At the center of today’s trade war and the escalating rivalry between the U.S. and China isn’t a clash of ideologies, but a battle over capital, supply chains, and control of the technologies that will define the future. Edward Gustely, managing partner at Penida Capital Advisors, recently gave a presentation that’s making waves well beyond his perch in Jakarta, Indonesia. In a riveting conversation with Financial Sense, Gustely pulled back the curtain on the escalating trade war, the battle for critical minerals, and the seismic shifts brewing in the global monetary system (see America’s Strategy for a New World Order for audio and slides).
I. The Trade War: More Than Tariffs—A Global Reset in Motion
When most people hear “trade war,” they think of tit-for-tat tariffs, trade uncertainty, and stock market whiplash. But as Gustely explained, this is just the surface. “The best way I was able to separate the signal from the noise,” he said, “was to put it into three agenda items.”
First, President Trump’s administration is laser-focused on restoring U.S. supply chain sovereignty. “That seems self-evident,” Gustely notes, but the urgency is new—America’s dependency on global supply chains, especially China’s, has reached a breaking point.
Second, Trump’s strategy is bilateral, not multilateral: “He certainly wants to renegotiate U.S. ties with all countries on a bilateral basis, not through multilateralism, to distance themselves from China.” This approach, Gustely argues, is rooted in Trump’s business background—“pitting one creditor against another” to see who blinks first.
Third, and perhaps most profound: shaping the emerging world order itself. The U.S. is “deleveraging the U.S. commitment to multilateralism,” Gustely says, seeking to reset not just trade deals but the very architecture of global influence.
II. China’s Dominance and the Critical Minerals Chessboard
If America owns the world’s data, China owns its minerals. Gustely’s presentation made this chillingly clear: “China controls about 80% of [rare earths] globally and is using it as a restriction against the U.S. with regard to tariffs.”
But it’s not just rare earths. China now leads in solar energy, battery storage, and even global car production, with over 32% of the world’s output—up from almost nothing a decade ago. The U.S., by contrast, has slipped to 11%.
China’s power is also geographic and diplomatic. Through its Belt and Road Initiative, China has “spent the last 15 to 20 years building” infrastructure across Asia, Europe, and Africa, securing energy routes and trade corridors that bypass U.S. influence. Gustely highlights the new “Arctic Silk Road” as an example—shortening trade routes to Europe and, crucially, reducing China’s vulnerability at global choke points like the Strait of Malacca.
Why does this matter? Because “the rest of the world is dependent on the reserve currency, the dollar, to trade among themselves.” China is not just building infrastructure—it’s building alternatives to U.S.-centric systems.
III. Tariffs as Tactics: Closing Loopholes, Redrawing Alliances
Are tariffs the solution—or the problem? Gustely doesn’t mince words: “The trouble with tariffs, to be succinct, is that they raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity, and increase global tensions. Other than that, they’re fine.” The quote, from JPMorgan’s David Kelly, drew a laugh, but the point is serious.
Trump’s new tariffs are designed not just to punish, but to force clarity: “Are you, as a trading partner, aligned with U.S. interests and lowering tariffs…or are you going to remain aligned with China?” The “China Plus One” policy, which sees manufacturing moving from China to places like Vietnam and Mexico, is a direct response to the first round of tariffs. Now, Trump’s team aims to close the loopholes—countries like Vietnam, Cambodia, and Malaysia, previously used by China to reroute goods, are being called to the table.
Notably, Gustely praised Vietnam’s pragmatic response: “On day one, when these tariffs went into place, Vietnam picked up the phone and called the White House, saying, ‘Let’s make this work.’ That was very courageous…others then began to say, ‘You can’t avoid this, and you can’t resist. We need to have a practical discussion with someone who’s a businessman who understands the need to make deals.’”
For Southeast Asia, the stakes are generational: “The 10 economies of ASEAN Southeast Asia—that’s 680 million people. The mean age is 30. That’s your consumer market.” Combine ASEAN with India, and you’re looking at over 2 billion people—a demographic force that could rival or surpass China.
IV. The Battle for Critical Minerals: Indonesia, Investment, and Opportunity
If the trade war is the opening act, access to critical minerals is the main event. “The focus right now is on rare earth metals,” Gustely explains, “but nickel, cobalt, manganese, and lithium are the lifeblood of the EV and battery revolution.”
Indonesia, with the world’s largest nickel reserves, is front and center. “China has invested $28 billion into the nickel processing and smelting industry in Indonesia,” Gustely points out. “Indonesia needs value-added processing to move further downstream in its goal of being a leader in the EV battery industry, and China stepped up to that. There is no U.S. involvement in it.”
This economic reality, Gustely notes, has led to a paradox: “Although Indonesia is ideologically more aligned with the U.S., being the largest democracy after the U.S., its economic dependence is on China.” This is the heart of the new great-power competition—not ideology, but investment, supply chains, and who controls the next generation of technology.
There are opportunities here, too. As Gustely observes, “most of these companies can stand on their own if given other opportunities to sell into other markets.” The U.S. and its allies could play a pivotal role in helping countries like Indonesia diversify away from Chinese dependency, especially as technologies like EVs and batteries become central to economic growth.
V. Toward a Monetary Reset: Sovereign Wealth, Gold, and the Future of the Dollar
Perhaps Gustely’s boldest argument is that the world stands at the edge of a monetary reset. He recounts the little-known history of the Kennedy bonds—how President Kennedy and Indonesia’s Sukarno once explored collateralizing the gold reserves of developing nations to back new U.S. Treasury-issued currency. “This was very contentious,” Gustely notes, “because it pitted the Treasury against the Federal Reserve.”
What does this have to do with today? Gustely envisions a scenario where the U.S. could “constitute a sovereign wealth fund that is able to take the natural endowments, securitize them, and provide that as a basis for a currency backed by assets.” In other words: moving away from debt-backed money toward tangible, asset-backed money—potentially including digital currencies.
“There’s not enough gold in the world to make a gold-backed digital currency,” he clarifies. “But if you look at the aggregate of assets, instead of turning those assets into debt, those assets generate investment income. That investment income, like a sovereign wealth fund, pays dividends and returns. That funds your entitlement programs.”
Such a shift would be historic—reshaping how America manages its debt, funds social programs, and exerts global influence. It’s a playbook already underway in places like Singapore and Indonesia, both of which have launched sovereign wealth funds.
VI. A Multipolar World: Realignment, Opportunity, and the Next 90 Days
The unipolar moment is over. “We are moving into a multipolar world,” Gustely asserts. The U.S., China, Russia, and rising regional powers are now locked in a complex contest for allies, resources, and influence. The outcome is uncertain, but the next few months—a reference to the current pause in tariff escalation—are critical.
“If, after this next 90-day period, we do not see successful negotiations on the tariff front…then that means Smoot-Hawley. We’re basically looking at the worst-case scenario,” Gustely warns, referencing the disastrous protectionism of the 1930s. But if deals are struck and tariffs settle at a manageable base rate, “we’re looking at a path forward where we could see some stabilization in the markets, a little more certainty emerge among trading partners, which we need.”
He’s ultimately optimistic that “cooler heads will prevail,” but the world must confront hard truths: “We can’t continue to kick the can down the road. Here’s our financial position in the U.S. The monetary system cannot continue the way it is. You’ve asked for deleveraging of the dollar. It doesn’t help us any more than it helps you if we continue on this path.”
Conclusion: The Stakes—and the Opportunity—of a New Era
Edward Gustely’s message is clear: we are living through a global reset. Trade wars, battles for critical minerals, and the reimagining of money itself are not isolated skirmishes—they are fronts in a larger contest over the future world order.
The next few years—and especially the coming months—will test whether the U.S. can leverage its strengths in data, technology, and alliances to rebalance away from dependency on China, whether emerging markets can chart a new, more independent course, and whether the global economy can adapt to the pressures of debt, demographics, and digital transformation.
One thing is certain: this is no time to look away. The choices made now will shape not just the next economic cycle, but the very structure of the world for generations to come.
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