AI will fuel populism and power shifts, JPMorgan Chase says

A new report from JPMorgan Chase warns that AI will shake up global alliances, stoke fresh populism and change the rules of war in the century ahead.Why it matters: The report, first seen by Axios, says that the U.S. is dominating the worldwide AI race. Efforts to maintain that dominance are ushering in new, uncomfortable norms.Zoom in: "The Geopolitics of AI: Decoding the New Global Operating System" calls the 2024 presidential election "the most consequential event" that has shifted the geopolitics of AI over the past year.This year, the U.S. "government's orientation to the tech sector and to the wider international community has shifted," the JPMorgan Chase center for geopolitics wrote.Private-sector AI or AI-adjacent companies now see the government as a dealmaker or a direct investor.The Trump administration took a stake in Intel and officials agreed to give Nvidia permission to sell some chips in China in exchange for a portion of sales — developments that some have likened to a command-economy.The U.S. is "reshuffling the global conditions in which nations are approaching their AI priorities," the report says.What they're saying "I wouldn't want to trade places with any other country in the world when it comes to where we are on AI," Derek Chollet, an author of the report who leads JPMorgan Chase's center for geopolitics, tells Axios.Chollet was counselor to Secretary of State Tony Blinken in the Biden administration an then chief of staff to Secretary of Defense Lloyd AustinThe report says the U.S. dominates in terms of private-sector AI investment, with the first half of 2025 already on track to surpass the previous year's sum.Yes, but: Some Trump-era policies might ultimately set America back in AI innovation, the report says."[R]ecent trends related to tariffs, immigration and the reduction in U.S. science and technology funding may be in tension with the nation's stated AI goals globally," the authors write.Driving the news: That tension is on display in the latest dial-up of trade tensions between the U.S. and China — the two nations that JPMorgan Chase says are most AI dominant, though the nations are on divergent paths.China threatened to cut off global access to its rare earth supplies, a critical input for a range of U.S. products, including semiconductors.Trump threatened to retaliate with 100% tariffs on Chinese goods and harsher export controls on critical software, though later insisted "it will all be fine!" with China.What to watch: "AI is as geopolitically significant as anything since the dawn of the nuclear age 80 years ago," Chollet tells Axios."Governments drove technological development in the nuclear age, but AI has principally been driven by the private sector. Now governments all around the world are having to play catch-up," says Chollet.The bottom line: JPMorgan Chase says there are seven "strategic axes" that are "already motivating governments, businesses, and alliances to reposition in ways that will shape the century ahead.""Assertive China" is investing huge sums to try to position itself at the "forefront of AI development."America is repositioning itself "to counterbalance China's rise."The European Union is "striving to reduce their dependence on foreign technology and bolster their own AI capabilities."The Middle East's "sovereign wealth funds are leveraging energy abundance to become key players in AI infrastructure."Labor disruption & populism: AI "impacts are likely to include significant transitions for markets, for work, and for workers."Defense leadership: "Militaries that integrate AI fastest will hold decisive battlefield advantages."Energy & hardware as the new chokepoints: "Semiconductors, critical minerals, and electricity capacity define who can scale AI, and who risks falling behind."

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