Geoeconomic Pressure

Geoeconomic pressure — the use of existing economic relationships by governments to achieve geopolitical or economic ends — has become a prominent feature of global power dynamics. This paper introduces a methodology using large language models (LLMs) to systematically extract signals of geoeconomic pressure from large textual corpora. We quantify not just the direct effects of implemented policies but also the off-path threats that induce compliance without formal action. We systematically identify governments, firms, tools, and activities that are involved in this pressure. We demonstrate that firms respond differently to various forms of geoeconomic pressure (tariffs, financial sanctions, and export controls), as well responding differently to policies that have been implemented versus the threat of future pressure. We use this methodology to study the firm-level responses to the ongoing global trade war.