Caught in the crossfire, companies across the globe are quickly revising their supply chains, pricing, and investment strategies in response to the pressure from the great powers. Until now, there hasn’t been a consistent way to measure such geoeconomic pressure or track firms’ reactions and the immediate economic implications for the companies and countries involved.
A new study by Christopher Clayton, Antonio Coppola, Matteo Maggiori, and Jesse Schreger of Columbia Business School uses an AI-based framework to measure geoeconomic pressure globally. Their June 2025 paper Geoeconomic Pressure uses large language models to analyze hundreds of thousands of corporate documents and shed light on how businesses are adapting to this new trade environment.
The research offers insight into how global power dynamics are shaping business strategies as companies and markets respond to state-imposed pressures.
Study design
The researchers applied a large language model to approximately 800,000 corporate earnings call transcripts and analyst reports worldwide to systematically identify the application of and response to geoeconomic pressure, including tariffs, sanctions, export controls, and related policy tools. They used the LLM to classify each instance, including:
- Sender (country applying pressure)
- Receiver (targeted country or firm)
- Means (e.g., tariff, sanction, export control)
- Firm response (price changes, domestic investment and R&D, supply chain adjustments, etc.)
They then validated the results across multiple open-weight models and used human verification for a subset of cases. The researchers designed the study as an ongoing analysis, planning to extend it to more fields and larger samples and update it frequently.
What the researchers found
Mentions of geoeconomic pressure in company communications spiked sharply after 2018, tracking heightened geopolitical friction. The rise reflects governments’ growing use of economic policy as a strategic and diplomatic tool, with the United States and China dominating, both as senders and receivers of economic pressure.
The analysis reveals a clear pattern of supply chain realignment in response to geoeconomic pressure, as companies look to reroute logistics and forge new partnerships.
The limits of tariffs
In 2025, more than 60% of companies studied had been affected by tariffs, but researchers found that tariffs had a mixed and primarily negative impact on U.S. firms. More than half of American companies in 2025 reported experiencing a negative sales or profit impact due to tariffs, while about 10% of American companies — especially those with a more domestic supply chain than their competitors — reported a positive impact.
Both positively and negatively impacted American companies reported raising sales prices at similar frequencies, and American firms were more likely than foreign firms to report being impacted by higher input prices and raising sales prices. There is no systematic evidence that foreign companies negatively by tariffs plan to cut the prices at which they sell their products in the United States.
The tariffs, however, have had some effects towards the U.S. government’s stated objective to onshore supply chains. American firms report shifting their supply chains toward the United States, while also moving sourcing away from China and toward Mexico and Vietnam. Meanwhile, Chinese firms have reallocated their supply chains throughout Asia, benefiting Vietnam, Thailand, Malaysia, and India.
Sanctions reshuffling the global supply chain
The United States, European Union, and allies also feature prominently in reports of sanctions, primarily targeting Russia, China, and Iran. Emerging markets frequently appear as secondary beneficiaries, absorbing trade and investment flows diverted from restricted relationships. Notably, firms in China and India have emerged as major beneficiaries of U.S. sanctions against Russia, taking on a larger share of Russian oil exports and other redirected trade.
The analysis reveals that in 2022, nearly 40% of Russian sector-quarter reports mention Russian firms reallocating their supply chains toward China, with around 15% moving to India. India also benefited from lower local prices, as Russia redirected its oil exports to that market at a discount. The findings suggest that geoeconomic pressure can result in new global production networks, rather than simply isolating the target of the pressure.
Targets of export controls turn to innovation
When governments focus export controls and sanctions on “chokepoint” sectors where there are few alternatives, such as semiconductors or rare earth exports, companies in target countries respond to the negative impact by rearranging their supply chains, increasing investment in R&D to produce domestic alternatives to the products they can no longer access. In countries targeted by export control, researchers found an increase in R&D and domestic investment.
Such findings suggest that tariffs, sanctions, and export controls have complex ripple effects. Understanding and tracking such effects is essential to strategy and resilience in an era of heightened economic statecraft.
