Opinion | Crypto Gamblers, Tech Oligarchs, Wall Street Opportunists. What Could Go Wrong? #CriptoNews

Over the past two decades, America has built an unprecedented arsenal of economic security tools that have anchored U.S. foreign policy.

Republican and Democratic administrations together developed a shared understanding of the world, and how best to pursue America’s interests. Economic security officials worked across administrations, gradually developing grand ambitions of a global order founded on financial sanctions, export controls and development of crucial technologies. Each new administration built up the economic weapons it inherited from the last and encouraged its successors to keep building the structures of American economic power.

We are about to find out what happens when those structures are controlled by a disruptive administration — and what happens when that administration inherits the weapons without the accompanying sense of responsibility.

There are still traditional economic-security technocrats in the new Trump administration, but they are just one faction, vying with others — crypto fans, Wall Street boosters and America Firsters. With this jockeying as well as President Trump’s social media beefs with other countries, we may be looking at the beginning of a world in which countries disentangle themselves from U.S. dependence at the same time that our machinery of power begins rusting from within.

Before they left the White House, Joe Biden’s people clearly hoped to shape the Trump administration’s agenda. Just six days before Mr. Trump was to take office, the Biden administration published a plan for America to command global A.I. This document was the culmination of over two decades of U.S. efforts to use technological and economic chokeholds to build enduring American power, and it laid out an intricate plan for cementing U.S. control over cutting-edge A.I.

But then Mr. Trump displayed his own approach to policy and global affairs. Colombia is one of America’s closest Latin American allies. When it refused to accept two military planes of deportees, Mr. Trump announced that he would impose full “Treasury, banking and financial” sanctions as well as 50 percent tariffs on all Colombian products within a week. Colombia’s president responded with his own online tirade. A face-saving compromise ended the spat. Out was the decades-in-the-making policy understanding; in was a 190-word post on Truth Social.

Other countries will certainly have paid attention. In the short term, they may be more willing to give Mr. Trump what he wants. In the longer run, they will have every reason to pull away from an America that seems willing to crush an ally’s economy on a whim. Mr. Trump’s bluster seemed more like 19th-century gunboat diplomacy than strategic calculation.

But the problem isn’t just that Mr. Trump ricochets through policy positions like a ball on a roulette wheel. It’s that his administration is set to become a casino where crypto gamblers, tech oligarchs and Wall Street opportunists compete with security hawks for influence.

U.S. policy will then depend on which pocket on the wheel Mr. Trump comes to rest. These different factions have different understandings of America’s interests. Should the nation rely on crypto technologies that were designed to resist government control? Should it loosen or strengthen restrictions on the export of A.I. and semiconductors? Should it strike convenient bargains with wealthy autocratic regimes?

At least some of these would depart sharply from the past security consensus. It used to be that while Democrats and Republicans fought bitterly over many policy questions, both agreed that the national interest depended on building up power over global finance and technology.

After the Sept. 11 attacks, members of both parties realized that a largely unregulated global financial apparatus threatened American security. The U.S. dollar underpinned a system in which terrorists and rogue states like North Korea could easily send and receive money across borders.

The Treasury Department began to turn the dollar into a system of global power, deploying sanctions and blocking people, banks and eventually even entire countries. It took longer to focus on technology, but by the second Obama administration, the Department of Commerce’s Bureau of Industry and Security was building up export controls and related measures that not only isolated countries including Iran but could also be used against overseas companies such as China’s ZTE, which flouted U.S. rules while depending on U.S. technology.

Few outsiders paid attention to what seemed like an arcane realm of dull technicalities. Only specialists understood that the United States was slowly reshaping the global economy around its security interests, piling action upon action to construct a vast machinery of coercion.

When Mr. Trump first came to power in 2017, this system didn’t change as much as one might have expected. His past threat of sanctions against allies made American economic power far more visible and controversial. But Mr. Trump regularly found himself frustrated by his own senior officials, who often stymied actions that they feared would undermine American interests.

Midlevel officials steered policy through Mr. Trump’s tweetstorms, and their improvisations even led to the discovery of a new economic weapon. Mr. Trump’s desire to press China into making trade concessions led export controls to be expanded so that they could be used against foreign businesses that were only indirectly connected to the U.S. economy.

When Mr. Biden came to power, his officials used these measures against Russia, and then China. Mr. Biden’s A.I. plan relies on powers that were invented by Mr. Trump’s Commerce Department.

These two decades of continuity are now set to end. It is already clear that there will be fewer constraints on Mr. Trump in his second term. In 2020, he issued an executive order that would have effectively banned TikTok as a threat to national security. Now he appears to want a deal that would keep TikTok alive (he changed his mind around the time he talked to Jeff Yass, a major investor in TikTok’s parent company, although he denies having discussed TikTok at the meeting).

Mr. Trump’s love affair with crypto sits awkwardly with his enthusiasm for American power. He has promised to make crypto into a national policy priority, and even issued his own crypto memecoin. He appointed a crypto investor, David Sacks, as “crypto and A.I. czar,” and nominated as commerce secretary Howard Lutnick, whose company, Cantor Fitzgerald, has been a major supporter of the crypto stablecoin Tether.

But crypto’s interests are at odds with U.S. financial and technological power. Crypto makes it easy for rogue states to move money across borders and promises that technological decentralization can provide alternatives to government power. Traditional banks worry about the possible fallout from crypto services’ lackadaisical approach to money laundering and enforcing financial sanctions.

There will be similar battles over semiconductors and A.I. The national security hawks in the new administration want to keep A.I. in America’s grasp and to limit foreigners’ access to powerful semiconductors. But A.I. companies and semiconductor producers are making early investments in influence — they want their enormous financial bets on data centers and manufacturing facilities to pay off.

A.I. companies are often sanguine about export controls (which undermine their Chinese competitors) and want fewer regulations and restrictions on A.I. Semiconductor companies, by contrast, are much more concerned about export controls, which greatly limit their access to global markets.

The midlevel officials who long kept the economic security machine running will have to juggle these competing demands. Sometimes, President Trump will likely demand that they provide him with a cudgel against his enemies. That means that they will have to maintain and build up America’s machinery of sanctions and export controls.

Other times, the president will likely want these officials to get out of the way of crypto, A.I. or whichever other influential economic interest wants to duck national security restrictions.

Sometimes, his goals and national-security interests may coincide. While Mr. Trump himself vacillates on whether Ukraine might become part of Russia, some of his advisers clearly want to increase sanctions pressure on Moscow to squeeze it into accepting a peace agreement with more concessions to Ukraine.

Overall, however, this administration will inexorably weaken America’s economic security. Sanctions and other measures could well, sometimes, be applied indiscriminately against countries, organizations and individuals that displease the president. Those who fear Mr. Trump’s fickleness and wrath will have every reason to detach themselves from connections with the United States to limit the damage.

Countries and businesses will likely pay Mr. Trump his tribute, or pretend to, to avoid tariffs, sanctions and export controls. But they will also know the United States is no longer entirely reliable. They are likely to be hurt not only by Mr. Trump’s deliberate actions but also by the foreign-policy mistakes that proliferate as America’s administrative state withers from within. We are likely to see the erosion of the markets that underpin U.S. strength, as one-way tributes displace two-sided relationships in a multilateral world. Global businesses will diversify their supply chains, applying the same risk calculations to American exposure that they once applied to dealings with tinpot kleptocrats.

America’s adversaries have long found it hard to persuade America’s allies to defect from America’s economic networks. Mr. Trump’s second term has changed their calculus — now even European allies are quietly talking about moving closer to China. It’s increasingly hard to see the benefits they get from their ties to America, and increasingly easy to see the costs.

Henry J. Farrell of Johns Hopkins and Abraham L. Newman of Georgetown are professors of international affairs and the authors of “Underground Empire: How America Weaponized the World Economy.”

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