[May 2026]
Global governance faces a paradox. Tricky challenges that urgently require coordinated international responses – pandemics, climate change, rapid automation, transformative technologies among them – are proliferating in scale and complexity. Yet the architecture of post-World War II international cooperation, the multilateral institutions and cooperative frameworks built to manage cross-border problems, is under serious strain. New modes of cross-border engagement will be needed – including at the subnational level.
Great Power Contestation Returns
One key reason this architecture is under strain is the emergence of structural competition between the two great powers of our time, the United States and China. What began over a decade ago as a gradual recalibration of threat perceptions has hardened into something more durable: a mutual conviction, on both sides, that deep interdependence carries unacceptable strategic risk, rather than strategic benefit. This marks a change from earlier calculations by both sides that cautiously deepening interdependence would bring strategic payoffs.
On the U.S. side, the turning point came earlier than many appreciate. As far back as 2015, under Defense Secretary Ash Carter, the Pentagon began institutionalizing the language of “great power rivalry.” At the time, this terminology sat uneasily alongside efforts by other parts of the Obama administration to secure Chinese cooperation on cybersecurity norms and carbon emissions targets. Despite this tension, the trajectory was clear.
In the economic domain, Beijing’s pursuit of an increasingly statist, security-driven model of economic governance steadily eroded American confidence in the prospect of market-oriented reform in China. Industrial strategies such as Made in China 2025 and the 2014 National Integrated Circuit strategy signaled that Beijing intended to compete aggressively for leadership in areas at the core of American technological and economic power, most notably the semiconductor industry. By 2016, before President Trump took office for the first time, not only was the Pentagon embracing the paradigm of great power contestation, but commercial agencies responsible for U.S. economic growth were ready to wall of key planks of exchange with China. As one example, Penny Pritzker, Obama’s commerce secretary, suggested in January 2016 that no further semiconductor acquisitions from China would be permitted under the Obama administration.
The shift on the Chinese side was equally structural, though its roots lie in a different set of anxieties. The period between 2008 and 2011 proved particularly formative. The Global Financial Crisis boosted Beijing’s confidence in its own economic model while simultaneously intensifying concern among Chinese Communist Party leaders about “external risks” to Chinese national rejuvenation. The 2008 Beijing Olympics and associated Tibetan protests, the 2011 Arab Spring – which Beijing read as a Western-facilitated destabilization campaign – and the accelerating spread of borderless digital communication all heightened the CCP’s sense of vulnerability to forces it could not fully control.
Out of this moment emerged a more assertive Chinese posture: in the South and East China Seas, in technology policy, and in economic statecraft. Where Beijing had previously sought to cautiously enhance interdependence with Western economies to blunt Washington’s willingness to assert its asymmetric economic leverage, it now moved to build an economy capable of both absorbing and delivering strategic pressure. Today, export restrictions on critical minerals, the selective blacklisting of American firms, and accelerated development of domestic alternatives to foreign technology are all expressions of this reorientation.
As a result of these shifting perceptions, contestation between the United States and China today is structural, not episodic. It is not primarily a function of specific leaders in Washington or Beijing and will not be resolved by a change of administration. Both capitals are systematically rewiring their political economies for a sustained period of rivalry, driven by security imperatives, ideological divergence, and political incentives that cut across partisan lines in both countries.
The Governance Gap
Great power competition does not only reshape bilateral relationships. It degrades the broader ecology of international cooperation. Institutions and frameworks that depend on consensus among major powers, such as the UN Security Council, are no strangers to gridlock, but become reliably less effective when those powers are engaged in sustained rivalry. The multilateral trading system, global health organizations, international climate frameworks, and bodies tasked with managing emerging technologies have all experienced this dynamic in recent years.
The result is what might be called a governance gap: a growing mismatch between the scale and urgency of transnational challenges (some global, some more localized), and the capacity of existing institutions to address them. The COVID-19 pandemic exposed the fragility of international health coordination. Climate negotiations have proceeded with a combination of pledges and frustration. Efforts to establish common norms for artificial intelligence or civil space exploration have moved within coalitions of the willing rather than through universal frameworks.
National governments have not been passive in the face of this challenge. Rather, many have adapted by pursuing alternative architectures for cooperation. Smaller, more flexible arrangements built around shared interests are taking the place of institutions with universal membership. Canadian Prime Minister Mark Carney recently described this approach as “variable geometry”: different coalitions for discrete issues, configured around common values and practical compatibility. The Biden administration pursued a similar “latticework” of partnerships. The Trump administration, despite a preference for bilateral deals and a marked skepticism toward long-term multilateral commitments, reproduces the same underlying logic: international cooperation as a series of tactical arrangements rather than a durable institutional order.
Simultaneously, a less-discussed but increasingly consequential form of cross-border collaboration is gaining ground – driven by states, cities, and regions. This is particularly important given that so many challenges of our time affect local communities long before they reach the agendas of national governments. Pandemics do not wait for coalition formation. Climate impacts are distributed unevenly and hit locally before they register nationally. The disruptions of automation and technological change are experienced first at the level of labor markets, communities, and cities.
Subnational Actors on the Rise
Subnational diplomacy, or the engagement of non-federal actors in international relationships, is not a new phenomenon. But it is becoming more consequential in recent years, especially as Washington on a bipartisan basis reconsiders the scope and scale of U.S. engagement overseas. International partners are proactively looking beyond Washington to engage U.S. partners, driven by recognition that American states are increasingly powerful economic and foreign policy actors in their own right.
These engagements still tend to be primarily commercially oriented and technically grounded, focused on trade, investment, and scientific cooperation. But diplomatic architecture is following, an implicit recognition that the depth and implications of these subnational relationships extend beyond commerce. Take Arizona, for example. The state’s deep ties to Mexico, its role as a gateway between the United States and Latin America, and its position as a “purple state” whose political trajectory matters to national outcomes have long made it an attractive partner for foreign governments seeking to diversify their U.S. relationships beyond Washington. But the state has become a more significant global actor in recent years – anchored in the decision by the Taiwan Semiconductor Manufacturing Company (TSMC) to invest a record-breaking $165 billion in building the most advanced semiconductor facilities on U.S. soil in the Valley of the Sun.
The project’s strategic implications are less discussed than its numerous economic benefits. Yet the semiconductor industry sits at the intersection of the most consequential technologies of the current era and the most contested dimensions of U.S.-China rivalry. Taiwan itself is one of the world’s most significant geopolitical flashpoints. As such, Arizona’s role as a production site for some of the most advanced chips in the world means that the state is embedded, whether it chooses to be or not, in a set of strategic relationships and dependencies that have implications far beyond job creation or GDP growth.
Indeed, the investment has catalyzed a cascade of institutional linkages between Arizona and Taiwan extending well beyond commerce – from regular bilateral visits to direct air connectivity across two airlines, to deepening legislative partnerships. Most strikingly and novelly, Arizona is signing onto multilateral arrangements designed at least in part to enhance Taiwan’s security. In March, Arizona, the municipality of Kaohsiung in Taiwan, and Kumamoto Prefecture in Japan inked a trilateral MOU to create a “semiconductor strategic triangle” – aimed at deepening supply chain integration, research collaboration, workforce development, and joint industry engagement across the three regions. Taipei is now scoping locations for a representative office in Phoenix, mirroring an Arizona trade office in Taiwan set up in March 2023.
The Arizona-Taiwan relationship is forging new ground in what subnational engagement can be – sustained, institutionalized, and geopolitically impactful. In this sense, the relationship points to a new model of cross-border engagement, where states, cities, and regions are not just shaped by global forces, but actively shape them. Subnational engagement is not a substitute for federal foreign policy or reformed multilateral institutions. But it is a real and growing part of the global landscape, and one deserving of more analytical attention.
This essay is from the Security & Defence PLuS Emerging Voices Series, which highlights the next generation of scholars and practitioners shaping thinking on strategy, security, and defence. The series brings together perspectives from PhD candidates and early career researchers, grounded in the complex geopolitical realities of the 21st century.
The collection explores a “Latticework of Resilience” that connects often-overlooked sectors, such as subnational diplomacy and critical infrastructure inherent in agriculture security, to the core of national security. Taken together, the essays emphasise the importance of adaptive, multidisciplinary approaches to building resilience in an increasingly complex global environment.
The first event in the Emerging Voices series was held at Arizona State University on 2 March 2026, with events to follow at King’s College London and UNSW. Watch the event recording: The Emerging Voices Series: Strategy, Security & Defence at Arizona State University.
