Trump's actions and the ‘new national security economy’

Five years ago, I came up with the idea of “the new national security economy.” That phrase is shorthand for a security environment fundamentally different from that to which we are accustomed and which has, until now, framed security policy and strategy.

Adopting my approach demands a transformation in our thinking about security — not only in how we define threats but where we look for them. It focuses greater attention on economics, technology and the ways that tech’s ever-deepening integration into daily life poses challenges that we don’t fully comprehend. Recent developments have driven home not only the need for this reassessment but, sadly, confirmed its most tentative and troubling element: We must be alert to dangers that emanate not only from adversaries but our supposed “allies” as well.

Traditionally, national security focused on the application of “hard power," or the ability of governments to force or coerce compliance with its wishes. Some smart folks argue that persuasion and attraction create more durable, enduring and productive relationships; we call this “soft power.” Soft power is poorly understood and it is no substitute for situations when brute force is required, but it has genuine influence in subtle ways that increasingly matter in a world in which resorting to kinetic means — shooting, bombing, invasion — is ever more problematic.

The economic dimension of national security typically concerned the ability of nations to support or sustain the material elements of hard power. Economic policy determines how many assets a country can deploy to the battlefield, along with their quality and the quality of its soldiers.

The transition to the postindustrial world and the emergence of new technologies mattered mostly insofar as these developments magnify defense capabilities. This is the first dimension of the new national security economy. Those technologies make weapons more lethal and allow militaries to be more effective. Virtually all restrictions on technology adopted by the U.S. and its allies in recent years have been justified by the claim that access to (for example) semiconductors will make China a more lethal adversary.

The penetration of digital technologies into society and our increasing reliance on them for the most elementary and sometimes essential tasks has introduced a new vulnerability which is my second element. Connectivity has created the prospect of large-scale disruption when those technologies are interrupted. Governments are increasingly concerned with critical infrastructure and figuring out how to protect it against attack or breakdown.

This has been acknowledged by Japan’s Economic Security Promotion Act, which notes that “stable provision of specified essential infrastructure services (is) fundamental to the daily lives of Japanese people and Japan’s economic activities.” The Cabinet in September 2024 identified 15 sectors as critical infrastructure, from electricity to credit cards, but that number can change. Other governments have their own lists.

The economic disruption generated by the COVID-19 pandemic hammered home this new sense of vulnerability. Governments were forced to acknowledge that economic and business orthodoxy, which squeezed out every inefficiency in the pursuit of quarterly returns, had failed to pay sufficient attention to resilience. Global supply chains configured for “just in time” delivery foundered when forced to deal with “just in case.”

These developments underscored the need for a new understanding of the relationship between the public and private sectors and redrawing lines that had divided the two. Neoliberal nostrums crumbled.

Economic issues elbowed their way into this new security mindset on another level. Never before had the global economic leadership of the West (and the U.S. more specifically) been challenged. China’s rise has thrown that into question as the West’s economic model faltered — think global financial crisis — and Beijing stepped up to meet the needs of the developing world through the Belt and Road initiative and other efforts.

China’s “hybrid capitalism” was successful — most notably by raising hundreds of millions of people out of poverty — and proved capable of generating national wealth and matching the West in developing technologies. Equally, if not more important, existing tools don’t seem capable of checking Chinese misbehavior or keeping pace.

This has forced a rethink of industrial policy, competition policy, trade and investment policy and the viability of the global economic order. Free trade is no longer a given and, again, lines dividing the public and private sectors are being redrawn.

This brings us to the third key component of the “new national security economy” and to my mind, the most important one: Leadership in new technologies translates into global leadership. The masters of these domains will write the rules of a new global order. China is matching, if not beating, the West in this race. Its new status and influence are buttressed by the success of the unique brand of capitalism that produced those technologies.

The fourth and final element of the new national security economy is the sad, but increasingly evident, recognition that threats can come from allies as well as presumed adversaries, enabled by connectivity and encouraged and fueled by globalization. Central to this threat framework is U.S. behavior that is making it a source of danger and instability.

While there is good reason to be concerned about Beijing’s efforts to intimidate countries that disagree with it, no serious conversation can ignore Washington’s penchant for bending governments to its will. By one count, the U.S. has imposed three times as many sanctions as any other country or international body, with one-third of all nations targeted with some type of financial penalty. Sanctions are “an almost reflexive weapon ... seemingly irresistible,” concluded the authors of that analysis.

Donald Trump and his administration have picked up the pace, announcing a 25% tariff on all steel and aluminum imports, imposing 25% tariffs on other imports from Mexico and Canada — with some exemptions — and levying a 20% tariff on Chinese goods. The U.S. president has also threatened a 200% tariff on alcohol from EU countries unless the bloc scraps its "nasty 50% tariff on whisky." For Trump, the tool is a cudgel to reduce immigration, stop drug flows, change investment, alter trade balances or acquire territory.

There have long been trade disputes between the U.S. and its allies and partners. The European Union’s Anti-Coercion Instrument was created to counter pressure imposed by the first Trump administration. During the Biden years, alliance cohesion was reprioritized and Europe’s focus shifted to China.

Washington’s readiness to escalate its coercion is a qualitatively new phenomenon. Its leverage is the product of this new connectivity. And the consequences are alarming.

In the last week, five governments, four of them NATO allies, have been reported to be reconsidering plans to upgrade their air force inventories with the F-35 fighter (made by the U.S. manufacturer Lockheed Martin) out of concern about continued access to parts and software updates as well as limits on work that can be done on black boxes vital to aircraft operations. Portuguese Defense Minister Nuno Melo was explicit: This ally of ours, which has always been predictable over the decades, could bring limitations to use, maintenance, components and everything that has to do with ensuring that aircraft will be operational and used in all types of scenarios.”

This fracturing of the West and the need to consider threats from entirely new directions stems from the failure to fully appreciate the third threat on my list, the challenge to the West’s global leadership. Only by assuming that U.S. leadership is a given can Washington discount the value of a united front with allies and like-minded partners.

This is a dangerous assumption. And likely wrong. More than ever, concerted, cooperative and coordinated strategy and action is essential. Rarely has it seemed more unlikely.