It’s not just a battle of tariffs and duties: it’s a silent war for control of technological power and strategic resources. And it’s rewriting the rules of global markets.
If you think the conflict between the United States and China is limited to Trump’s tariffs, perhaps it’s time to look deeper. Today, the real battleground is no longer trade-related, but strategic. The new global game is about control of critical resources, semiconductors, and the technologies on which 21st-century economic supremacy is based.
On the one hand, Beijing has understood that critical minerals can be used as a geopolitical weapon: controlling the supply chain means controlling the pace of technological development. On the other, Washington responds by restricting access to advanced software, intellectual property, and AI-related components.
This dynamic has transformed economic rivalry into a full-fledged economic Cold War. It’s a less visible conflict, but one with potentially devastating consequences for markets. It’s not fought with missiles and tanks, but with export controls, state subsidies and industrial policy. A conflict where power is not measured in square kilometers, but in 3-nanometer chips.
The Chess Game of Economic Power
Imagine two great powers sitting in front of a chessboard. Each move is slow, calculated, but every sacrificed pawn can change the global balance.
The United States is trying to reduce its manufacturing dependence by building new supply chains, especially for rare earth elements, which are essential for electric motors, batteries, turbines, and military equipment. The goal is to create a more resilient supply network, including allies like Australia, Canada, and Japan.
China, on the other hand, is ahead in the race. It accounts for over 90% of the world’s production of processed rare earth elements, but it isn’t satisfied: it wants to free itself from Western expertise and build a fully domestic tech ecosystem. It has invested heavily in semiconductor research, artificial intelligence projects, and the expansion of the New Silk Road, which allows it to secure privileged access to the resources of Africa and South America.
Unlike Washington, Beijing has a structural advantage: policy flexibility. It doesn’t have to answer to Congress or the Supreme Court, and can therefore plan long-term moves without political obstacles. The United States, on the other hand, must contend with institutional limitations and an increasingly polarized public opinion. This bureaucratic inertia risks eroding its competitive edge, especially in a context where technological speed is more valuable than financial capital.
A fragile balance in the markets
Like every cold war, this one will not have a winner, but rather a lot of collateral damage. Geopolitical adjustments take years, and markets will have to cope with a period of elevated structural uncertainty not seen since the 1980s.
Trump, now back in the White House, is trapped in his own political narrative: the slogan "America First" forces him to maintain an aggressive stance. Even if he wanted to, he couldn’t eliminate tariffs without losing support. And this means that imported price pressures will remain a real threat.
Investors are thus faced with an ambivalent scenario. On the one hand, the S&P 500 has shown remarkable resilience: even after the elections and the first rounds of tensions, markets continued to rise, supported by expectations of tax cuts and economic stimulus. On the other, macroeconomic fundamentals remain weak. Inflation, while slowing, is still above the Federal Reserve’s target; economic growth is stabilizing at moderate levels; and interest rates, although bound to fall sooner or later, cannot fall until inflation shows sustained disinflation.
In other words, equity markets remain highly volatile: every rebound is potentially ephemeral, every rally can be interrupted by a tweet or a new technology embargo.
The Attention Triangle: Treasuries, Dollar, and Gold
When economies polarize, investors seek refuge. Historically, the bond market is the key gauge of risk sentiment. If real Treasury yields decline, the dollar loses attractiveness and international flows shift elsewhere. This mechanism is crucial: reduced foreign demand for Treasuries signals waning confidence in the sustainability of US debt.
A weakening dollar would take us into uncharted territory.. For decades, the US currency has been synonymous with safety, but if real yields remain low and foreign policy fuels uncertainty, capital may prefer other safe havens. This is where gold comes back into play.
The yellow metal has always been a barometer of mistrust of fiat currencies. In recent months, it has already risen sharply, driven by geopolitical tensions and expectations of new tariffs. However, it would be naive to think that it will continue to rise linearly. Gold reacts to expectations rather than events: if markets have already priced in a certain level of instability, new shocks are needed to push it higher. Without further deterioration in US-China relations or a collapse of the dollar, gold could enter a phase of consolidation.
Between realism and strategic vision
So, does it make sense to invest in gold in this new economic cold war? Not exactly. Markets discount expectations, not headlines. Gold, like other safe-haven assets, has already risen on expectations of a prolonged crisis. Likewise, stock markets have already factored in the possibility of tariffs and trade slowdowns.
The truth is that neither bloc has any real interest in pushing the conflict beyond a certain point. An escalation would damage both economies, compromising supply chains and the stability of global markets. It’s likely that we’ll remain in a fragile equilibrium, characterized by moderate but constant tensions, where any political signal can translate into short-term volatility.
The new Cold War will not be won with weapons, but with technological advantage, supply chains, and financial credibility. And like any conflict fought over the long term, it will reward those who remain clear-headed, not those who chase panic or momentary euphoria.
Original article published on Money.it Italy 2025-10-19 16:51:00. Original title: La guerra fredda economica che devi conoscere se sei un investitore
