Finance as Foreign Policy
In 2025, power is measured less by armies and more by who controls capital. The line between Wall Street and Washington is blurred as financial decisions shape foreign relations. The actions of U.S. President Donald Trump’s administration relies heavily on financial leverage as statecraft. The administration escalated tariffs on China to weaponize market access, capital and technology flows and leveraged U.S. finances to steer Argentina’s presidential outcome. In our current political landscape, U.S. policy runs through financial channels, treating money as a geopolitical tool. Under the Trump administration, finance has replaced force as the United States’ dominant instrument of power, turning economic pressure into the central mechanism to shape global behavior. This shift stands in contrast to earlier presidencies when military force was the default tool for U.S. dominance (Brooks & Wohlforth, 2022). Today, Washington reaches first for tariffs, sanctions and market leverage rather than aircraft carriers or brigades.
The U.S. dollar has maintained a prominent role in global finance since WWII (Lahiri & Eckman, 2025). In 1944, the Bretton Woods Conference was held to institute a stable post-war monetary order to avoid another Great Depression. This meeting established the International Monetary Fund and the World Bank. Additionally, Bretton Woods member countries fixed their exchange rates by pegging their currencies to the U.S. dollar (Beman n.d.). By anchoring postwar exchange rates to the U.S. dollar and creating the IMF and World Bank around that system, Bretton Woods cemented the dollar’s primacy. Eight decades later, the data confirms this supremacy. In 2024, the U.S. dollar constituted about 58% of reported global foreign exchange reserves, ahead of the Euro, Japanese Yen, British Pound Sterling, and Chinese Yuan (Bertaut et al., 2025). Because the dollar intermediates the majority of trade invoices and cross-border finance, even non-U.S. actors comply with the transaction, regulatory, and liquidity rules of the dollar system. Since dollar exclusion can destabilize an economy overnight, control over dollar liquidity often exerts more pressure than military threats. As a result, this financial leverage allows the U.S. to achieve strategic outcomes without needing to rely on military force.
U.S. foreign policy toward China shows how financial flows are increasingly treated as matters of national security. Under Trump’s second term, he has used regulatory, investment and export controls to limit Beijing’s reach and protect national interests. The administration has tightened investment screening through the Committee on Foreign Investment in the United States (CFIUS) to block Chinese investment in industries that can harm our national interests. Trump ordered CFIUS to restrict Chinese investments in “strategic areas,” framing Chinese investments in the United States as a national security risk. The government is no longer treating cross-border money flows (investments, acquisitions, financing) as just economic activity; instead, ownership of strategic assets is seen as a potential threat to national security (Holland, 2025). Rather than responding with military containment or expanded defense in Asia, the administration has pursued a strategic economic strangulation through screening investments, cutting off chip access and weaponizing market entry as substitutes for military power.
The Trump administration has also tied market access to ownership and control of digital platforms, most notably through the divestment or sale of ByteDance/TikTok. By requiring TikTok to separate from Chinese ownership, the United States conditions access to its domestic markets on who controls the platform’s data, algorithms, and corporate governance, framing foreign ownership as a national security risk. Additionally, Trump has weaponized Nvidia sales as leverage over China. He wants to block China’s access to top-tier chips, Nvidia's Newest Blackwell AI chips, to reserve the cutting-edge technology for U.S. firms and allies (Alper, 2025). In April 2025, the Trump administration halted sales of Nvidia’s China-specific H20. These restrictions hamper China’s AI development by limiting access to the advanced GPUs required to train large-scale machine learning models. Frontier AI systems depend on high performance chips, such as Nvidia's H20, for efficient computation. Without access to these chips, Chinese firms face higher costs, slower training times, and lower model performance, constraining progress in both commercial and strategic AI capabilities. However, China and the United States agreed to a deal in which Nvidia pays the United States 15% of its revenue from the sale of those chips to China. This essentially creates a financial choke collar on China by restricting its access to U.S. capital, technology, and dollar-based markets (AP News, 2025). By banning China from Nvidia's frontier chips and taxing sales, the United States turns chip commerce into a pay-to-play pressure system: a pure example of using finance as foreign policy.
In Argentina, Trump has taken the logic of finance-as-foreign policy to its extreme by using dollar access and bailout promises as tools to sway an election and secure a government aligned with U.S. economic ideology. In mid-October, he publicly tied a $20 billion swap and market backstop, a U.S. commitment to supply Argentina with emergency dollars and step in to stabilize its financial markets, to President Javier Milei’s midterm success. He also proposed the idea of another $20 billion private financing vehicle to make continued U.S. support conditional on the election outcome. Milei’s success in Argentina’s midterm elections would determine if Argentina received $20 billion from Trump (Bennhold, 2025). Put bluntly, Washington turned Argentina’s bailout into leverage over voters: If they wanted a foreign lifeline for their economy, they had to vote for Meilei. While the U.S. has long used financial assistance as instruments of influence abroad, explicitly tying this dollar swap to the success of a particular election appears to break from established precedent. Trump’s financial intervention in Argentina underscores how access to dollars has become Washington’s preferred instrument of influence (Miller, 2025; Stratford, 2025).
Although none of these actions are unique to Trump’s term, he is leaning hard on financial leverage as statecraft. Trump has expanded secondary sanctions on Iran and Venezuela to limit who has access to the dollar and global banks. Trump has also escalated a tariff and entity list campaign against China to weaponize market access, capital, and technology flows, as seen with TikTok and Nvidia. He suspended and terminated U.S. Agency for International Development programs, curtailed World Health Organization funding, and threatened North Atlantic Treaty Organization resources to delineate his use of aid and dues as bargaining chips. These examples show how Trump uses money — market access, financing, and technology capital — as the primary tool of coercion and incentive, not troops. In each case, financial tools have accomplished what earlier administrations might have attempted through military signaling, marking a shift toward using financial power as a substitute for military force. While the tools themselves predate Trump, his approach is blunter, more unilateral, and less bound by multilateral norms. (Belin & Dworkin, 2025).
Finance is the silent arm of U.S. diplomacy — powerful because it is embedded in everyday transactions and mostly unaccountable to public debate. The strategic question is not whether the United States can coerce with capital, but how often to pull that lever without undermining the very dominance that makes it work (Bertaut et al., 2025).
Edited by Ethan Jacobs
References
Alper, A. (2025). Trump says China, other countries can’t have Nvidia’s top AI chips. Reuters. https://www.reuters.com/world/china/trump-says-nvidias-blackwell-ai-chip-not-other-people-2025-11-03/
Belin, C., & Dworkin, A. (2025). Multilateralism with Less America: Trump’s Plan for International Organisations. European Council on Foreign Relations. https://ecfr.eu/article/multilateralism-with-less-america-trumps-plan-for-international-organisations/
Bennhold, K. (2025). Trump's Hand in Argentina. The New York Times. https://www.nytimes.com/2025/10/28/world/trump-argentina-election-influence.html?searchResultPosition=3
Berman, A. S., Noah. (n.d.). The dollar: The world’s reserve currency | council on foreign relations. Retrieved November 4, 2025, https://www.cfr.org/backgrounder/dollar-worlds-reserve-currency
Bertaut, C., Beschwitz, B. von, & Curcuru, S. (2025). The international role of the u. S. Dollar – 2025 edition. https://www.federalreserve.gov/econres/notes/feds-notes/the-international-role-of-the-u-s-dollar-2025-edition-20250718.html
Brooks, Stephen G., and William C. Wohlforth. “American Primacy in Perspective.” Foreign Affairs, vol. 81, no. 4, 2002, pp. 20–33. JSTOR, https://doi.org/10.2307/20033237. Accessed 4 Dec. 2025.
Holland, S. (2025). Trump orders use of CFIUS to restrict Chinese investments in strategic areas. Reuters. https://www.reuters.com/world/trump-use-cfius-restrict-chinese-investments-strategic-areas-white-house-2025-02-21/
Lahiri, U., & Eckman, E. (2025). What’s Behind the U.S. Dollar’s Dominance and Why it Matters. Bipartisan Policy Center. https://bipartisanpolicy.org/explainer/whats-behind-the-u-s-dollars-dominance-and-why-it-matters/#
Miller, L. (2025). Trump’s Milei election warning fuels backlash and “colonialism” accusations in Argentina. Reuters. https://www.reuters.com/world/americas/trumps-milei-election-warning-fuels-backlash-colonialism-accusations-argentina-2025-10-22/
Stratford, M. (2025). Bessent Inks “Economic Stabilization” Deal with Argentina. Politico. https://www.politico.com/news/2025/10/21/bessent-argentina-economic-deal-00616391
US will get a 15% cut of Nvidia and AMD chip sales to China under a new, unusual agreement. (2025). AP News. https://apnews.com/article/nvidia-amd-15-revenue-share-deal-c06e20d9c3418f1d0b1292891c4610c6
Rapoza, K. (2026). House Hearing on China Investment in US Reveals Much More Needs to be Done [Photograph]. The Coalition for a Prosperous America. https://prosperousamerica.org/house-hearing-on-china-investment-in-us-reveals-much-more-needs-to-be-done/