ECONOMIC SECURITYGetting Economic Security Right
National security policymakers are understandably worried about economic risks, but they shouldn’t lose sight of other national interests.
For most of the postwar period, U.S. international economic policy was primarily aimed at seizing opportunities: opening global markets, promoting growth, improving efficiency. Today, it is largely about managing risks, whether transnational challenges like pandemics or climate change, technological advances that offer enormous promise but also pose threats to national security and jobs, or competition with an assertive China. Indeed, a new term has emerged to describe this burgeoning area of policy: “economic security.”
Governments everywhere are understandably preoccupied with mitigating risks to national security and the foundations of their economies. Yet they need to keep perspective so that their efforts don’t overwhelm other national interests, such as supporting economic growth and competitiveness, keeping inflation low, maintaining close relations with allies, and preserving a rules-based international order.
Other members of the Group of Seven (G7) advanced democracies have been trailblazers in economic security policy. Japan enacted an Economic Security Protection Act in 2022 and has established a slew of new bureaucratic functions in this area. The European Union released an economic security strategy in early 2024 and is acting along multiple fronts: establishing an EU-level investment screening policy, creating an anti-coercion instrument to counter China’s bullying, and, most recently, announcing countervailing duties against electric vehicles from China. And, at their 2023 summit in Hiroshima, G7 leaders issued a first-ever statement on economic security.
While the term itself has not gained the same currency in the United States, Washington has been enacting laws, regulations, and policies over the past several years that are effectively aimed at enhancing economic security. In 2018, citing a legal provision designed to protect national security, President Donald Trump imposed tariffs on steel, aluminum, and other products imported from several trading partners (and later that year, imposed broad tariffs on goods from China under other provisions of trade law). While maintaining the Trump tariffs, the Joe Biden administration in May 2024 imposed new duties on $18 billion worth of imports from China. Both administrations have expanded the legal scope and use of export controls and investment screening mechanisms, particularly vis-à-vis China. The Biden administration has also greatly increased the use of industrial policies, winning congressional approval for four major laws that have collectively provided some $1.6 trillion of federal spending and subsidies for sectors deemed critical to national security (e.g., semiconductors) or economic competitiveness (e.g., electric vehicles).
