U.S. Economic Security

This section provides additional information on this report’s top recommendations, as well as granular supply chain dependencies for each tech area.

Additional Views

Although the report lays out the stakes and vulnerabilities related to economic security, the importance of federal funding for basic research in technological leadership should be emphasized.

A pipeline of technological breakthroughs in the United States has been federal funding for basic research, including through agencies such as the National Science Foundation, the National Institutes of Health, the Centers for Disease Control and Prevention, the Environmental Protection Agency, , and the Departments of Energy and Agriculture. Because of the unpredictability of its results, its long time horizons, and the open-source sharing of its ideas, most basic research is funded by the public sector around the world. In the United States, the federal government has long been the largest source of funding for basic research, and most of this research has been done at the nation’s research universities. Basic research has played a major role in technological breakthroughs in semiconductors, artificial intelligence, quantum, and biotechnology.

Federal funding for basic research at independent research universities is an economic security lever that supports U.S. national security. The deep cuts in federal funding for basic research in the current federal budget, along with attacks on the independence of those universities, are impairing this lever.

—Laura D’Andrea Tyson

President’s Message

In the post–World War II period, the United States designed and championed an international economic system optimized for growth and efficiency through greater trade liberalization and global integration. That rules-based system, and the benign international economic environment it fostered, is currently subject to stress. Some of the stress is due to traditional protectionism, but it also reflects a major new development—the emergence of economic security as an increasingly central organizing principle for international economic policy. 

Economic security, the convergence of national security and economics, is the new mantra. Over the past decade, the United States has increasingly intervened in the economy by deploying a range of offensive and defensive tools— chief among them tariffs, as well as export controls, restrictions on inward and outbound foreign investment, and industrial policy—to protect foundational technologies and resources deemed critical to the country’s security. At the same time, the tenets of neoliberal economics have given way to harsh geopolitical realities, and power politics are rewiring the global economy. The contours of the new economic security paradigm remain to be fully defined. 

Any administration—current or future—will be called on to determine under what circumstances the government should intervene in the market, how and when the government should deploy various tools at its disposal, and what limiting principles and guardrails should guide the instances and extent of intervention. Even as those issues are addressed, the United States is engaged in an unprecedented competition with China across military, political, economic, and technological domains. It is therefore imperative that we address the most immediate challenges facing U.S. economic security. 

To help policymakers address those challenges, the Council on Foreign Relations convened a bipartisan Task Force on Economic Security under the auspices of its RealEcon: Reimagining American Economic Leadership initiative. 

From the quantity and quality of artificial intelligence publications and patents to the production of drug inputs, China is well on its way to compete in, if not lead, the development of foundational technologies, including artificial intelligence, quantum (sensing, communication, and computation), and biotechnology. China has also discovered where it has leverage over the U.S. economy, including its near monopoly on critical minerals extraction and refining. Given the size and reach of the U.S. economy, export controls, investment restrictions, and industrial policy play an essential role in ensuring the United States maintains the technology edge over China, whether it is to correct for market failures at home or to reduce overdependencies on certain markets for critical inputs, such as advanced semiconductor chips. 

Recognizing crucial challenges to investment, supply chains, and controls, the Task Force supports continued U.S. government leadership on the following specific recommendations: onshoring the manufacturing of critical inputs and components for semiconductors; accelerating U.S. progress on the world’s first utility-scale quantum computer; creating a network of advanced biomanufacturing hubs with co-investment from the private sector; expanding the National Defense Stockpile to include critical minerals; developing the U.S. workforce by supporting the machinists, electricians, and other trades workers needed to advance those technologies; and establishing an Economic Security Center at the Department of Commerce. 

At the end of the Cold War in the 1990s, the Council helped develop the concept of geoeconomics, the convergence of geopolitics and international economic policy. The current moment reflects an inflection point in the ongoing evolution of the U.S. role in the international economic environment not unlike thirty years ago. Thus, I commend the Task Force for providing policymakers with a pragmatic way to inform the United States’ approach to economic security, grounded in deep knowledge and real-world experience. 

I thank the cochairs, former Secretary of Commerce Gina M. Raimondo, former Deputy Secretary of the Treasury Justin G. Muzinich, and Chairman, President, and CEO of Lockheed Martin James D. Taiclet, for their leadership. I also thank CFR’s Jonathan E. Hillman, who directed the Task Force and authored the report, and Anya Schmemann, who guided the process.

Michael Froman