AN ANALYSIS OF INTERNATIONAL TECHNOLOGY AND TRADE WARS AT THE ONSET OF 2025
In 2025, the main challenges facing the global economy will include the trade policies the US implements, sluggish global growth, and geopolitical risks
Entering 2025, the global economy is expected to proceed largely unchanged from 2024, aside from efforts to combat inflation. Inflation has been brought down to manageable levels in numerous countries, leading central banks to start lowering interest rates. A further reduction in global inflation is anticipated for 2025. Also, other economic indicators such as growth, investments, and global trade are projected to follow similar patterns to those in 2024, suggesting that the global recovery has yet to gain significant traction.
In 2025, the main challenges facing the global economy will include the trade policies the US implements, sluggish global growth, and geopolitical risks. One of the most significant changes anticipated to set the new year apart is the trade policies the US is expected to implement and the ensuing trade wars they may trigger. Trade wars or technology wars are not new phenomena and will not first emerge on our agenda in 2025. Following the global financial crisis of 2008, the US and China have been engaged in an increasingly severe trade war.
What initially seemed like a purely technical conflict has gradually taken on political implications. A crucial turning point occurred when, during his first presidential term, Trump decided that the use of technologies developed within adversarial nations would be deemed a critical threat within the United States. Upon Biden’s inauguration following Trump, despite hopes for improved relations, the Biden administration adopted a more stringent approach towards China, especially in the technology arena. The US-China technology conflict is thought to have originated in the semiconductor industry, considering the supply chain disruptions brought about by the pandemic.
However, it soon became evident that the issue extended beyond semiconductors and the supply chain disruptions caused by their scarcity. The primary driver behind the trade and technology wars is the digital technology revolution’s capacity to profoundly transform not only the economy but also the social fabric, serving as a crucial factor in establishing leadership within global competition. The United States, leveraging its prestigious universities, research institutions, and a strong focus on science and innovation, regards technology as both a means to gain trade superiority and a tool for establishing economic and political dominance on the global stage, shaping all its policies accordingly.
In contrast, China seeks to enhance its status as the world’s manufacturing powerhouse—a position it has secured through inexpensive labor—by advancing through technological initiatives. It is formulating policies aimed at becoming a dominant global political, military, and economic force. It is evident that while the technology conflict between the US and China began as a trade dispute, it has progressively shifted towards leading essential technologies like 5G and artificial intelligence, in addition to semiconductors.
Leading these technologies will also spearhead global political, economic, and social transformations. Throughout our article, we have focused on global trade and technology wars using the US and China as examples. This is because these conflicts are not only confined to these two nations but also because they are at the heart of these struggles. The European Union has lagged behind both China and the United States in this wars, with no recovery expected in the near future. A report prepared by Mario Draghi, the former President of the European Central Bank, underscores this issue and recommends increasing investments in this sector by 5 percentage points of GDP to close the existing gap.
Also, Taiwan, a leading producer of semiconductors, and South Korea, another technologically advanced nation in the region, are expected to align with the United States in this wars across multiple areas. Other emerging nations and regions are anticipated to adjust their economic frameworks and technology policies to align with one of the newly forming alliances, resulting in both direct and indirect effects on global trade and technology conflicts. Looking ahead, numerous uncertainties remain, including how global trade and technology wars will evolve, their impact on global production and supply chains, and how the financial sector will identify and fund the appropriate projects within these conflicts.
The complexity of trade and technology wars is further heightened by the involvement of not just multinational corporations but also governments, which are responding to these dynamics with diverse policy measures. Nonetheless, there is a single outcome: the nations that emerge victorious from this process will drive the economic, political, and social transformation of the new global landscape.
At DEİK, we founded the DEİK Digital Technologies Business Council in 2022 to assess these developments and ensure that our country maximizes its advantages from this transition. Our goal is to strategically position our companies for global integration throughout their digital transformation endeavors, thereby contributing to our nation’s optimal gains from this evolution.