- The weaponisation of supply chains signifies the conversion of economic interdependence into a risk to security, compelling a major shift in global trade.
- The US and China are using their leverage over critical inputs, manufacturing choke points, and market access to gain geopolitical advantage, punish opponents, and enforce compliance with their governments or a set of geopolitical norms.
- China has developed immense dominance across aspects of global manufacturing, from raw materials like rare earths to components and final assembly in key industries like electronics and solar, to unparalleled structural leverage.
- The US is also engaging in supply chain weaponisation, especially through its control of “chokepoint” technologies, the most significant being the export controls on Semiconductor Manufacturing Equipment (SME).
What sets the US-China economic rivalry apart from other historical instances and tensions is how globalised supply chains have transformed from being simply a means of economic efficiency to being active tools in economic statecraft. This transformation is often referred to as the “weaponisation of supply chains.” This concept sees great powers, primarily the US and China, using their leverage over critical inputs, manufacturing choke points, and market access to gain geopolitical advantage, punish opponents, and enforce compliance with their governments or a set of geopolitical norms.
An overarching strategy that the US has developed in response to the “weaponisation of supply chains” phenomenon is the US-led policy of “de-risking.” “De-risking” marks a significant transition from the previous understanding of commerce, which was more about a purely market-driven, commonly understood interdependence, toward a new understanding of the global economy where economic security is inextricably bound to national security.
The Nature of Supply Chain Weaponisation
Weaponisation in the context of global supply chains is understood in terms of asymmetric interdependence of the degree one country relies on another for a particular critical good or technology. China has developed immense dominance across aspects of global manufacturing, from raw materials like rare earths to components and final assembly in key industries like electronics and solar, to unparalleled structural leverage.
Weaponisation can occur in several ways. One form of weaponisation is the threat or actual use of export controls on key materials; an example of that is when China imposed restrictions on exports of rare earth elements, or more recently, with critical metals such as gallium or germanium, both of which are essential for advanced semiconductors and certain defence-related technologies. This represents an overt act of economic coercion aimed at undermining the adversary’s industrial and military capabilities.
A second form is in the form of “intrusion,” which is the potential use of compromised hardware or software in a supply chain that could be used for espionage or sabotage. This was a central concern that facilitated action by the United States against firms like Huawei. A third way to weaponise economic dependence is to use economic coercion to pursue foreign policy interests, as was the case when China used sudden trade restrictions on Australian wine–along with Lithuanian goods due to policy disagreements. This form of economic coercion was meant to send a signal to other countries about the costs of disagreement with Chinese policy.
Importantly, the US is also engaging in supply chain weaponisation, especially through its control of “chokepoint” technologies. The most significant instance is the export controls, especially the controls on Semiconductor Manufacturing Equipment (SME). By limiting China’s access to technology, software, and tools originating from the US for producing advanced chips, Washington seeks to prevent Beijing from closing the gap in key areas like Artificial Intelligence (AI) and advanced computation. This is a very intentional and high-leverage use of control over an important part of the global technological supply chain.
The Strategic Role of ‘De-Risking’
The response of the United States to China’s supply chain dominance has transitioned away from the outright blunt instrument of “decoupling,” a total economic disentanglement, to “de-risking,” a far more nuanced policy. De-risking was a strategic mantra adopted by the Biden administration, continued under Trump 2.0, as well as American allies like the European Union and the G7; it recognises that a full break is both impossible and will impose a substantial economic cost, while offering a more targeted and surgical method for reducing critical vulnerabilities.
The core goal of de-risking is to achieve “interdependence without overdependence.” This is pursued through three primary mechanisms:
- Diversification and Redundancy: Promoting and incentivising firms to shift the production of non-critical goods out of China and into a variety of other countries. This can create alternative sourcing options or redundancy to lessen the effects of disruption in any single country.
- “Friend-Shoring” and “Ally-Shoring”: This refers to the relocation of essential supply chains to nations that are geographically and geopolitically in alignment (i.e. allies including Mexico, Vietnam, India, and Southeast Asian partners). The political reliability factor is intentionally included by the strategy, in addition to economic efficiency, and is aimed at arranging a solidly functioning supply chain among political systems that share less of a likelihood to coerce each other.
- Domestic Capacity Building: Direct government intervention, such as the US CHIPS and Science Act and the Inflation Reduction Act (IRA), provides massive subsidies to bring the manufacturing of strategically vital components—especially semiconductors, batteries, and critical minerals processing—back to the US or North America. This focuses on achieving strategic autonomy in the most essential dual-use technologies.
Contemporary Analysis and Policy Implications
The Blurring Line Between De-Risking and Decoupling
The modern concept of de-risking carries a troubling contradiction: while it is intended to be less decisive than decoupling, what it requires is often, functionally, technological decoupling, especially in high-tech industries. At the same time, export controls on advanced chips and related manufacturing equipment are, at their core, fundamentally designed to stop China from accessing the leading edge of semiconductor technology.
Similarly, companies like General Motors instructing suppliers to remove all parts sourced from China by a certain date, as reported recently in the automotive press, signifies that de-risking is effectively transitioning to de-coupling, who, in both ultimate cases, create a clearly articulated novel strategy to move forward with actionable unity of purpose. De-risking in China is little more than “decoupling in disguise”, only holding to China’s own narrative of de-Americanization and dual circulation, both of which are intended to lessen reliance on foreign technologies, while establishing its own capabilities and sourcing in the Global South.
Costs and Geopolitical Fragmentation
The immediate effects of de-risking are higher cost and complexity for multinational corporations. Decades of efficiency have created a conflated ecosystem, and it is expensive to unwind; these costs will be fully passed on to consumers. In addition, the US-led imperative of friend-shoring invites a fragmentation of the global economy (geopolitically-driven) into distinct rival blocks, adding regulatory heterogeneity and inviting pressure on non-aligned countries (the Global South) to align with one block versus another—ultimately complicating international trade and/or slowing global economic growth.
In conclusion, the weaponisation of supply chains signifies the conversion of economic interdependence into a risk to security, compelling a major shift in global trade. De-risking is the current strategic response—an attempt to use a scalpel rather than a sledgehammer to protect national security interests while preserving some of the benefits that trade can offer. However, as the US targets technological “choke points” and China further entrenches its hegemonic role in its greater role as a source of manufacturing, the line between targeted risk avoidance and decoupling from the economy continues to blur, establishing a future where geoeconomics will continue to be the major realm of US-China competition.
References:
- https://blogs.isdbinstitute.org/geopolitical-risk-fragmentation-confidence-economy/
- https://www.csis.org/analysis/closer-look-de-risking
- https://direct.mit.edu/isec/article/48/1/91/117127/Collective-Resilience-Deterring-China-s
- https://www.thetaxadviser.com/issues/2023/jun/what-the-inflation-reduction-and-chips-acts-could-mean-for-us-importers/
- https://www.uscc.gov/sites/default/files/2025-11/Chapter_9–Chained_to_China_Beijings_Weaponization_of_Supply_Chains.pdf
Hridbina Chatterjee is a final-year postgraduate student in International Relations at Jadavpur University, Kolkata. She has written for newspapers and think tanks, with interests in South Asian politics, India’s foreign policy, and the Indo-Pacific. Views expressed are the author’s own.
Raghvendra Tripathi 
Aayush Pal 
Garima Sharma