‘Will Trump give up the store?’ Edward Fishman on how US economic warfare works – and doesn’t

Edward Fishman’s first book, Chokepoints, is a study of American economic warfare. Densely reported but fast-moving, the book examines recent US sanctions policy regarding Iran, Russia and China, and how the dollar’s dominance of international financial systems has allowed administrations to pursue political aims.

Fishman’s own service under Barack Obama, at Treasury, Pentagon and State, stands him in good stead. So does teaching at Columbia and being a Washington thinktank fellow.

As Chokepoints comes out, Donald Trump is beginning talks with Russia aimed at ending the war in Ukraine. Russia is seeking relief from US sanctions, which Trump seems inclined to give, and Ukraine and Europe are increasingly isolated from the US.

“The record of the first Trump administration on Russia is not particularly strong,” Fishman said, diplomatically, when asked what the US might expect from a president widely held to be in thrall to Vladimir Putin – and speaking before Trump’s spectacular Oval Office argument with Volodymyr Zelenskyy of Ukraine and subsequent suspension of US military aid.

Fittingly, as the author of a history of modern sanctions, Fishman looked back to look forward – and did not find encouraging signs.

Edward Fishman’s Chokepoints: American Power in the Age of Economic Warfare. Photograph: Portfolio

In 2018, “under pressure from Congress, Trump imposed sanctions on Oleg Deripaska, an aluminum magnate in Russia … Deripaska owned Rusal, which is the largest aluminum company in Russia, and produced almost 10% of the world’s aluminum. And overnight, basically, aluminum prices skyrocket, Rusal stock collapses, and there’s significant chaos in metal markets.

“And Trump gets all these calls from the Russians, from CEOs, saying, ‘What are you doing? Stop.’ And he just pulls back the sanctions.”

Years later, that episode is “concerning” to Fishman, “for a few reasons. One is, I think it signals to Russia that as soon as [Trump’s US faces] even the slightest amount of blowback, he will cave, even absent any concessions. It wasn’t like Putin gave any political concessions [in 2018]. It wasn’t like, ‘OK, we’re gonna free these prisoners overnight, we’re gonna stop this bombardment in Ukraine,’ because there was a low, simmering conflict being fought at the time. Trump just pulled back the sanctions.

“And after that is when Russia shifts basically all of its foreign exchange reserves out of the dollar and into the euro and the yuan, the Chinese currency, and gold. So that was the key moment. Putin realizes [about Trump], ‘This guy, he doesn’t have the stomach to do anything, but also he’s so erratic.’ I think that was when the US lost leverage it needs with Russia, though I think it contributed to Putin underestimating the sanctions he would face in 2022”, from Biden, when he ordered a full invasion.

US sanctions have hurt Russia deeply – and therefore should be among Trump’s strongest cards to play. Typically, he has been inconsistent. Usually friendly to Moscow, on Friday, Trump used his social media platform to say that because Russia was “absolutely ‘pounding’ Ukraine on the battlefield” he was “strongly considering large scale” sanctions and tariffs on Russia until a ceasefire could be reached.

Fishman pondered the issue: “Do I think that Trump will give up the store? I don’t know … I would say I’m not confident that he’s going to get a just peace in Ukraine. But I’m not yet saying, ‘This guy is failing, we’re about to give up everything to Russia in exchange for nothing,’ though I think it’s possible and it’s certainly what the Russians want. It’s very clear they want to cut a deal with Trump that basically couches sanctions relief as a favor to the US, to say, ‘We should have open trade and investment with you. It’s good for America. It was Biden who put on all these restraints. He was just restraining US-Russia relations for no good reason.’

“They want to basically get the US to give up their biggest bargaining chip before full negotiations over Ukraine even start.”

Fishman studied at Yale, Cambridge and Stanford after 9/11. He noticed that “Iran’s nuclear program shot to the top of the foreign policy agenda”, even though “it was very obvious that the US was not willing to fight another war in the Middle East. And as a result, a number of people were thinking, ‘OK, what do we do about it?’”

Joining the US government, Fishman found himself looking for a good book on sanctions.

“I had an interesting mix of roles. Some were in the action, doing sanctions, diplomacy, and in others I was more of an adviser to really senior people. I worked for Secretary of State John Kerry and Chair of the Joint Chiefs of Staff Martin Dempsey … And what I noticed was in the Situation Room, when the top leaders were discussing US foreign policy, whenever it turned to economic warfare, sanctions, etc, the level of conversation was so low, and I think it was because most people in the room had no idea what sanctions were.

“It felt arcane. It felt mysterious. And so a big goal [with Chokepoints] was to demystify this and to create a way for average people just to read a book and say, ‘OK, I get it enough that I can develop my own opinions.’”

The book is written to keep the reader moving, short chapters introduced with journalistic flourishes. Character traits are sharply noted, short anecdotes from lives away from work help present diplomats and bureaucrats in sharp relief.

The importance of the sanctions policy such characters have shaped over the last 20 years is hard to overstate. The first part of Fishman’s book concerns the Iran nuclear deal, reached under Obama through diplomacy and economic pressure, meant to stop the Islamic Republic getting the bomb, dumped by Trump in 2018. Fishman also considers Russia’s annexation of Crimea in 2014 and the US-led response – one subject of angry debate in the Oval Office when Zelenskyy visited last week – then switches to how Obama and Trump approached China.

Fishman is a proud Obama alum but he is not afraid to apportion criticism.

“Trump was significantly less risk-averse than Obama was when it came to sanctions. And I think that hopefully the Obama-Russia section [of Chokepoints] shows that in some ways, that risk aversion did not serve American interests.

“The Obama administration also toward the end started to become quite concerned about China building islands in the South China Sea, all kinds of other aggressive acts. I think some Obama people would say this was too late in the administration to do anything about it but I would have been surprised, honestly, if you had seen a kind of frontal assault on Chinese economic aggression, even if Obama had more time.

“So I think the benefit of Trump, with respect to China, was that he showed us that we have more leverage than we think we do, that we have more flexibility to actually push back against things that China was doing to hurt American interests, because I think it was well documented that Chinese IP theft was one of the ways that they were damaging American business interests, damaging the US economy, and we really hadn’t done anything about it.

“So I do think that what Trump got right on China was that you can punch back without necessarily destroying the relationship … the US-China relationship didn’t really collapse during the Trump administration until the very end, until Covid, because they had signed the phase one trade deal in January 2020.

“The thing that strikes me about the first Trump administration, and I think is going to be true about this one, is that Trump … on most issues, he vacillates. And China’s one of them. He goes back and forth from being extremely tough to being like, ‘Xi Jinping is my best friend.’”

Trump is inconsistent toward other countries too, particularly those he threatens with tariffs, adversaries and friends alike, as demonstrated this week by 25% tariffs slapped on Mexico and Canada, then partially delayed.

“Tariffs are taxes on imports,” Fishman said. “Let’s say we were to impose a tariff on Russian oil of 20%. That would mean that US companies could buy Russian oil, but if they were to do so, they’d have to pay a 20% tax. So a US refinery, down the street from me in New Jersey, could pay a tax to the US government to buy that Russian oil.

“A sanction would be basically saying you can’t buy any oil at all. So a tariff is a significantly weaker form of a sanction. Historically, as a result, tariffs have not been used for national security reasons. They’re an economic bargaining chip. Sometimes you use tariffs to protect important domestic industries.

“What Trump has done is basically just made tariffs yet another weapon in the US economic arsenal, alongside sanctions and export controls. And I think that’s OK. But it’s important for people to realize that tariffs are a significantly weaker tool than sanctions or export controls, so the idea of using them to address key national security problems is somewhat ludicrous.

“Trump recently threatened tariffs on Russia. We import $2bn or $3bn worth of goods from Russia. So what good is that going to do? The tariff threat against the Brics countries – a lot of these things don’t make a lot of sense. I think he has a fixation with tariffs. Let’s see if one of his red lines is crossed, if he actually just relies on tariffs, or if there’s sanctions too.”

A “chokepoint” is a point at which trade can be squeezed: physically, in corridors such as the Bosphorus or the Panama canal, electronically, through financial networks from which the US can freeze enemies out.

“Geographic chokepoints have never fully lost their relevance,” Fishman said. “With the invention of the airplane, there are ways to ship commodities without access to chokepoints. But a lot of things, like oil, still travel by sea or by pipeline. And so that’s why the Bosphorus today is still a really important chokepoint. The Suez canal is very important, and the Strait of Hormuz.

“What’s different about economic warfare today is that throughout almost all of human history, up until 20 years ago, cutting off any of these chokepoints would have required taking a navy vessel and parking it there, and saying, ‘OK, thou shall not pass.’ The difference now is you can have an official in the treasury department sign a document and block a chokepoint from thousands of miles away. That’s why you’ve seen this sort of unchained economic warfare, because it’s not like military force, it’s not like you’re actually putting US troops and US ships in harm’s way.”

Trump has implied willingness to use US troops, to seize the Panama canal or Greenland. Fishman sees actual deployments as a possible consequence of Trump fueling a breakdown of economic order.

“The thing I worry about, about some of Trump’s rhetoric, not just about Panama but Greenland … is that I think that we are certainly headed toward a breakdown in globalization. I think that in order to regain a sense of economic security, we’re going to see an erosion of economic interdependence.”

Economic nationalism is on the rise. Fishman worries that “Trump may be driving us towards deploying these weapons of economic warfare not just against the Chinas and Russias of the world, but against Canada, Mexico, the European Union, Colombia, Brazil – all these different countries he’s threatened tariffs and sanctions against.”

His book ends on a pessimistic note. In conversation, he warns: “History shows us that when states can’t acquire markets and resources through open trade and finance, that’s when wars break out. They try to conquer them. If you have that mindset, if you say, ‘We don’t feel like we can access these resources unless we physically plant our flag there,’ then that’s not a world that any of us is going to be happy living in.”

• Chokepoints is out now