RUFARO MAFINYANI: The geopolitical strategy that lies behind economic nationalism

In the unfolding geopolitical landscape, the resurgence of economic nationalism under the Trump administration represents more than mere political rhetoric — it signifies a calculated response to fundamental shifts in global economic power.

At the heart of the US’s geopolitical recalibration lies the precarious position of the dollar as global reserve currency. With the US debt-to-GDP ratio surpassing 120% and manufacturing declining from 23% of GDP in 1970 to about 11% today, the nationalist faction sees an existential threat: what happens if major foreign holders dump US treasuries?

Such a scenario would trigger a spike in government debt yields, potentially initiating a sovereign debt crisis. Former US treasury secretary Lawrence Summers acknowledged this vulnerability: “The day foreign creditors lose confidence in our fiscal trajectory is the day American economic hegemony faces its greatest test.”

This scenario has crystallised two competing visions for America’s future. The globalist perspective, embodied by multinational corporations and financial institutions, views borderless capitalism as both inevitable and desirable, with primary allegiance to shareholder value rather than territorial prosperity.

The nationalist camp conversely identifies this arrangement as detrimental to America’s long-term interests, arguing that decades of offshoring and technology transfer were motivated by short-term profit considerations that ignored strategic implications.

Former US trade representative Robert Lighthizer articulated this position: “Free trade is not God’s natural law. It’s a policy choice that has both benefits and costs. We’ve focused exclusively on the benefits while ignoring the costs for far too long.”

The seemingly chaotic confrontations with allies and adversaries serve a strategic purpose: preventing co-ordinated alternatives to dollar dominance. By creating multiple simultaneous crises — from European tariff threats to Middle East conflicts — the nationalist strategy in effect prevents the concentration of diplomatic energy needed to establish viable alternatives to the Swift payment system or the petrodollar arrangement.

This explains the contradictory approach to Europe — demanding greater defence contributions while threatening tariffs. If European countries respond by raising interest rates to strengthen the euro, they will further slow their already stagnant economies, making their exports more expensive while simultaneously making US exports more competitive. Meanwhile, initiatives such as mBridge — using distributed ledger technology to enable direct cross-border payments without Swift — remain theoretical amid the geopolitical disarray.

The most significant manifestation of this tension is the US’s relationship with China. The globalist strategy of integrating China into the world economy was predicated on the belief that economic liberalisation would lead to political liberalisation and alignment with Western interests.

Instead, this approach created what military strategist Graham Allison terms the “Thucydides Trap” — the structural stress that occurs when a rising power threatens to displace an established one. China now controls critical supply chains, holds substantial US debt, and has developed indigenous technology capabilities that rival the US’s in several domains.

The tariff strategy implemented by the Trump administration seeks to address this imbalance by forcing a repatriation of manufacturing capabilities. This is not merely about job creation but about strategic self-sufficiency. As trade analyst Peter Navarro explained: “The economic security of a nation cannot be separated from its national security, and manufacturing capability is central to both.”

The pivot towards Russia serves multiple strategic objectives: driving a wedge between Russia and China undermines the formation of a Eurasian power bloc; reintegrating Russian energy into Western markets would reduce industrial energy costs; and it connects to an ambitious vision of territorial expansion. Forcing the EU to pay for its own defence is designed in part to further weaken the bloc’s ability to resist US economic pressure during negotiations.

US President Donald Trump’s interest in acquiring Greenland (with its vast rare earth mineral deposits) and proposals for closer integration with Canada reflect a recognition that future industrial dominance requires secure access to critical materials. This expansionist vision aligns with the recognition that physical resources — not just financial instruments — will determine future power dynamics.

The competition for AI supremacy has triggered countermeasures across the Western world, most notably Emmanuel Macron’s European AI summit, where €500bn was pledged for AI development. This unprecedented European commitment signals recognition that technological sovereignty has become existential.

The Trump administration’s success in securing TSMC’s $100bn semiconductor production facility in Arizona represents a critical strategic victory. By relocating the world’s most advanced chip production to American soil the administration has secured a vital chokepoint in the global technology supply chain.

For SA, navigating this landscape requires acknowledging both vulnerabilities and opportunities. SA should leverage its position within Brics to maintain balanced relationships with both Western powers and emerging economic blocs, while developing downstream processing capabilities for its critical mineral resources — particularly the platinum group metals (PGMs) essential for green energy and advanced manufacturing.

Investing in digital infrastructure and localised manufacturing capacity focused on regional African markets creates resilience against global supply chain disruptions. As the late former Reserve Bank governor Tito Mboweni observed: “Middle powers must be strategically flexible while economically focused during periods of great power competition.”

Monetary diversification through gradual reserve rebalancing provides insurance against dollar volatility without triggering capital flight. This must be carefully calibrated to avoid being caught in the crossfire of currency wars that may intensify as the global economic architecture is redesigned. 

By understanding the deeper patterns behind seemingly chaotic global developments, SA can position itself advantageously in a world where the old rules of economic engagement are being fundamentally rewritten.

• Mafinyani is risk advisory & financial modelling partner at DiSeFu, a specialised financial technology and risk advisory firm operating in the sub-Saharan region.