana Birkett Rakow was drawn to science and exploration from a young age, leading her to Harvard University, where she earned a Bachelor of Arts degree in chemistry. Additionally, she holds two Master of Arts degrees—one in public administration and one in public health—from the University of Washington Evans School of Public Affairs.

In a 2016 interview, she shared that she had initially applied to a Master of Fine Arts in painting and trained as a yoga teacher before entering the healthcare field, experiences she believes helped her develop creativity in her work. Birkett Rakow began her professional journey as a health policy advisor for the US Senate Finance Committee in Washington, D.C.

She spent over a decade at Group Health in various senior positions, including Executive Director of Public Policy and Executive Vice President of Public Affairs. After its acquisition by Kaiser Permanente, she continued on as Vice President of Public Affairs, Communications, and Brand Management.

Diana Birkett Rakow later became Vice President of External Relations at Alaska Airlines, and was subsequently promoted to Senior Vice President of Public Affairs and Sustainability, where she led the environmental and social governance (ESG) strategy, government affairs, communications, and community relations.

She spearheaded the airline’s efforts toward achieving net-zero carbon emissions by 2040, and oversaw the airline’s venture investment arm, Alaska Star Ventures, which invests in new technologies to help reach that goal.

After Alaska Air Group acquired Hawaiian Airlines, Diana Birkett Rakow was named CEO of Hawaiian Airlines in October 2025, making her the first female CEO in Hawaiian Airlines’ history.

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In the words of American businessman Anthony Noto, “Businesses and their leaders, both domestically and internationally, must now negotiate a confusing new environment where political motivation might have an equal impact as established legal precedent.”

Consider the instance of Cognizant Technology Solutions Corporation. In April, a federal judge formally dismissed the Department of Justice’s long-running bribery case against the company’s two former bosses, Gordon Coburn and Steven Schwartz, who allegedly approved a $2 million bribe to expand in India, at the request of Alina Habba, US attorney for New Jersey and a former Trump defence attorney. The DOJ had abandoned a foreign bribery case for the first time since Trump was elected to a second term in office.

However, Noto observed a troubling trend where government prosecutors were increasing their efforts in specific high-profile cases while backing down from others. For example, they moved forward with a bribery case against Smartmatic, a London-based voting machine company that far-right conspiracy theorists falsely claimed helped steal the 2020 election from Trump in favour of former President Joe Biden, just weeks after Coburn and Schwartz were given a go-ahead. Ironically, two Smartmatic executives were the target of a lawsuit filed by the Biden administration in 2024.

Co-founder Jorge Miguel Vasquez and Roger Pinate, both of whom were born in Venezuela, were accused of bribing the Philippines with $1 million. Trump’s DOJ is still pursuing the lawsuit in Miami. Confused lawyers were left wondering: Are some businesses no longer covered by the FCPA?

What’s going on?

The Foreign Corrupt Practices Act makes it illegal for American firms and foreign companies with a US connection to bribe foreign officials.

While transparency advocates have credited enforcement of the law behind Uncle Sam’s vigorous fight against foreign corruption, critics, including business leaders, have been vocal against the law putting American companies at a disadvantage in international markets where certain business practices are common.

Trump, a longtime critic of the FCPA, expressed similar concerns while signing the executive order that ended its enforcement.

The Republican summed up the situation, stating that “it sounds good on paper, but in practicality, it’s a disaster. It means that if an American goes to a foreign country and starts doing business there legally, legitimately or otherwise, it’s almost a guaranteed investigation, indictment, and nobody wants to do business with the Americans because of it.”

The FCPA prohibits companies from providing cash payments or valuable gifts to foreign officials for business advantages. While the law exempts certain “facilitation payments,” it prohibits third parties from making bribes. This was enacted in 1977 following post-Watergate investigations that revealed widespread foreign bribery by US-based multinational corporations.

Concerned about the impact on US foreign policy and international standing, Congress responded by criminalising such practices, imposing prison terms and substantial penalties on violators.

Though initially focused on American companies, the law’s jurisdiction has expanded substantially. It now extends to any foreign business or individual with connections to the US. This broad reach enables prosecutors to pursue cases against foreign firms. A good example was the case involving a Dutch company with a subsidiary based in Ohio that was accused of paying off Chinese officials through another subsidiary in Thailand.

The law had a significant impact on the development of anti-corruption laws around the world. In fact, in 1997, the Paris-based Organisation for Economic Cooperation and Development used the FCPA as a model for its Anti-Bribery Convention, which now has 46 member countries.

While enforcement of FCPA was negligible in the decades following its enactment, the early 2000s marked a significant shift. The United States Justice Department and the Securities and Exchange Commission (SEC), the two agencies responsible for enforcing FCPA’s provisions, ramped up enforcement, driven by emerging business scandals and new congressional requirements for corporate governance and financial reporting.

In recent years, US foreign bribery law enforcement has been robust, with the Justice Department and the SEC opening nearly 174 investigations between 2018 and 2021. Last year, the Justice Department alone filed 17 enforcement actions under the law. Latin America has emerged as a hot spot for investigators in recent years.

In 2016, two Brazilian companies agreed to pay a combined $3.5 billion after pleading guilty in a sprawling international foreign bribery case. US authorities investigated the case because the illicit payments were made through American bank accounts. In 2020, European aviation giant Airbus agreed to pay nearly $4 billion to resolve foreign bribery charges brought in by the United States, Britain and France. Airbus admitted using intermediaries to bribe government officials and airline executives to win lucrative contracts in China and other countries.

In January 2024, SAP SE, a German software company with offices in the US, agreed to pay $220 million to resolve investigations into bribery payments to South African and Indonesian officials. In December, Illinois-based aviation services company AAR Corporation agreed to pay more than $55 million to resolve investigations into bribery payments to government officials in Nepal and South Africa.

However, under “Trump 2.0,” the ambiguity surrounding the FCPA has created a “Wild West” kind of scenario for businesses.

Frank Rubino, a lawyer for one of the charged Smartmatic executives, said, “I don’t understand why the government is taking an inconsistent position. They’re cherry-picking. You’re either going to prosecute all these cases or none of them.”

He further argued that the Cognizant scenario isn’t dissimilar to what’s being alleged against Smartmatic, with the only difference being the “one-eighty on the part of prosecutors.”

During his thirty years in practice, Rubino has focused exclusively on federal white-collar crime, including cases involving alleged FCPA violations, in Coral Gables, Florida. To some extent, he concurs that the FCPA’s enforcement can be overly stringent.

He claims that “the smallest thing,” such as bringing a potential customer to dinner, may be interpreted as a transgression. However, the Trump administration appears to be favouring one company over another, which motivates him to prepare for a trial date in October 2025.

The executive order now imposes a six-month freeze on foreign bribery investigations by the Justice Department. Almost all FCPA cases will be suspended while Attorney General Pam Bondi conducts a review and revises enforcement guidelines. The executive order gives Bondi discretion to extend the pause for an additional six months. She has now directed federal prosecutors to prioritise FCPA cases involving cartels and transnational criminal organisations.

Trump: Vocal critic of the law

According to the law firm Greenberg Traurig, 2024 was one of the highest-earning years since the FCPA’s inception in 1977, with the DOJ and SEC collecting over $1.328 billion in total penalties. Over the last ten years, several well-known companies have been hit with bribery fines.

For example, Airbus settled for more than $3 billion in 2020; Goldman Sachs settled for $2 billion in relation to the 1MDB scandal; and Glencore, a mining company based in Switzerland, admitted guilt and paid more than $1 billion to resolve an investigation.

During his first term, Trump described the FCPA as a “dreadful law,” claiming that it “actively harms American economic competitiveness.”

As the Republican puts the law into abeyance for 180 days, Paris-based OECD has argued that a protracted FCPA pause “will not serve its intended purpose to restore American competitiveness and security.”

By seriously endangering American businesses operating overseas and denying the US a deterrent tool it has used to protect its ventures from unfair competition, it might achieve the exact opposite.

According to former OECD director Nicola Bonucci, Washington was temporarily at a disadvantage because other nations were ignoring bribery. He claimed that between 1977 and 1999, “the paradox is that the uneven playing field was a valid argument. Now, it’s considerably less so.”

“The standard was altered in 1999 when 46 signatory states, including the US, decided to band together and combat bribery globally as part of the OECD Anti-Bribery Convention,” which Bonucci assisted in implementing.

According to Bonucci, US businesses doing business overseas are in a difficult situation, and if some businesses are treated differently from others, there may be a rise in bribery requests and more confusion.

“Bonucci claims that there is more uncertainty because it is unclear why some ongoing cases are being dropped while others are being pursued,” the Voice of America reported.

The majority of defendants in FCPA enforcement cases over the previous ten years were currently located in other nations and areas. Based on data from 2015 to 2024, a recent report from the law firm Gibson Dunn reveals that 62% of individual defendants and 50% of corporate defendants were based outside the United States.

Furthermore, foreign corporations contributed $6.11 billion of the $8.3 billion total, accounting for eight of the ten largest monetary settlements. If the US withdraws from the Anti-Bribery Convention or if the 180-day pause is extended, OECD chair Drago Kos anticipates that some countries may think that the Wild West of unpunished corruption is back.

Even before his first term, Trump had been a vocal critic of the law. In 2012, he called it a “horrible” and “ridiculous” statute that impeded American companies’ ability to do business abroad. Despite his criticism, FCPA enforcement surged during his first term in office, with 2020 marking a record-breaking year, according to the Morrison Foerster law firm.

The executive order framed the pause in enforcement as part of the president’s broader agenda to “advance American economic and national security by eliminating excessive barriers to American commerce abroad,” apart from mentioning that FCPA’s scope has been “stretched beyond proper bounds and abused in a manner that harms the interests of the United States.”

A White House fact sheet on the order further stated that the “overenforcement” of the law harms American companies and “infringes on the President’s Article II authority to conduct foreign affairs.”

“This concern about aggressive enforcement isn’t new. There has been a focus on the quantity of enforcement actions compared to the quality of those enforcement actions. Enforcement has, in many cases, gone so far off the rails that this law is being enforced in ways that do put companies at a competitive disadvantage,” said Mike Koehler, a law professor and leading authority on the FCPA, who noted that both Republicans and Democrats have raised similar issues over the past two decades.

Transparency advocates, however, warn that suspending enforcement could deal a significant blow to global anti-bribery efforts.

“This pause will work to the advantage of unscrupulous business actors around the world who until now feared US criminal pursuits,” Transparency International said in a statement calling on other OECD Anti-Bribery Convention members to increase their enforcement following Washington’s policy shift.

Proximity to politics matters

As per the Associated Press, Smartmatic’s voting machines were only utilised in Los Angeles County, a Democratic stronghold in a state that is not competitive, and that Republican candidate Donald Trump chose not to run for office after the 2020 election.

The Department of Justice continues to pursue this case. Observers note that the Trump administration has a pattern of targeting perceived adversaries while favouring close relationships with its inner political circle. In line with this approach, Trump granted a pardon to Nikola founder Trevor Milton, who was convicted of defrauding investors in late March.

Throughout his campaign and the period leading up to his inauguration, the cryptocurrency industry contributed millions of dollars, and he did the same.

In March 2025, the SEC halted its investigations into Ripple, Coinbase, and Gemini, and he pardoned three BitMEX founders who had been found guilty of money laundering. This year, the SEC also dropped a lawsuit against Justin Sun, a cryptocurrency entrepreneur who, just after Election Day, invested millions in the Trump family’s World Liberty Financial company.

It remains to be seen if businesses will now feel more confident when making cross-border transactions because of the moral guidelines the Trump administration seems to be establishing. In any case, analysts say that the current state of affairs is not favourable for the United States.

DealRoom CEO Kison Patel said, “I think there’s some sentiment that is starting to shift. It’s not as glamorous to go into business or get acquired by an American company, just given all the current sentiments towards our administration right now.”

As of mid-April, data tracker Dealogic reports that while volume is up in the Middle East/Africa (80%), Asia (99%), Japan (142%), Canada (53%), and Europe (9%), US M&A (merger and acquisition) activity is down 3% in 2025 compared to this time in 2024.

As of mid-April, data tracker Dealogic reports that while volume is up in the Middle East/Africa (80%), Asia (99%), Japan (142%), Canada (53%), and Europe (9%), US M&A (merger and acquisition) activity is down 3% in 2025 compared to this time in 2024.

“The global anti-bribery movement has grown stronger and more interconnected, and the United States is swimming against the tide,” Kos says, adding that most nations are unlikely to follow Washington’s example if it repeals the FCPA or cuts ties with the OECD.

He argues that “the anti-corruption world is now strongly connected.” While the withdrawal of one nation can be very challenging, it won’t prevent the rest of the world from continuing the fight against corruption. In simple terms, other countries that maintain their commitment to leading by example for emerging economies can fill the leadership void left by the United States.

The Trump administration’s recent moves to suspend the enforcement of the FCPA signal a significant shift in US foreign policy. While proponents argue that it could level the playing field for American businesses, critics warn of the damage to global anti-corruption efforts and the growing uncertainty in the business environment.

As countries increasingly cooperate on anti-bribery initiatives, the US’s withdrawal from these efforts could weaken its international standing. Despite this, the global commitment to fighting corruption remains strong, with other nations poised to step up in the absence of US leadership.

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