Rabobank’s Senior Macro Strategist Bas van Geffen outlined on Monday how Washington is shifting from a largely permissive stance on artificial intelligence to a more structured, incentive-based strategy. In a note to clients, van Geffen described the emerging approach as a “carrot-and-stick” policy that extends the bank’s Pax Silica framework, which positions US control over silicon and digital infrastructure as the defining geopolitical dynamic of the decade.
The analysis arrives as the Biden administration’s AI executive order from October 2023 has been superseded by a more assertive posture under the current administration. Van Geffen’s framework suggests that Washington is no longer content to set voluntary guidelines; it is now actively rewarding allies who align with US AI standards and penalizing those who do not.
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What Pax Silica Means for AI Governance
The Pax Silica concept, introduced by Rabobank economists in 2023, draws a parallel between the current era and the post-World War II Pax Americana. Just as the US used its naval and economic power to shape global trade, Washington is now tapping into its dominance in semiconductor manufacturing and AI research to dictate the terms of AI development worldwide.
Van Geffen’s latest note argues that AI alignment—ensuring AI systems act in line with human values and national interests—has become a central pillar of US foreign policy. The strategy involves:
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- Export controls on advanced AI chips, which restrict access to nations deemed security risks.
- Incentives for allies, including technology sharing agreements and co-investment in AI infrastructure.
- International standards setting, where the US pushes for its own safety and ethical guidelines to become the global baseline.
This dual approach mirrors the Biden-era CHIPS and Science Act, which allocated $52 billion to boost domestic semiconductor production, and the subsequent expansion of export controls on advanced AI chips to China in October 2022 and again in October 2023. The strategy has since evolved to include not just hardware but also the software and algorithmic frameworks that underpin AI systems.
Market and Geopolitical Implications
The hardening of Washington’s AI strategy has significant implications for global markets and technology companies. For investors, the key takeaway is that AI-related equities and semiconductor stocks are now intrinsically tied to geopolitical risk. Companies like Nvidia, AMD, and TSMC have already felt the effects of export controls, with Nvidia’s stock dipping after each round of restrictions.
Van Geffen notes that the “stick” side of the strategy—sanctions and trade barriers—could lead to a bifurcation of the global AI ecosystem. Nations aligned with the US would benefit from access to advanced technology, while those outside the sphere, particularly China and its allies, would be forced to develop their own alternatives. This could accelerate the emergence of parallel AI ecosystems, each with its own standards and capabilities.
For European allies, the carrot-and-stick approach presents both opportunities and challenges. The EU’s AI Act, which entered into force in August 2024, represents a competing regulatory framework. Washington’s push for alignment may create friction, as European regulators seek to maintain their own standards while also securing access to US technology.
What to Watch Next
The next test of Washington’s AI strategy will come with the implementation of the AI executive order signed in early 2026, which mandated federal agencies to adopt AI safety standards and required AI developers to share safety test results with the government. The order also directed the Commerce Department to establish a framework for AI audits, a move that could set the stage for broader international cooperation.
Van Geffen’s analysis suggests that the success of the carrot-and-stick approach will depend on Washington’s ability to maintain the trust of its allies while enforcing its standards. The recent G7 summit in June 2026, which included a dedicated session on AI governance, indicated that the US is seeking to institutionalize its approach through multilateral forums.
For businesses and investors, the key variable is whether the incentives will be substantial enough to outweigh the costs of compliance. The carrot—access to advanced AI chips and joint research programs—may prove more persuasive than the stick, particularly for nations with significant technology sectors that rely on US supply chains.
As the global AI race intensifies, the Pax Silica framework offers a useful lens for understanding Washington’s strategy. It is no longer a question of whether the US will lead on AI, but how it will use that leadership to shape the rules of the game.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency and technology markets are volatile and uncertain; readers should conduct their own research before making investment decisions.
