The U.S. National Security Strategy and the Reshaping of the Global Economy

The U.S. National Security Strategy issued in 2025 signals a profound structural shift in Washington’s vision of its global role. After decades of managing the international order through military dominance, broad alliances, and direct intervention in crises, the United States is now moving toward a more selective approach—one centred on economic security, the rebuilding of industrial power, and calibrating foreign engagement according to the logic of “direct national interest.”

This shift does not imply a retreat of U.S. influence from the global system; rather, it represents a comprehensive reengineering of its foundations. Energy, supply chains, and advanced technologies have become the primary instruments of influence, replacing expansive military presence.

This transformation has already materialized through the redirection of more than $1.1 trillion globally between 2021 and 2025 toward supporting production within economic blocs, instead of reliance on open-ended globalization.

The End of Globalization and the Cost Shock

The new strategy reflects the end of the globalization model based on free trade and widely dispersed supply chains, replacing it with a fundamentally different paradigm that prioritizes economic security over price efficiency, reshoring strategic industries, and linking trade to alliances rather than to open markets.

The reshoring of manufacturing to the United States and Europe has proven costly, as it entails relocating production from low-cost Asia—leading to higher wages, stricter environmental compliance, and elevated energy and financing costs.

Reshoring costs have already risen by 25–40% compared with production in East Asia, driven by a threefold increase in industrial wages, energy costs rising by up to 60% in Europe, and environmental compliance costs representing at least 15–20% of total operating expenses.

This is not a temporary inflationary cycle, but a structural and lasting shift in global price formation and production costs. It is compressing consumer purchasing power, eroding profit margins, and forcing a global rethink of investment and industrial development strategies.

Globally, industrial goods prices are expected to rise by 18–32%, average maritime shipping costs by about 25%, while marine insurance in high-risk zones has surged by 300–600%, alongside an increase in trade finance costs of 1.5–2 percentage points.

These dynamics have reshaped global trade itself. The ratio of world trade to global GDP has fallen from 61% in 2008 to roughly 52% in 2024, its lowest level since the global financial crisis. In contrast, intra-Western trade within geopolitical blocs increased by 17% between 2021 and 2024, while trade between rival blocs declined by 12%.

This has triggered a clear redrawing of the global trade map, altered future shipping routes and transformed re-export centres—leading to the emergence of new commercial hubs and the decline of traditional neutral intermediaries.

Sadek Al-Rikaby, Director of Economic Research at the International Centre for Development Studies, notes:

“Economies built on re-exports, intermediate manufacturing, and cross-border logistics—while maintaining political neutrality—will face declining demand. These states will have to redefine their roles and create new value within bloc-based systems. Those that fail to grasp the new bloc logic will find themselves excluded from global value chains unless they adapt rapidly to the emerging security and logistics transformations.”

Closed Industrial Regions

The reallocation of global supply chains is expected to shift approximately 22% of Asia’s industrial trade into closed industrial blocs over the next decade. The world is moving toward closed industrial regions organized around major strategic blocs: a U.S.-led industrial region encompassing North America and parts of Latin America; a China-led region spanning East and Southeast Asia; and a European effort to rebuild an independent industrial base despite persistent energy constraints.

The United States has already injected more than $420 billion into semiconductor, energy, and supply-chain programs under the CHIPS Act and the Inflation Reduction Act. Europe has approved industrial support packages exceeding €390 billion, while China’s estimated—largely undisclosed—annual industrial subsidies range between $280–300 billion.

According to Al-Rikaby:

“The new industrial blocs will define future investment and trade opportunities and reshape the global distribution of economic power. The world economy is moving from a single, interconnected system toward parallel, competing networks.”

Energy at the Core of the New U.S. Strategy

Energy now sits at the heart of U.S. national security, serving as a tool to support domestic industry, a lever to control global markets, and a weapon to constrain adversaries. While Washington may reduce its direct political engagement in the Middle East, it cannot abandon the stability of global oil and gas markets, which remain a central artery of the world economy.

Al-Rikaby emphasizes:

“The United States cannot allow any global oil shock that would destabilize prices and the world economy, even as it scales back its direct political involvement in the region.”

The 2025 strategy anchors the concept of “American Energy Dominance” as a core pillar of national security. The objective is no longer mere self-sufficiency but securing cheap energy to support U.S. industry and suppress inflation.

The United States has become the world’s largest oil producer, exceeding 13.3 million barrels per day in 2024, and the world’s largest LNG exporter, with a global market share exceeding 22%.

U.S. energy exports rose from $210 billion in 2020 to over $420 billion in 2024, contributing to a reduction in inflation of roughly 1.2 percentage points during 2023–2024 and granting U.S. industry electricity prices that are about 55% lower than those in Europe. In this transition, the United States has moved from being an “anxious consumer” to a “competitive producer and exporter.”

European and Asian Economies

As the United States expands oil and gas exports to bolster its geopolitical influence, it simultaneously seeks to deny adversaries the ability to weaponize energy. Its confrontation with China—the long-term strategic rival—is being waged through technology, industry, and supply chains, while the confrontation with Russia is managed through sanctions, energy, and financial pressure rather than direct military conflict.

Europe, meanwhile, is bearing the brunt of the conflict through an energy crisis, slowing growth, and eroding competitiveness, alongside rising defence spending at the expense of social welfare.

Europe has lost at least 1.3% of its industrial output annually since 2022, while defence spending has risen from 1.4% to 2.1% of GDP within two years, alongside a loss of nearly 18% in industrial competitiveness relative to the United States.

China’s growth slowed from 8.4% in 2021 to approximately 4.6% in 2024, with foreign direct investment outflows exceeding $160 billion in a single year.

In this context, Europe is paying the economic price of major power conflicts, while Asia and Russia are increasingly becoming arenas of geo-economic competition rather than direct military confrontation.

A New U.S. Role in the Middle East

Amid the transformation of U.S. national security strategy, the Middle East is entering a fundamentally new phase. Washington no longer sees itself as a comprehensive political guarantor of regional stability. Yet, despite the reduction in political engagement, it cannot abandon Middle Eastern oil stability. A mere $10 per barrel price shock could raise global inflation by about 0.4 percentage points and increase import costs for developing countries by more than $85 billion annually.

Ensuring the flow of global energy requires securing strategic maritime chokepoints—most critically the Strait of Hormuz and the Bab El-Mandeb—to prevent supply disruptions and price volatility. Any disruption in these two straits could immediately halt around 21 million barrels of oil per day, equivalent to 21% of global supply, while roughly 12% of global trade passes through the Suez Canal.

As geopolitical risks rise and the U.S. political umbrella recedes, regional states will increasingly rely on their own capabilities and regional alliances rather than on direct U.S. protection. Economic transformation is accelerating as oil no longer guarantees long-term fiscal stability. Some oil-producing states face elevated risks—most notably Iraq, which confronts a dual vulnerability: extreme fiscal dependence on oil and persistent security threats that make any attack on its energy infrastructure extraordinarily costly.

Economic diversification and transforming geographic position into logistical value are no longer economic luxuries for Middle Eastern states—they are strategic imperatives. Although the region is a central transit hub for energy and trade, its effectiveness remains conditional on security. The Suez Canal, for example, is a vital artery of global trade, yet it is acutely vulnerable to security disruptions. The same applies to Al-Faw Port and Iraq’s Development Road project—both high-value strategic ventures whose success depends on security, domestic rail connectivity, and international operational partnerships. By contrast, the ports of Dubai and Abu Dhabi enjoy the flexibility and efficiency needed to capitalize on shifting global routes.

Security Capitalism

As the global economy enters a prolonged phase of uneven growth and volatile inflation, geopolitical shocks are likely to recur. The classical globalization model is eroding, giving way to a new form of security-driven capitalism dominated by major geopolitical blocs. This form of capitalism is no longer a byproduct of crises—it is a deliberate strategic choice, compelling each bloc to monopolize critical resources and reallocate production within its political sphere rather than according to free-market logic.