More Sino-American decoupling

The nuclear option

How America might wield its ultimate weapon of mass disruption

PRESIDENT DONALD TRUMP’S sabre-rattling against corporate China has had a real but, so far, limited impact on relations between the world’s two biggest economies. That could change if he decided to go all out and cut China off from the global payments system, which America controls thanks to the dollar’s status as the world’s reserve currency and lubricant of commerce.

Mr Trump has three main ways to constrain another country financially. He can refuse its banks access to CHIPS, a New York-based clearing house through which 95% of all dollar transactions are routed. He can try to force SWIFT, a Belgium-based messaging system which 11,000 banks worldwide use to make cross-border payments, to expel members from the offending state. And he can slap an embargo on its financial system, threatening to punish any foreign or domestic financial institution that uses dollars—as virtually all do—but continues to transact with the embargoed firms.

These tactics have been tested on Iran, North Korea, Venezuela and Myanmar—small economies with which America had few dealings. Mr Trump’s predecessor, Barack Obama, stopped…