Copyright © 2025 Telesto Strategy, LLC
All rights reserved
Economic warfare is no longer a distant concept — it is here now, shaping the environment in which companies operate. It spans commodity blockades, cyber coercion, financial retaliation, and increasingly volatile tensions in a multipolar world. Management teams need to build readiness into their operations. That means stress-testing scenarios, building financial and cyber resilience, diversifying supply chains, and creating agile operating models that can respond to sudden policy changes. With AI-assisted readiness and better intelligence, companies can decode geopolitical moves, strengthen supply chains, and protect both financial performance and ethical standing.
Key takeaways
- Economic statecraft, including tariffs, export controls, sanctions, and resource nationalism, is now a standard operating condition, not an exception. Policy shifts are coming faster and with fewer exemptions
- The trade landscape is fragmenting, but overall world merchandise trade remains positive. Services growth slowed in early 2025. Foreign direct investment is rerouting selectively rather than collapsing outright
- Energy and technology remain at the center of geopolitical friction. Price caps and “shadow fleet” shipping shape Russian oil flows. Chip and tool controls now include pay-to-export arrangements and vendor-specific restrictions.
- Logistics chokepoints, such as strategic ports and canals, are adding time and cost to global supply chains
- Conflicts worldwide are at their highest levels since before the Cold War, making resilience a strategic priority rather than a compliance exercise
Sanctions, export bans, and shifting alliances
The global network of sanctions and export bans is constantly shifting, influenced by geopolitical rivalries, trade fragmentation, and policy changes. These measures target issues such as:
- Human rights violations
- Nuclear proliferation and terrorism
- Actions undermining territorial integrity
- Destabilizing activities in conflict zones
Examples of current geopolitical flashpoints:
- Port of Darwin, Australia. A Chinese company holds a 99-year lease on this strategically important port, sparking security concerns in Australia and the U.S. The Australian government is exploring options to regain control, with potential U.S. corporate involvement.
- Intel leadership controversy. President Trump has called for the Intel president’s resignation, citing alleged problematic ties to China.
- AI chip exports. U.S. policy now allows downgraded AI chip sales to China in exchange for a 15% revenue share, creating both opportunity and policy risk.
- Red Sea logistics. Suez Canal volumes dropped by about 50% in early 2024, leading carriers to add surcharges and reroute shipments.
- EV tariffs. The EU’s 45% tariff on China-built EVs has shifted market share and pricing in Europe.
- HPE-Juniper merger. U.S. intelligence agencies pushed for approval of this $14B deal to reduce dependence on Chinese technology.
- U.S. Steel sale to Nippon Steel. The deal involved CFIUS review, executive orders, and a “golden share” to balance foreign investment with national security concerns.
- Russian gas to India. The U.S. sees these purchases, even if within price caps, as indirectly funding Russia’s war in Ukraine.
Risks for multinational companies
With global volatility at record levels, companies face broad exposure to operational, financial, and reputational harm. Key risks include:
- Reputational damage. This occurs when a company is perceived as supporting sanctioned or controversial regimes
- Stock price drops. These often far exceed the value of regulatory fines
- Higher compliance costs. These arise from tougher oversight once a company has been flagged by regulators
- Gross margin pressure. This is caused by input shortages and cost spikes
- Higher OpEx. This results from the increased demands of trade and compliance operations
- Working capital strain. This happens when longer shipping routes and precautionary inventory tie up cash flow
- Limited insurance coverage. This applies to geopolitical risk and conflict-related disruptions
- Increased labor costs. This stems from the need to hire specialized compliance and risk management personnel
- Currency volatility. This complicates pricing and contracts in international markets
- Restricted market access. This results from sanctions, trade wars, or political tensions
Actions management teams can take:
- Develop an economic warfare playbook and dashboard. Track sanctions exposure, tariff impacts, lead-time risk, and revenue at risk
- Stress-test supply chains. Model export bans, tariffs, or other policy shifts and diversify sourcing for critical inputs
- Build legal and diplomatic capacity. Strengthen your ability to navigate jurisdictional conflicts
- Establish agile response protocols. Enable rapid operational pivots in production, logistics, or markets
- Engage with policymakers. Influence frameworks that balance security with commercial continuity
- Revisit China+1 strategies. Assess exposure to East Asia and ASEAN disruptions
- Partner with public, private, and philanthropic entities. Align on security considerations and compliance strategies
Questions for management teams:
- Are we equipped to track and manage conflicting sanctions and trade regimes?
- What are our high-risk market “red lines” — and have we tested them recently?
- How exposed are we to resource nationalism in critical materials or technology?
- Are we overweight or underweight in certain connector markets based on trade realignment?
- Can we rapidly adjust production, sourcing, or logistics in a geopolitical shock?
- How will we manage compliance, ethical expectations, and stakeholder trust during conflict?
Additional Telesto resources
- Atlas, equips your organization’s corporate directors and leaders with the insights and knowledge necessary to stay up to date, mitigate risks, and seize business opportunities associated with sustainability, climate, and ESG
- Prism, our ESG benchmarking tool, helps your organization to rapidly strengthen its Sustainability, Climate, and ESG performance and disclosures through in-depth benchmarking of industry peers and identification of gaps and areas of distinction
- Board series: What’s your sanction exposure? Readiness for Industrials
- Recently released by Telesto Strategy’s CEO & Founder, Alex Kruzel, The Courage to Continue: Stay the Course on Sustainability to Secure our Future, explores the connection between corporate priorities and President Trump’s national security agenda
Contact Telesto Strategy to equip your management team with the intelligence, strategies, and operational tools to anticipate geopolitical shocks, protect enterprise value, and act decisively in high-risk environments.
