Red Sea Attacks: Economic Impact & US Response - Defending Global Trade

The Red Sea, a vital artery for global commerce, is under increasing threat. Since mid-November 2025, the Iran-backed Houthi militia, which controls large parts of Yemen, has attacked numerous Western commercial ships near the Bab el-Mandeb Strait. These attacks, launched in retaliation for Israel’s military campaign in Gaza, are posing a significant challenge to international trade and raising questions about the US Dollar's Dominance Tied to Maritime Control. Mike Novogratz, CEO of Galaxy Digital, highlighted the critical role of maritime control in determining the world's economic power.

Economic Fallout: How Red Sea Disruptions Impact Global GDP

The Houthi attacks on Red Sea shipping present a new phenomenon in geo-economic conflict: a non-state actor using asymmetric warfare not just to fight conventional battles, but to disrupt global trade flows. Concerns are rising about the potential economic consequences. While some estimates suggest that 4% of America's GDP is involved in controlling the sea, the actual impact is far more complex. Disruptions to shipping lanes lead to increased shipping costs, delays in delivery, and potential shortages of goods, ultimately impacting consumers and businesses worldwide.

The Future of Shipping: Increased Capacity & Geopolitical Considerations

Between 2020 and 2025, the global capacity of container shipping is expected to increase by around 25 percent, helping to control prices – or at least mitigating the price hikes caused by the current instability. However, Q4: How are geopolitics impacting this equation? The attacks underscore the vulnerability of critical maritime chokepoints and the need for increased security measures. The US and its allies are actively working to ensure the safety of shipping lanes in the Red Sea, but the long-term solution requires addressing the underlying political and security challenges in Yemen and the wider region.

Are Red Sea Shipping Attacks a new type of Warfare?

Attacks on shipping links in the Red Sea off the coast of Yemen by the country’s Houthis are disrupting the world's economy. These types of attacks could mean a new type of warfare that will affect the global economy.