Dr Mukul Chandra Bora
(Vice Chancellor)
&
Dr Achintya Saikia
(Associate Professor in Economics, North Lakhimpur University)
US President Donald Trump’s tariff hike policy represents a clear manifestation of geoeconomics, in which economic instruments are deliberately deployed as strategic tools to achieve political and geopolitical objectives, often described as the warfare of the twenty-first century. With the imposition of higher duties on imports such as steel, aluminium, and technology-related goods, the United States not only tries to correct trade imbalances but also to restructure global trade in its own favour while exerting pressure on both allies and rivals to renegotiate trade agreements. This strategy is a violation of World Trade Organization (WTO) free trade policy and marked a decisive shift from free-trade multilateralism toward power-centric economic nationalism, where tariffs functioned as weapons in a broader contest for influence, technological leadership, and industrial dominance. In this context, Trump’s tariff policy exemplifies geoeconomic warfare, where control over markets, production networks, and economic leverage increasingly substitutes traditional military force as a means of asserting power. Geoeconomics, as a conceptual framework, refers to the strategic use of economic instruments by states to achieve geopolitical goals, combining economics, geography, and political power to explain how trade policies, investment flows, sanctions, technology controls, infrastructure initiatives, and financial systems are used as tools of influence in international relations. In contrast to traditional geopolitics, which prioritises military strength and territorial control, geoeconomics highlights markets, resources, supply chains, and economic networks as crucial factors influencing global power. In an era of globalization, competition among states is increasingly waged through commerce, finance, technology, and connectivity, underscoring economic strength not only as a source of prosperity but also as a vital form of strategic leverage. The concept of geoeconomics has evolved over centuries, shaped by shifts in global power, economic structures and strategic thinking. Although the term is modern, the idea of using economic instruments for geopolitical purposes has deep historical roots.
Kautilya, or Chanakya, is also regarded as the “Ancient Machiavelli” because his political ideas mirror the realist, power-centric approach that Machiavelli later expressed in The Prince, and both thinkers viewed politics as driven by power, strategy, and pragmatic decision-making rather than idealism or moral doctrine. Kautilya emphasised espionage, intelligence networks, deception, alliances, and military preparedness as essential tools of governance—ideas strikingly similar to those Machiavelli endorsed centuries later. He believed that the survival and security of the state were the highest priorities, requiring rulers to use both ethical and harsh measures when necessary. Kautilya’s work is still regarded as more expansive, although it predates Machiavelli by nearly 1800 years and covers all aspects of modern economics, taxation, administration, welfare, diplomacy, and foreign policy in remarkable depth.
It is important to note that the Arthashastra may be regarded as one of the oldest treatises on geoeconomics, although the term was not there, but it represents one of the earliest expressions of geoeconomic thinking, as Kautilya stressed that wealth (artha) was the foundation of state power and national security, advocating strong revenue systems, control over natural resources, and strategic regulation of trade and markets. He recommended tariffs, state monopolies, and infrastructure development as tools to strengthen the kingdom’s economic base and at the same time build a modern banking system. Thus, Kautilya stands not only as the “Ancient Machiavelli” but also as a foundational thinker of political realism and geoeconomics.
The subject of geoeconomics is gaining more importance in discussion because of the present tariff war, which is also a part of geoeconomics. The use of economic tools to achieve strategic or geopolitical objectives is quite visible, and tariffs are one of the most used tools of economic statecraft. For example, the US-China trade war (2018–present) is a classic geoeconomic conflict, and tariffs were used to curb China’s technological rise, reduce dependence on Chinese manufacturing, and negotiate strategic concessions. Thereby, tariff wars are a major geoeconomic instrument because they merge trade policy with geopolitical strategy, which clearly indicates how economic measures are used as tools of power and influence in international relations.
Long before the word "geoeconomics" was even used, it was already happening. For example, ancient empires like India, Egypt, Rome, and China used trade routes and resource control, like the Silk Road, to gain strategic power. During the 16th to 18th centuries, mercantilist powers and European naval empires linked economic expansion with territorial dominance through monopolies and colonial trade. Industrialization in the 19th and early 20th centuries deepened the connection between economic capacity and national power, as industrial output, steel production, and energy resources increasingly shaped geopolitical strength. The World Wars demonstrated the effectiveness of economic blockades and reinforced the belief that economic power underpins military capability. During the Cold War, economic tools became systematically integrated into global strategy: the Marshall Plan countered Soviet influence; the US and USSR employed aid, embargoes, and resource control as instruments of competition; and institutions like the IMF and World Bank emerged as vehicles of global economic influence.
The 21st century is witnessing a transformation in global power dynamics where economic strength—rather than military confrontation alone—defines geopolitical influence. The term "geoeconomics" has emerged as a central analytical lens for understanding this shift. Coined by strategist Edward Luttwak in the early 1990s, geoeconomics refers to the use of economic instruments to achieve geopolitical objectives. It captures the growing reality that nations increasingly deploy trade, investment, finance, energy, infrastructure, and technology policies not only for economic development but also as tools of strategic statecraft.
Geoeconomics plays a central role in shaping international relations in the 21st century by demonstrating how states use economic instruments to pursue strategic objectives and influence global power structures. Unlike traditional geopolitics, which relies on military force, geoeconomics emphasizes tools such as trade policy, investment flows, sanctions, technology controls, supply-chain leverage, financial systems, and resource diplomacy to advance national interests. Countries deploy tariffs, market access, currency policies, and development aid to shape the behaviour of other states, while institutions like the IMF, the World Bank, and regional development banks become arenas of strategic competition. Control over critical technologies like semiconductors, telecommunications, renewable energy components, and AI systems has emerged as a new geoeconomic battleground, where states use export bans, investment screening, and intellectual property regimes to retain strategic advantage. Economic connectivity creates influence and dependency through the use of energy routes, mineral access, and infrastructure corridors like the Belt and Road Initiative. Sanctions and economic coercion have become powerful diplomatic tools, allowing states to impose costs without military escalation, as seen in US–Russia, US–Iran, and China–Australia tensions. In addition, supply-chain resilience and friend-shoring reflect how national security concerns increasingly shape global trade patterns. Geoeconomics also influences alliances: countries form partnerships based not only on political alignment but also on shared economic interests and technological ecosystems. Emerging economies use geoeconomic strategies to negotiate better terms, diversify markets, and enhance their global standing. Overall, geoeconomics transforms international relations by blurring the boundaries between economics and security, turning markets, trade, and technology into instruments of geopolitical power.
Geoeconomics is not merely an academic concept but the defining framework of global power in the 21st century. Military might remain relevant, but economic strength, technological leadership, financial influence, resource control, and infrastructure connectivity increasingly shape international relations. Nations that master geoeconomic tools—trade policies, investment strategies, technology governance, energy security, and supply-chain resilience—will secure strategic advantages. The global order is steadily transitioning from traditional geopolitics to a hybrid framework in which economic competition has become a decisive form of geopolitical rivalry and due to this, nations are increasingly compelled to integrate economic policy with national security and foreign policy objectives. Trade regimes, supply chains, technology governance, investment flows, and financial systems now shape strategic outcomes as much as military capabilities. These contemporary dynamics find remarkable resonance in the Arthashastra, the fourth-century BCE treatise authored by Kautilya (Chanakya), which is far ahead of its time, and the text recognises economics as indispensable to understanding and exercising power. It presents a sophisticated framework of international relations rooted in economic strength, placing artha (wealth) at the core of statecraft, diplomacy, and military preparedness. Kautilya systematically links trade, taxation, agriculture, and efficient resource management with foreign policy outcomes, arguing that economic prosperity determines a state’s influence over allies and adversaries. The Mandala Theory further integrates economic interests with strategic decisions related to alliances, war, and peace. Thus, the Arthashastra offers an early and coherent model of geoeconomics in which economic policy, diplomacy, and security are inseparably connected, and the renewed global relevance of this once-underappreciated text highlights the enduring value of the Bharatiya Jñana Parampara, and its inclusion in the National Education Policy 2020 marks a significant milestone in reclaiming India’s intellectual heritage.