SAO PAULO, 14 February 2026 – The United States is pursuing a recalibrated global economic strategy aimed at maintaining competition with China while strengthening ties with Latin America, signalling a shift toward supply chain resilience and geopolitical diversification in an increasingly fragmented global economy.
US Treasury Secretary Scott Bessent outlined Washington’s approach at an investor conference in São Paulo, emphasising that the US seeks “fair and enduring competition” with China rather than outright economic decoupling. Instead, the focus is on reducing strategic vulnerabilities, particularly in sectors tied to national security and economic resilience.
This evolving framework reflects a broader recalibration of global trade and industrial policies as geopolitical tensions reshape supply chains and capital flows. While economic engagement between the world’s two largest economies remains substantial, Washington is prioritising domestic capacity-building and diversification to reduce dependency in critical sectors.
Strategic Competition Without Decoupling
Despite persistent geopolitical friction, the US has made clear it does not intend to sever economic ties with China. Instead, policymakers are pursuing a risk-reduction strategy focused on sensitive industries such as semiconductors, critical minerals, and pharmaceuticals, areas deemed essential for national security and technological leadership.
Bessent emphasised that global economic imbalances, particularly China’s substantial trade surplus, present structural challenges. Washington believes long-term stability requires a more balanced trade environment and diversification of production bases across multiple regions.
This approach aligns with a growing global trend toward “friend-shoring,” where countries prioritise economic relationships with politically aligned partners while maintaining selective engagement with strategic competitors.
The strategy also comes ahead of planned diplomatic engagements between senior US and Chinese officials, including anticipated talks aimed at stabilising commercial relations and preventing escalation of trade tensions. These discussions highlight ongoing efforts by both powers to manage strategic rivalry without disrupting global economic stability.
Latin America Emerges as Strategic Priority
Alongside its China recalibration, the United States is intensifying its economic engagement with Latin America, positioning the region as a key partner in its global industrial and geopolitical strategy.
Bessent described Latin America as offering a “generational opportunity” to strengthen economic cooperation, particularly with countries implementing market-oriented reforms and seeking deeper integration with global supply chains.
This renewed focus reflects Washington’s effort to diversify sourcing of strategic commodities and manufacturing capabilities, especially as companies seek alternatives to concentrated supply chains in Asia.
Argentina has emerged as a focal point of this strategy, with the US providing economic support to maintain market confidence during political transitions. Brazil, the region’s largest economy, is also expected to play a significant role, with bilateral trade discussions and economic cooperation initiatives already underway.
Latin America’s vast reserves of critical minerals, including lithium and copper, position the region as a vital component in global energy transition and semiconductor supply chains—sectors that are increasingly central to US industrial policy.
Tariffs, Industrial Policy and Domestic Manufacturing
Washington’s evolving strategy also reflects a broader commitment to reindustrialisation, with tariffs and industrial incentives playing key roles in encouraging domestic production.
While tariffs generate short-term fiscal revenue, the longer-term objective is to incentivise companies to shift manufacturing back to the United States, strengthening domestic industrial capacity and reducing reliance on overseas production.
This industrial policy shift mirrors similar efforts across major economies, including Europe and Japan, as governments seek to secure supply chains and reduce vulnerability to geopolitical disruptions.
Technological transformation, particularly artificial intelligence, is also influencing economic strategy. Policymakers are increasingly focused on ensuring central banks and economic institutions remain responsive to productivity shifts driven by emerging technologies.
Implications for Global Markets and Asia
The US strategy carries significant implications for Asia and emerging markets, including ASEAN economies such as Malaysia, Vietnam, and Indonesia, which have benefited from supply chain diversification and investment inflows.
As multinational corporations rebalance manufacturing footprints, Southeast Asia has emerged as a key beneficiary of supply chain realignment, attracting investment in electronics, semiconductors, and advanced manufacturing.
Malaysia, in particular, stands to gain from its strategic positioning in the semiconductor ecosystem and growing importance in critical mineral supply chains. The country’s efforts to deepen industrial capabilities and attract high-value investments align with global trends toward supply chain diversification.
China, meanwhile, remains a dominant force in global manufacturing and trade, and the shift toward risk mitigation rather than decoupling suggests continued economic interdependence between major economies.
A New Era of Economic Competition and Cooperation
The US approach reflects the emergence of a more complex global economic order, one characterised by strategic competition alongside continued interdependence.
Rather than full-scale decoupling, policymakers are pursuing selective diversification, strengthening partnerships with allied economies while maintaining economic engagement with rivals.
This evolving framework underscores a fundamental shift in global economic governance, where national security considerations increasingly shape trade, investment, and industrial policy decisions.
For investors, businesses, and policymakers across Asia, the implications are profound. Supply chain realignment, industrial transformation, and geopolitical recalibration are reshaping the global economic landscape, creating both risks and opportunities in equal measure.
As the world enters a new phase of strategic competition, economic resilience and diversification are emerging as defining priorities, setting the stage for a fundamentally different global economic architecture in the years ahead.
