Gears of National Economic Power

The U.S. economy is the largest in the world and the United States is the world’s leading importer. Given America’s huge consumer market, it has acted as the primary recipient of goods for many of the world’s export-dependent economies, most notably China. While systemic bilateral trade imbalances can have negative consequences over the long-term, they also provide the United States with substantial leverage over exporting nations, including adversaries.

The United States has the leverage and leadership platform to establish basic rules of economic engagement rooted in free, fair, and efficient trade.

There are more than 18,000 individuals, entities, and jurisdictions currently subject to U.S. sanctions.

But sanctions can be far more effective — with added resources for enforcement, secondary sanctions applied to enablers of evasion, flexibility to support compromise, and integration into a larger strategy.

Export controls have been chronically circumvented by malign actors, used more to send messages of disapproval than to effectively restrict access. However, tailored action, enforcement, and coordination with allies can impose substantial penalties for those that circumvent American rules.

America must reinforce its supply chains — making them resilient, flexible, and free from foreign threats and intimidation.

Ally-shoring describes the need to move critical supply chains and core trade from our adversaries to our allies. In recent years, this process has picked up steam, but it must be both accelerated and institutionalized.

Ally-shoring also generates concrete benefits for American workers and businesses — establishing reliable supply lines for American products, providing essential components for advanced American goods, while also boosting friendly markets that are likely, in turn, to buy U.S. products.

America’s enemies depend on the shadows of our financial system to raise and move money. Enforcing the rules that expose that activity — and mandate action from banks, law enforcement, and monitoring actors — are critical to cutting off the cash that sustains illicit actors.

Since President Gerald Ford established the Committee on Foreign Investment in the United States (CFIUS) in 1975, the screening of foreign investment has been a key tool to protect American national security.

While foreign investment is often a lifeline to an emerging economy, it can also be a key entry point for surveillance, intellectual property theft, or uncontrollable market dumping. Adversarial investment in major allied countries adds an additional layer of complication — and necessitates coordinated screening.

America’s economic statecraft has long been defined more by its restrictions than its inducements. In a world of intensifying geoeconomic competition, this punitive bias cedes the initiative to authoritarian powers peddling investments greased with bribes.

America must provide a compelling counteroffer. The government’s ability to invest in and support partners demonstrates the tangible benefits from alliance with the American-led economic system. Many public sector entities (including geoeconomic programs like Prosper Africa) translate U.S. positive economic power into specific regional strategies.