RIP: Capitalism, this is an Era of Technology Protectionism
The Free Market is Dead - Long Live the Free Market.
The era of open, unfettered capitalism—the economic doctrine that defined global prosperity for decades—is officially over. Welcome to the age of technological protectionism, where national security imperatives rule supreme. AI is at the centre of this story.
At the onset of Donald Trump’s global trade wars, I wrote that these are the first AI Trade Wars. Some people didn’t like that thesis at all. "Trump is a dummy," they said, "stop claiming that he is playing 4-D chess." Or another retort: "Well, if that’s what he’s trying to do—it won’t work!" Basically, another way of saying Trump is a dummy.
We could debate endlessly whether Trump is a dummy, but that's just a straw-man argument. The emotive nature of ‘Trump’ is such, that it causes us to lose sight of the bigger forces currently unleashed: ones that will shape our everyday reality, and the global balance of power, long after Trump is a footnote in history.
Of course, it’s hard to rip your eyes away from the biggest drama on Earth and the President’s central role in it. His art of ‘just doing things,’ in a world which seems infinitely more dangerous—and yet, at the same time, more frivolous—is strange, uncertain, and definitely high-risk.
The stakes are higher than ever, and yet, we are subjected to the surreal spectacle of global leaders and their mouthpieces exchanging tit-for-tat barbs on social media. J.D. Vance calling the Chinese ‘peasants.’ The Chinese embassy shit-posting AI-generated videos of (fat) American workers hunched over production lines in dystopian American sweatshops.
Welcome to the absurd theatre of modern geopolitics: where memes collide with missiles, and social-media diplomacy reshapes trillion-dollar markets. It is a world where hard power speaks—even if it comes wrapped up in the form of a salty tweet. It’s a digital-age Realpolitik.
This geopolitical chaos defies simple interpretation—for we definitely don’t know where it will lead—but don’t let the uncertainty about the future obscure the clear fault lines that are emerging as the defining forces of this future.
They are technology and geopolitics. The interplay between these seismic forces is symbiotic: as technology advances, it profoundly disrupts geopolitics—and vice versa. It is already shifting the very ground beneath our feet.
When National Security Eats the Free Market
The first casualty is the market. No need to rehash all the bipolar swings here, as I’m certain you see it daily on your feed and/or portfolio. But beyond cratering stock prices, there is a deeper shift underway. The very concept of the free market as an ideology is no longer sacrosanct. Irony of ironies, it is the United States—the very champion of free-market capitalism—who is chipping away at it.
No wonder Chinese state media is indulging in a little Schadenfreude, flooding socials with videos of President Reagan patiently explaining (as if speaking to a recalcitrant toddler) why ‘tariffs = bad.’
It is tempting to attribute this all to the President. But we need to go deeper than simply reaching for Trump’s zero-sum mentality on the trade deficit (although that’s part of the equation.)
This connects directly to the two fault lines I mentioned earlier—technology and geopolitics—which have been quietly converging for decades, positioning technology as the ultimate means of securing geopolitical power.
Maybe in future histories, AlphaGo will be seen as the moment sh** started getting real. It was the single event that led Beijing to strategically assert its will to dominate AI by 2030.
The point is, look beyond Trump. We are in a new era of technology protectionism—one that began before Trump and will outlast him. It's an era in which free-market imperatives are trumped (no pun intended) by national security interests.
This is hurting some of the most valuable companies in the world—American ones included—but the calculation now seems clear: nations see a bigger strategic imperative than unfettered capitalism.
Post-Capitalism?
Let’s recap how this has been playing out since I last wrote:
From the 20% ‘Fentanyl surcharge’ imposed on Chinese goods in early March, U.S. tariffs on China have increased to an astonishing 145%. The Chinese have reciprocated in kind with tariffs reaching 125%.
Washington, it seems, is marching its most valuable corporations—Apple, Nvidia, Tesla—each heavily reliant on Chinese supply chains and markets, toward the guillotine. At the same time, it has no qualms about squeezing the American consumer. Cue the panic headlines about $30,000 iPhones.
Then came the 11th-hour reprieve. The Administration announced that critical technology components (including semiconductors, AI servers, and specialized chips) and consumer electronics (like smartphones and computers) would be exempt from reciprocal tariffs, with only the original 20% fentanyl surcharge still applying.
This means about 23% of Chinese goods imported to the U.S. (worth roughly $100bn) are exempt from reciprocal tariffs...for now. Yet no sooner had the Administration offered its tech giants this carrot than it also wielded a large stick.
Trump warned that the ‘stay of execution’ is only temporary, announcing a national security trade probe into the entire semiconductor sector, with punitive tariffs looming for companies that continue to manufacture in China.
This message was reinforced days ago by Commerce Secretary Howard Lutnick, who warned of further pain ahead—in the form of new, sector-specific ‘semiconductor tariffs,’ designed to bring supply chains home.
"All those products are …going to have a special-focus tariff designed specifically to ensure that those products get reshored. We need to have semiconductors, we need to have chips, and we need to have flat panels—we need to have these things made in America. We can't be reliant on Southeast Asia for everything that powers our economy… These tariffs are coming soon."
- Howard Lutnick, Secretary of Commerce
Behind this chaotic strategy—attempting to undercut China while simultaneously forcing American tech giants to bring their supply chains home and weaning the American consumer off Chinese goods—the driving force is clear: the symbiotic relationship between technology and geopolitics.
If the Administration has taught us anything so far, it is to take their statements literally and seriously. They consistently make clear their objective: repatriate supply chains, regardless of short-term economic disruption.
They repeatedly emphasize that technology is now integral to national security, and geopolitical strategy will reflect this reality. They continually insist that the U.S. must wean itself off dependence on China. And they explicitly state: ‘China cannot win the AI war.’
This strategic calculus does not end with Trump. These seismic shifts underscore just how deeply technology protectionism is reshaping the global economy— and how its effects will reverberate far beyond any single presidential term.
Nvidia in the Crosshairs
Two more important signals emerged this week:
First, on Monday, Nvidia announced a landmark $500bn investment to build AI infrastructure in the U.S. (following Apple's equally massive $500bn commitment announced in February).
For the first time in its history, Nvidia will manufacture in the USA. Production of its latest-generation AI chip, Blackwell, has already started at TSMC’s fab in Arizona.
‘Adding American manufacturing helps us better meet the incredible and growing demand for AI chips and supercomputers, strengthens our supply chain, and boosts our resiliency.’ – Jensen Huang, Nvidia CEO
No sooner had Jensen Huang finished unveiling Nvidia’s commitment to reshoring its critical supply chains than the company was blindsided by a devastating setback.
Its H20 chip—built specifically for the Chinese market—is now also subject to export controls. As a result, Nvidia expects to hemorrhage approximately $5.5bn in a single quarter—not due to poor products or declining demand, but solely because of geopolitical pressures.
This underscores a looming future where computing power becomes an increasingly scarce and expensive commodity, far from the cheap abundance we might have hoped for. Controlling the computing supply chain will become a defining element of geopolitical influence.
Given this backdrop, it's no surprise that the House Select Committee on the Chinese Communist Party has opened its first investigation into Nvidia. The stated aim: to assess whether the company supplied chips (particularly to China’s Deepseek) in violation of U.S. export controls.
These must be extraordinarily stressful times for Jensen Huang. Imagine having built one of the greatest companies in history—guided by a vision of the future recognized two decades before anyone else—only to find yourself trapped in geopolitical crosshairs at the very moment of your greatest triumph.
Hearts, Minds, and TikTok Diplomacy
Naturally, China isn't taking these measures lying down. Apart from reciprocal tariffs and restricting rare-earth minerals, the CCP is deploying some political theatrics of its own—ranging from dramatic diplomatic declarations of being ‘ready to fight to the end,’ to a sophisticated battle for ‘hearts and minds’ aimed directly at the American consumer.
Exhibit A is an emerging genre of social media content—the ‘luxury exposé’—breaking down how high-end Western luxury goods, from Hermès Birkins to Lululemon leggings, are manufactured cheaply in China and then sold at exorbitant mark-ups abroad.
This is coupled with an astonishing volume of content showing American influencers marvelling at China's modernity, technological advancement, and sheer scale. (All coincidental, I’m sure.)
Two Chinese shopping apps, DH Gate and Taobao, currently sit among the top five apps in the U.S. app store, right alongside ChatGPT.
Could there be a clearer signal of the times we live in?
The bottom line: Technology dominance is the defining geopolitical race of the 21st century. Even after Trump exits the political stage, it's hard to see how this trajectory will reverse.
If indeed we are on the brink of quantum leaps in AI capability within the next decade—and there are compelling reasons to believe we are (more on this soon)—then there is no returning to the status quo ante.
Indeed, this might merely be the calm before an even greater storm.
So for now: The free market is dead. Long live the free market.