1) How have the United States and Canada collaborated on minerals and metals in the recent past?

Recent years have seen the United States and Canada deepen cooperation on critical minerals in response to geopolitical pressures and the need for supply chain resilience, even during the first Trump administration. Under the U.S.-Canada Joint Action Plan on Critical Minerals (2020), both governments committed to strengthening cross-border supply chains, co-investing in extraction and processing, and aligning policies to support North American industrial capacity. There is extensive cross-border investment in critical minerals. For example, about 323 Canadian companies have invested over $45 billion in the US mining sector.

2) How large is the US-Canada minerals and metals trade?

There is a huge interdependence between both countries. The two countries are each other’s biggest export and import partners. In 2023, out of $57 billion in total minerals and metals exports, Canada exported $38 billion in minerals to the United States, or two-thirds of its total exports. In the same year, out of $114 billion in minerals and metals exports, the United States exported $28 billion to Canada, or about 25 percent of total exports. This figure also includes non-critical minerals like iron. 

3) How much will the new tariffs cost?

Canada exports $13 billion of aluminum to the United States and $17 billion of iron and steel. Those now must pay 25 percent tariffs, implying an additional cost of $7.5 billion annually. When other minerals and metals are required to pay the 10 percent tariff that would apply to them, the costs will go up further. Canada exported $4 billion of copper in 2024 and $1.5 billion of nickel. These costs will undoubtedly impact the downstream producers, affect their competitiveness, the ability to offer jobs, and finally, the costs for the final consumer via inflationary trends.

4) Can Canadian minerals and metals be substituted by domestic production? 

Not really. In terms of reserves and production, the United States and Canada are largely complementary. The United States holds significant global reserves in molybdenum (23 percent), tellurium (11 percent), lithium (4 percent) and silver (4 percent). Canada adds to that with significant reserves of niobium (9 percent), selenium (6 percent), titanium (4 percent), and lithium (3 percent).  For other strategic minerals, the countries each hold smaller shares of global reserves, but they often produce more. If critical minerals security of supply is truly a strategic goal, then it is important to protect that production and facilitate, at the local, national, and regional level, responsible expansions where feasible.  In terms of production, the complementarity is largely similar. The United States produces significant global shares of beryllium (56 percent), molybdenum (14 percent), zirconium (7 percent), zinc and copper (6 percent each), and silver (4 percent). Canada is a significant producer of niobium, cadmium, palladium (8 percent each), nickel, aluminum, tellurium, indium (4 percent each), selenium (3 percent), and copper (2 percent).

5) Can Canadian exports be substituted by other foreign partners?

In some cases, yes, but those supplies would not necessarily come from partners that the United States has historically been keen on relying on. Canada was the second largest source of iron and steel for the United States after China. Canada was the largest source of aluminum for the United States, with China in second place. Canada was the largest source of nickel for the United States, followed by Russia. Copper is a different case. Canada is second to a historically US-allied country, Chile, but Chilean copper production has been struggling and cannot easily pick up the slack. 

6) Has the uncertainty already impacted metals markets?

Market volatility has already increased due to the tariffs. Steel and aluminum prices have experienced spikes, leading to supply uncertainty and increased costs for US stakeholders. The combination of tariffs and retaliatory measures from Canada and Mexico has disrupted supply chains across multiple industries. While price effects depend on long-term policy implementation, historical precedent suggests that import tariffs on metals often result in higher costs for downstream manufacturers. The uncertainty surrounding compliance with USMCA and additional tariff exemptions has further complicated investment decisions, particularly in the US industrial sector.

7) What are the potential impacts of the Trump tariffs beyond prices?

The tariffs could have broader implications for North American supply chain integration, industrial competitiveness, and workforce mobility. The US mining and refining sectors have already faced talent shortages due to underinvestment, leading experienced professionals to retire or move abroad. The tariffs could also discourage Canadian professionals from relocating to the United States, further exacerbating domestic capacity constraints. Additionally, higher costs for raw materials could reduce North American competitiveness in sectors such as batteries, clean energy, and defense. Retaliatory measures from Canada and Mexico could also affect broader trade relations, creating additional uncertainty for investors.

8) What steps could be taken to create a more collaborative policy path for the United States with Canada?

The Trump administration could take several steps to strengthen minerals cooperation with Canada. First, aligning regulatory frameworks under the USMCA could facilitate cross-border investment in mineral extraction and processing. Second, expanding joint stockpiling and refining initiatives, including co-financing projects through mechanisms such as the Defense Production Act, would enhance supply chain security. Third, ensuring that US legislation—such as the IRA and CHIPS Act—consistently recognizes Canadian minerals as “domestic” would remove trade barriers. Finally, fostering workforce development initiatives, including mutual recognition of mining and refining certifications, could help address industry-wide skill shortages.

To read this blog as it was posted by the Center on Global Energy Policy at Columbia SIPA click here.

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Consider the following two stories involving legal disputes between American companies and foreign governments.

In 1919, the ocean steamer The Pesaro sailed from Genoa, Italy, for New York City. Built in Germany for a German shipper and formerly named the SS Moltke, the steamer had been seized by the Italian government in 1915 after Italy entered World War I. On board for its departure to America four years later were 75 cases of artificial silk owned by a company incorporated and based in the United States called the Berizzi Brothers. When The Pesaro arrived in New York after two weeks at sea, however, the Berizzi Brothers cried foul: Only 74 cases of silk were delivered. One had been lost or damaged in transit.

Eighty-two years later, a dispute on an altogether larger scale began. In 2001, with Argentina’s economy mired in recession, the country defaulted on around $93 billion of government debt, in what was then the largest sovereign debt default in history. Though a portion of that debt was owed to foreign governments, the default primarily involved private bondholders such as institutional investors. Most of these creditors would eventually agree to restructure the debt for cents on the dollar (thus booking losses), but a minority of the debt holders refused to accept this “haircut.” Like the Berizzi Brothers eight decades earlier, these holdouts, too, were based in the United States, namely a group of Wall Street “vulture funds” that had invested in the debt at distressed prices.

Beyond the fact that both cases pitted American firms against foreign governments, what links these stories is that the firms in question sought legal redress for their grievances. Not only that, but they sought this redress specifically in American courts, and thus by appeal to US law. The Berizzi Brothers sued for $250 in damages; the vulture-fund owners of the Argentinian debt sued for full face value plus interest.

The Berizzi Brothers’ case ended up in the US Supreme Court, and in 1926 the company lost, which is to say that the Italian government won. The Pesaro was owned and operated by Italy, and it was well established under US law that foreign governments (and their oceangoing vessels) were immune from suit in domestic courts. Yes, the Italian government was engaged in this case in a commercial activity, but it was so engaged, the court ruled, in a public rather than private capacity and with a public purpose.

But the Argentine government would not prove so fortunate, twice finding itself on the receiving end of negative legal judgments in its battle with the vulture funds. The first was when the US courts decided in 2012 in favor of the creditor holdouts, ruling that the full bond value was indeed due. The second followed Argentina’s subsequent decision—highly unusual among sovereign debtors in recent decades—to stand firm and continue to not pay up. While the US courts could not directly make Argentina pay, they could and did make life extremely uncomfortable, issuing rulings from 2012 to 2014 that indirectly forced the Argentine government’s hand by prohibiting it from making payments to other creditors unless it paid the holdouts first, and by prohibiting anyone anywhere in the world except Argentina from helping the country make such payments.

This pair of legal battles prompts a number of questions: What role does the law play in the arbitration of economic disputes? How does the direct involvement of sovereign states in such disputes affect that legal function? And what difference does it make when legal and economic disputes involving governments spill across national borders? These concerns have once again moved to the fore, with an explicitly protectionist and imperially minded president having taken the reins of power in America. The transition from The Pesaro and silk to Argentinian bonds and American vulture funds is an essential backdrop against which to answer these questions. In the course of eight decades, US courts seemingly made a decisive turn against foreign governments, stacking the deck in favor of American companies and becoming, in the process, a handmaiden to American empire.

The two stories with which we began effectively bookend the account of transnational commercial law that Shaina Potts, a geography professor at UCLA, provides in her new book, Judicial Territory. Potts’s study is capacious, offering insights on everything from financialization and hegemony to international trade and globalization. But at the core of the book is the history of how we got from US courts being willing to rule in favor of foreign governments and against American firms in the 1920s to the opposite outcome in the 21st century.

In a nutshell, that history is a chronicle of expanding US judicial authority over the economic decisions and activities of foreign governments, and in particular their relationships with private—usually American—companies. Governments that had previously been treated as sovereign and immune, such as the Italian government in its ownership and operation of The Pesaro, are no longer accorded such deference by US courts. Foreign states and their commercial dealings had not formerly been beyond the reach of US power altogether: The United States’ executive branch had rarely granted them immunity, especially when American interests were involved. What changed was that the US judiciary started to treat foreign governments exactly like private corporations, robbing them of any special legal status. This, as Potts describes it, was an epochal shift.

The change began in earnest in the 1950s and ’60s, and it was initially centered on what came to be termed “the Third World” and on developments in various postcolonial countries. Independence for such countries was frequently followed—albeit sometimes not until decades later—by the nationalization of foreign-owned assets and by the establishment in their stead of state-owned enterprises. Bolivia, for instance, nationalized its tin mines; Turkey nationalized its railways, ports, and utilities; Egypt nationalized the Suez Canal; and countries ranging from Iran to Mexico nationalized their oil industries.

Such nationalizations, which were integral to the plans of developing countries for a New International Economic Order, had long been regarded as beyond the purview of US law. But after World War II, a shift gradually occurred, and American courts increasingly came to treat the nationalization of US assets as unlawful expropriation. The nationalizations in Cuba on the heels of its revolution—Castro famously nationalized all American-owned sugar companies in 1960—were a particular flash point and are given special attention by Potts.

The path from The Pesaro to Wall Street vulture funds, and the markedly different legal treatment accorded to the latter, were enabled by transformations—halting, uneven, and in certain respects still ongoing—in two main legal doctrines that had historically insulated foreign governments from US courts. The first concerned foreign sovereign immunity rules: Who and what were immune from lawsuits? In the 1950s, both the who and the what began to be understood by US jurists in more restrictive ways, with the result that the commercial acts of foreign states—such as Italy’s conveyance of silks to America—lost their former immunity (through the so-called “commercial exception”).

The second key doctrine was “act of state.” This international legal principle asserts that acts carried out by sovereign states in their own territories—such as nationalizations—cannot be challenged by other countries’ courts. Historically, US courts fully respected this doctrine, but by the 1960s they’d started to chip away at it. In particular, commercial acts came to be excluded, just as they were from foreign sovereign immunity rules. Increasingly, it didn’t matter to US courts who a business operator or asset owner was: The activities and possessions of all economic actors (be they public or private) were no longer protected by the rules of sovereign immunity and acts of state.

The expansion of US judicial authority that resulted from the parallel transformations of these two doctrines has been as audacious as it has been largely unnoticed outside of narrow legal circles. It has also been multidimensional: While the juridical encroachment on foreign sovereignty has perhaps been most notable in cases of financial contracts (with creditor rights typically being privileged, as with Argentina’s debt), the phenomena newly falling within the ambit of US law are far more extensive. Anything that conceivably could be subjected to the transnational application of US domestic commercial laws has been. This includes, for example, cigars: A landmark case was Alfred Dunhill of London, Inc. v. Republic of Cuba (1976), in which the US Supreme Court ruled against the Cuban government, which had nationalized the cigar industry and subsequently refused to return the money mistakenly paid to it for pre-nationalization cigar shipments by importers in the United States. All that has been required to bring foreign governments to heel, Potts shows, is to successfully argue that the relationships or activities in dispute are “merely economic” (that is, private and commercial) rather than public and political, which is an argument that US courts have been increasingly happy to accept.

Meanwhile, alongside this expansion of what is litigable in the United States, more striking still has been the expansion of who can be sued and where the relevant activities or assets are located. Today, no sovereign government can operate without the risk of falling afoul of US laws and being held so accountable, and this is true wherever in the world they happen to be operating. Indeed, while making foreign governments subject to US laws for what they do in America is one thing, making them subject to these laws for what they do elsewhere, including in their own countries, is something else entirely. Yet that is precisely what has come to pass.

In 1990, the Nigerian government found itself embroiled in a US court case involving a contract it had awarded for the construction of a military hospital in Nigeria. Why? One American firm had accused another of having secured the contract through the bribery of Nigerian officials. The US Supreme Court decided that it did have the power to adjudicate the bribery accusation, thus reminding foreign governments the world over that they cannot deal with American firms, even at home, without considering how US courts will judge those dealings. (President Trump has recently weighed in on the appropriate course of judgment, telling US jurists to stop ruling against such bribery: “It’s going to mean a lot more business for America,” he said.) As Potts insists, it is surely a sea change of profound political significance that, over the course of several decades in the post–World War II era, the US legal system has “helped make the whole world part of US economic space.”

The transformations discussed in Judicial Territory are, as Potts admits, familiar ones to certain legal experts and well documented by legal historians. The particular importance and value of her new account lies in refusing the idea—implicit if not always explicit in the bulk of the existing literature—that this is merely a technocratic history, consisting merely of technical juridical tweaks. This process was not technocratic whatsoever, but partisan and nationalistic—thoroughly political from start to finish.

To begin with, the timing of the commencement of this shift in legal treatment—in the 1950s—was anything but happenstance. It coincided both with an upsurge in the socialist and postcolonial nations pursuing economic development models that prioritized domestic populations and industries rather than multinational (increasingly, US) capital, and with the diminishing potential for powerful Western countries to strangle those upstart development models in ways they had in the past. The American courts’ growing subordination of the international arena into merely another jurisdiction of US domestic law is part and parcel, then, of a longer and larger historical policy of containment.

Hence, the history that Potts narrates refuses technicist readings every step of the way. Behind the expansion of US judicial reach in the second half of the 20th century was the desire and determination of US government and corporate actors to tame statist national economic models overseas and to nip in the bud any developments remotely inimical to the interests of US capital. Much of the richness of Potts’s account is found in its careful identification of the primary nonjudicial actors (the private companies, investors, and policymakers with intimate connections to both constituencies) that animated and motivated these historical juridical transformations.

The value and importance of Judicial Territory also lies in Potts’s assessment of the consequences and indeed intrinsic nature of the massive expansion of US judicial authority. One of the most enduring puzzles of the postcolonial age has been the question of why previously colonized countries so frequently failed to flourish once the colonizers were sent packing and formal sovereign status had been achieved. Potts does not exactly situate her study as an answer to that question, but an answer—one adding to and complementing a range of existing answers—is nonetheless what she indubitably provides. Postcolonial nations have widely failed to thrive, Potts effectively argues, because in reality they remained part of a de facto empire, although in this case an American as opposed to a British, German, or Spanish one; and this has served to undermine their nominal sovereignty.

In fact, the refreshing thing about Potts’s book is that she makes no bones about it: Imperialism is clearly what we are dealing with here. But it is a different type of imperialism, one where exogenous judicial authority increasingly stands in for military or executive authority. Her book is a call to treat the United States as an imperial power precisely (although not exclusively) because of this extension across international space of US legal authority and, correspondingly, of the interests of US capital. Potts writes of the latter-day American empire evincing a “judicial modality”—of foreign sovereign nations and their peoples being subordinated to America by law rather than by colonial occupation or military force.

What is perhaps most insidious about the “imperial modality”—another striking Potts framing—of US judicial power is the extent to which it was designed to quietly snuff out “postcolonialism.” The expansion of US judicial territory after World War II, Potts writes, “enabled the United States to continue exercising substantial authority over the decisions of foreign governments in an age of avowed anti-imperialism and formal sovereign equality.” More than that, the turn to law was a mechanism of the active disavowal of empire. “The recoding of many foreign policy issues as merely legal,” Potts notes at one point, “has been an especially potent way for the United States to obscure its own imperial operations.” Or, as she puts it elsewhere, the trick has been “to cloak the pursuit of US geopolitical and geoeconomic goals (always entangled to a large degree with private corporate interests) in the guise of the ‘rule of law.’”

For that, of course, is the thing about law: its self-professed impartiality and, well, judiciousness. A modern-day empire rooted in law, of all things? The very idea seems counterintuitive, absurd even. Yet that is what Judicial Territory presents us with: empire camouflaged by the veneer of fairness that the law furnishes. If, as Carl von Clausewitz famously argued, war is merely the continuation of politics by other means, then, for Potts, law—at least the transnational application of domestic American commercial law—represents the continuation of empire by other means.

Just as Indigenous populations worldwide resisted the imposition of foreign occupation and rule that was European colonialism, so too have national governments worldwide—to varying extents and with varying degrees of determination—resisted and challenged the postwar expansion of US judicial authority. Potts recounts many such examples of confrontation. The Cuban government has long been a particular irritant for the United States in this respect, repeatedly and robustly arguing against the overreach of American judicial authority.

But Potts is also clear-eyed about the fact that, for the most part, these challenges have ultimately been in vain: “Once judicial decisions are made,” she observes, “most foreign governments do obey them most of the time.” But why? After all, as Potts notes, “transnational law is not backed directly by the enforcement power of the police the way domestic law is.” Her answer emphasizes the chilling impact of the economic blackballing that routinely comes with not conforming: “Foreign governments simply cannot afford to be locked out of US markets or legal services.”

The case of Argentina’s defaulted debt and the vulture-fund holdouts appeared, at least, to represent something of a counterpoint to this tendency. When the US courts initially ruled in 2012 that the country did have to pay the vulture funds in full, Argentina continued to refuse to do so. It held firm.

But that was not the end of the matter. As mentioned, the courts proceeded over the next two years to ratchet up the pressure further—effectively blocking Argentina from paying its other bondholders unless it first paid the holdouts in full—and in the end, the government buckled: In 2016, it settled with the vulture funds to the tune of more than $10 billion. Why? Argentina had essentially been excluded from the international capital markets while making its stand, compounding its domestic economic strife. Settling with the holdouts enabled Argentina to restore its credibility in the markets, issue new debt, and take measures to stabilize its economy.

In the end, Argentina had no real choice, besides isolationism, other than to settle. Settling was structurally required of it, given the country’s dependent positioning in the circuits of international finance. Economists call this structural bind “international financial subordination,” by which they mean that fundamental inequality in the global financial system structurally subordinates less powerful states and constrains their financial autonomy. What Potts has brought to light with Judicial Territory is the crucial role of the law in fashioning and enforcing such subordination—that is, in demanding and securing the obedience of sovereign states.

And the vulture funds? They made out like the bandits. According to data published by the courts in conjunction with the 2016 settlement, the funds each earned returns on investment of between 300 and 1,000 percent. But in its own analysis of the numbers, The Wall Street Journal found that one fund, Florida’s Elliott Investment Management, had actually achieved a return of up to 1,400 percent.

Elliott was very much the public face of the vulture funds in the lengthy battle with Argentina, receiving endless brickbats for its leading role in facing down the Latin American sovereign. Indeed, the normalization of the term “vulture” to refer to Elliott and the other investment funds involved in the litigation plainly indexed the way they were widely viewed: as operating somehow beyond the acceptable pale. “Elliott is the ugly face of America,” one critic, capturing the mood, exclaimed in 2018.

But to suggest that an investment fund such as Elliott is an aberration from contemporary American capitalism is to miss the point entirely. Insofar as it trades on the rule of law that the United States propagates and exercises globally, Elliott is American capitalism’s globalizing arm, its vanguard rather than black sheep.

Argentina’s government was demonstrating an “inexhaustible disregard for the rule of law,” Paul Singer, Elliott’s founder and president, opined in a letter to his clients at the height of the dispute. In 2014, a banker who’d done business with the firm was asked by a journalist what made Elliott so successful. “They have deep respect for the rule of law and they expect others to share it,” the banker said. But what would happen if Singer and his colleagues ever sensed that others did not share this “respect”? “I think you know the answer,” the banker replied.

To read the article as it was posted on The Nation website, please click here.

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The United States of America is the most extraordinary nation the world has ever known. From the very beginning, and even more so as it unfolded across the entire continent, the United States was populated with people of immense talent, drive, and grit. In the previous century it saved the entire world, dispatching three rounds of adversaries by winning two world wars and defeating Communism. It put an American on the moon.

The United States accomplished those feats because it was a tremendous industrial power fueled by innovation and blessed with abundant agricultural and energy resources. Indeed, the very success of the American way of life—its freedom and its prosperity—is supported by two things: a robust middle class earning high wages and a strong national defense. These are, in turn, created by a combination of innovation that fuels productivity growth, domestic work and investment in industry, and the day-to-day choices of individual Americans.

Today, the upward mobility offered by the manufacturing sector is not widely available to the working class, much of our industrial might has moved overseas, and innovation has begun to follow. Manufacturing jobs in the United States declined from 17 million in 1993 to 12 million in 2016.1 Over 100,000 factories closed between 1997 and 2016. 2,3 And the U.S. goods trade deficit has soared to over a trillion dollars.4 These trends are the product of a withering, decades-long assault by globalist elites who have pursued policies—including trade policies—with the aim of enriching themselves at the expense of the working people of the United States. As a result, the middle class has atrophied, and our national security is at the mercy of fragile international supply chains.

President Trump alone recognized the role that trade policy has played in creating these challenges and how trade policy can fix them. Since he first took the oath of office in 2017, President Trump has reshaped the trade policy landscape to prioritize the national interest. He has built a new consensus that tariffs are a legitimate tool of public policy. He has demonstrated the imperative for tough trade enforcement against countries who think they can take advantage of the United States and get away with it. He has shown that the United States has leverage and can negotiate aggressively to open markets for Made in America exports, particularly for agricultural exports. He has proven that a robust and realist trade policy can create jobs, promote innovation, strengthen the national defense, raise wages, support farmers, and foster the manufacturing renaissance that many elites long thought was impossible for the United States to achieve.

Toward a Production Economy

To reach these objectives, the United States must have an economy focused on production. For much of our history, the American way of life was defined by creating, inventing, building, growing, and producing. Americans are more than just what they consume. And the United States is more than an economy that merely moves money around—it is a nation of intertwined communities, oriented around the production of manufactured goods, agricultural products, services, and knowledge. Ensuring that trade policy favors a Production Economy will help the President Make America Great Again.

Why? It’s simple:

A Production Economy is a high-wage economy. Manufacturing jobs have a wage premium of roughly 10 percent. However, as the United States deindustrialized, that wage premium declined for manufacturing workers in core production jobs. Using trade policy to increase the number of manufacturing jobs in our country – and the share of manufacturing contributing to gross domestic product – will help raise wages and return our country to one with a more vibrant and secure middle class.

A Production Economy creates jobs for all. Trade policy does not need to pit workers or sectors against each other. This is because manufacturing is a sector known for positive spillovers, including in the service sector, that benefit the economy overall. One study found that for every additional manufacturing job created in a community, 1.6 jobs were created in other sectors.6 And agriculture-related jobs—work that produces the sustenance vital for human life—comprise about 10.4 percent of total U.S. employment.

A Production Economy is a boon for innovation. Between 2003 and 2017, research and development (R&D) expenditures in China by U.S. multinationals grew at an average rate of 13.6 percent per year, while R&D investment by U.S. multinationals in the United States grew by an average of just 5 percent per year. Deploying trade policy tools to create incentives to reshore manufacturing will reverse this troubling trend and promote U.S. technological dominance.

A Production Economy is a vital component of our national defense. The United States was able to win World War II because of our industrial might, but our manufacturing base has atrophied. Although the United States produced less than 14,000 aircraft in the two decades prior to World War II, it produced 96,000 planes annually by 1944.9 By comparison, today the United States can only produce each month about a third of the 360,000 artillery rounds the military says it needs to deter our adversaries. Trade policy can help strengthen our defense industrial base.

Changing this alarming trajectory requires a trade policy that is strategically coordinated to achieve three things: an increase in the manufacturing sector’s share of gross domestic product; an increase in real median household income; and a decrease in the size of the trade in goods deficit.

An America First Trade Policy

On January 20, 2025, President Trump signed the Presidential Memorandum “America First Trade Policy” laying out a plan to accomplish the transformational change necessary to reverse our country’s economic decline. The Presidential Memorandum instructs USTR and other agencies to undertake rapid, unprecedented work to put America First on trade.

Right away, the Presidential Memorandum strikes at the threat posed by the trade deficit by directing USTR and other agencies to “investigate the causes of our country’s large and persistent annual trade deficits in goods, as well as the economic and national security implications and risks resulting from such deficits.” By reversing the flow of American wealth to foreign countries in the form of the trade deficit, the United States can reclaim its technological, economic, and military edge.

The Presidential Memorandum further instructs the USTR to review our country’s economic relationship with all nations in order to identify their unfair trade practices, including where trading partners engage in non-reciprocal trade with the United States. By identifying, and acting against, such unfair and non-reciprocal practices, the United States can use its leverage to open new markets for U.S. exports and re-shore the production that has been lost.

USTR has been empowered to chart a new course for any trade agreements to ensure they help raise wages and grow our industrial base. USTR will review existing trade agreements to guarantee that those agreements operate in the national interest. For instance, third countries should not be permitted to free ride on our trade agreements with other trading partners. Alongside this review, USTR will commence the statutorily required public consultation process of the United States-Mexico-Canada Agreement (USMCA) in order to “assess the impact of the USMCA on American workers, farmers, ranchers, service providers, and other businesses” in preparation for the mandated review of the agreement in July 2026. USTR will also identify opportunities for bilateral or sector-specific plurilateral agreements that might be negotiated to open new market access for U.S. exports and reorient the trading system to promote U.S. competitiveness.

The Presidential Memorandum also addresses U.S. trade relations with the People’s Republic of China, the single biggest source of our country’s large and persistent trade deficit and a unique economic challenge. In his first term, President Trump negotiated a historic and enforceable Economic and Trade Agreement Between the Government of the United States of America and the Government of the People’s Republic of China (also known as the Phase One Agreement). However, there has been no action taken to enforce the agreement where China has not lived up to its commitments. USTR will assess China’s compliance with the Phase One Agreement.

The Phase One Agreement grew out of USTR’s investigation under Section 301 of the Trade Act of 1974 into China’s acts policies, and practices related to technology transfer, intellectual property (IP), and innovation. Yet, technology and IP-intensive sectors are hardly the only ones that are threatened by China’s non-market behavior. USTR will look broadly at the bilateral relationship to identify, and respond to, additional unfair practices.

President Trump’s interest in addressing challenges in the relationship with China complements significant interest by the U.S. Congress on the topic. Pursuant to the Presidential Memorandum, USTR will assess the recent legislative proposals related to China’s Permanent Normal Trade Relation (PNTR) status and “make recommendations regarding any proposed changes to such legislative proposals.”

Taken together, these workstreams signal a national commitment to continuing the America First approach to trade developed in President Trump’s first term of office. By taking a strategic, yet vigorous, approach, the United States can finally address the structural challenges distorting the global trading system in ways that undermine U.S. competitiveness and course-correct for the short-sighted trade policy mistakes of the past.

Building on Past Success

To summarize: over the last several decades, the United States gave away its leverage by allowing free access to its valuable market without obtaining fair treatment in return. This cost our country an important share of its industrial base and thereby its middle class and national security. Although many sectors benefitted from trade, it was at too high a price—for example, despite its comparative advantage in agricultural production, the United States has even incurred a worrying trade deficit in agriculture over the past two years.

Going forward, the United States will take action to create the leverage needed to rebalance our trading relations and to re-shore production, including, but not limited to, through the use of tariffs. This will raise wages and promote a strong national defense.

Importantly, this America First Trade Policy builds upon President Trump’s accomplishments from his first term.

•  Though promised by Presidents past, but never accomplished until his first Administration, President Trump successfully renegotiated NAFTA. Its replacement, the USMCA, contains historic provisions to re-shore manufacturing (especially in the auto sector, which had been decimated by NAFTA), the strongest labor and environment provisions in any trade agreement, new market access for U.S. agricultural products, and high-standard digital trade rules.
•  Under his leadership, the United States entered into two important agreements with Japan, opening new access for U.S. agricultural products and securing USMCA-style digital trade rules.
•  The United States also engaged extensively at the WTO, calling attention to and defending U.S. rights to take action against non-market policies and practices and reclaiming American sovereignty from unaccountable foreign bureaucrats.
•  The United States responded assertively to China’s unfair trading practices, negotiating the Phase One Agreement to protect U.S. firms against China’s forced technology transfer and IP theft and imposing significant bilateral tariffs at the same time.

These past successes on trade demonstrates the wisdom and efficacy of President Trump’s America First approach.

First, the proof is in the pocketbook: In 2001, the year China joined the WTO, real median household income in the United States (measured in 2023 dollars) was $70,020. In 2016, the comparable figure was $73,520—real median household incomes had grown only 5 percent in sixteen years.11 That’s an annual average growth rate of 0.3 percent. Then, from 2016 to 2019, the last year before the U.S. economy was disrupted by COVID-19, real median household incomes had grown to $78,250—an increase of 10.5 percent over the course of only three years.12 That’s an average annual growth rate of 3.4 percent, over ten times the annual average growth rate that prevailed from 2000 to 2016. By putting America First on trade, President Trump restarted our Production Economy in a single term; something prior Presidents failed to do for a generation. Further proof is in our newfound national security strength resulting from President Trump’s first term. An America First posture, complemented by new investments in our industrial base, showed that the United States is still a superpower. President Trump’s first term peace dividend brought benefits not only to Americans, but also to the rest of the world.

Lastly, one of the most satisfying pieces of evidence for the America First approach is its bipartisan credibility: all of President Trump’s first term trade accomplishments were retained by the next administration and, in some cases, even expanded upon.

President Trump’s ability to deliver for all Americans while forging a new consensus on trade validates his inaugural pledge: the trade challenges facing our country will “be annihilated” because “from this moment on, America’s decline is over.”

To read the complete report as it was published by the United States Trade Representative click here.

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Indeed, given the importance of trade between the two regions, deteriorated trade relations would be detrimental for both, but likely more for the United States than for the EU, especially for the manufactured goods sector. The United States relies on the European Union for 18.3% for its trade in goods, compared to 6.7% for the EU. An analysis of value-added trade somewhat mitigates this data, depending on the sectors.

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Over the past few years, the United States has made the most significant change in its approach to trade in generations. Starting in the 1970s, trade policy was focused on neoliberal priorities such as promoting efficiency through tariff and cost reductions and limiting the space for purely national regulation of commerce. This was done with an eye toward benefiting multinational corporations and with the view that trade was primarily a tool for advancing the foreign policy interests of the US (and its image as a global leader). Other goals, such as the quality of domestic jobs or environmental sustainability, were an afterthought. In recent years, however, a new set of values has started to guide US engagement with the global economy, with working class power, climate sustainability, and supply chain resilience at the core of a new approach to global leadership.

While evidence of this new approach can be found throughout the executive branch, it is perhaps most clearly evidenced in the Office of the US Trade Representative (USTR) under the leadership of Ambassador Katherine Tai. Since assuming office with the unanimous, bipartisan support of the US Senate in March 2021, Tai and her agency have laid out an ambitious new US trade policy agenda—one that has started to bear fruit for workers, industries, and the environment.

To take stock of these changes, the Roosevelt Institute convened a study commission of scholars, former policymakers, and labor leaders. Some are longtime trade experts, others economic policy generalists with a bird’s eye view of how trade connects to other economic policies. We sought to better understand how trade policy got to where it is and to sketch out ways this trade agenda could be refined and expanded by future policymakers. This stocktaking report summarizes our takeaways from the commission. However, nothing here should be taken as consensus recommendations or the group’s full range of ideas for the future of trade policy. Rather, the report represents our attempts to identify—through a group-informed process—fruitful areas for analysis and action in the months and years ahead.

The report is divided into three sections based on the following themes:

1. Producing what matters: Trade policy should be in service of the emerging theory of economic growth, rather than pursued for its own sake. Future trade negotiations should focus on problem-solving around production challenges in specific sectors, with the goal of deepening competition and promoting sustainable economic development at home and abroad.
2. Consuming with purpose: Past trade policies have been sold through emphasizing their benefits to US consumers in the form of lower prices. The new strategy organizes American consumers to use their collective strength as a $3.8 trillion import market (the world’s largest) to push countries, producers, and importers to follow high-road practices. In other words, access to the US market is a privilege, not a right, and “consumption power” through trade enforcement is how the privilege is managed.
3. Personnel is policy: Who serves in government and who government consults is vital to good policy outcomes. Trade policymakers, career staff, and expert advisors should be willing and able to build on this new trade policy model and should reflect America’s full diversity.

Foreword

By Felicia Wong, President and CEO of the Roosevelt Institute

In planning this first-of-its-kind study commission on trade policy and the Office of the US Trade Representative (USTR), the Roosevelt Institute team asked: Why us, and why now?

First off, it is our job to lift up and celebrate the legacy of Franklin and Eleanor Roosevelt. They remade the US and global economy in much the same way that the Biden administration is trying to do today, by rewarding work and not wealth, using the public sector to shape markets, and preserving our natural resources. These efforts are very much in line with the ideas and initiatives that have been developed at USTR under Ambassador Katherine Tai’s leadership.

Second, establishing better trade policy has been a core part of the Roosevelt Institute’s work. It featured as a theme in our flagship 2015 Rewriting the Rules report. After trade dominated the 2016 election cycle, we held extensive convenings with Open Society Foundations, New America, the Center for American Progress, and other partners to better understand the fault lines and opportunities around the issue. Trade was core to my own work as the US representative on the G7 Panel on Economic Resilience in 2021, and has been a regular part of the portfolio of Roosevelt’s own in-house experts including Joseph E. Stiglitz, J.W. Mason, and Todd N. Tucker. Indeed, a glance at our 2017 Sustainable Equitable Trade report will show how a series of Overton-window pushing recommendations from that time have now become conventional wisdom: the value of directing the benefits of trade to regions of the country left behind by globalization, greening production, putting guardrails around corporations’ privileges, and finding new bases for international cooperation with other democracies. 

Third, since 2015, Roosevelt has run a personnel project—part of what we now call the Roosevelt Society—that helps develop a pipeline of exciting and innovative people from the academy and civil society and into government. We are pleased that a number of our past and present fellows have served in government and were able to join the study commission, including Joelle Gamble, K. Sabeel Rahman, and Sameera Fazili. 

Finally, and most importantly, we believe that now is the right moment to have a deep conversation about trade and how it fits in with the emerging US economic strategy. The COVID-19 pandemic, climate crisis, exploding inequality, and precarious supply chains have brought into question much of the received wisdom about globalization. The US has begun charting a new path with increasing bipartisan support, but the exact contours of this path are still ripe for mapping.

In fact, much of the initial criticism of the US’s industrial policy from trading partners has subsided, suggesting that the breaking of established economic norms was both significant and broadly understandable once explained. It is thus no coincidence that many of the US’s closest partners and allies are considering or implementing similar industrial policy packages.

We hope that this study commission serves as a template for future evaluation of making government agencies deliver equitable economic policy for all Americans.

Todd N. Tucker is a political scientist and director of industrial policy and trade at the Roosevelt Institute, where he helps lead research on how to build state capacity and supply chains. He is author of Judge Knot: Politics and Development in International Investment Law (Anthem Press), and received his PhD from the University of Cambridge. His popular writing has been featured in Politico, Time, Democracy Journal, the Financial Times, and the Washington Post. He served as special rapporteur for the expert Study Commission.

To read the report as it was published by the Roosvelt Institute, click here.

To read the full report as a PDF, click here.

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Overall, the public’s attitudes about trade have changed little since 2021. However, Republicans’ views have become more negative.

Nearly three-quarters (73%) of Republicans and Republican-leaning independents now say the U.S. has lost more than it has gained from increased trade. That is 8 percentage points higher than in 2021.

Democrats and Democratic leaners remain divided on this question. Half of Democrats say the U.S. has gained more than it has lost, while 47% say the opposite. Democrats were similarly divided on this question in 2021.

Demographic, educational differences in views of increased trade

Americans with at least a four-year bachelor’s degree are more likely than those with less formal education to say increased trade with other countries has more benefits than costs for the U.S.

Nearly half of college graduates (47%) say the U.S. has gained more than it has lost from increased trade, compared with about a third of those with less education (31%). These differences are evident in both parties.

There also are differences in both parties by race and ethnicity as well as family income. And Republicans differ by age on this issue.

Among Democrats

• 60% of Asian and 53% of White Democrats say the U.S. has gained more than it’s lost from more trade. Hispanic and Black Democrats are less positive about the impact of greater trade (45% and 42%, respectively, say the U.S. has gained more than it has lost).
  
  
• Upper-income Democrats (62%) are more positive about the impact of increased trade than are middle- (52%) or lower-income Democrats (42%).

Among Republicans

• White Republicans are particularly critical of the growth in international trade: Just 22% say the U.S. has gained more than it’s lost. About a third of Black and Hispanic Republicans also say this (35% and 33%, respectively), as do 49% of Asian Republicans.
  
  
• There are relatively modest differences among Republicans by income, but upper-income Republicans are somewhat more likely than middle- and lower-income Republicans to view increased trade positively.
  
  
• Younger Republicans are more likely than older Republicans to say the U.S. has gained more than it has lost from increased trade.

Trade is a low-priority issue for most Americans

While trade with other nations is an issue in the 2024 presidential campaign, it is not a top concern for most Americans. In our 2024 policy priorities survey, dealing with global trade ranked near the bottom of 20 policy goals asked about.

In our April survey, we asked respondents to weigh the benefits of more trade (“it has helped lower prices and increased the competitiveness of some U.S. businesses”) against the drawbacks (“it has cost jobs in manufacturing and other industries and lowered wages for some U.S. workers”).

Another recent survey by the Center found considerable public skepticism about the benefits from U.S. trade with China, but not with Canada. Nearly half of Americans (47%) said China benefits more from the U.S.-China trade relationship than America does. Only 14% said the same of U.S. trade relations with Canada.

When asked about free trade agreements generally – without context – Americans are more supportive: In July, 65% of Americans say that, in general, free trade agreements between the U.S. and other countries have been a good thing. But there are wide partisan differences in these opinions. Roughly eight-in-ten Democrats (79%) say free trade agreements have been good for the U.S., compared with only about half of Republicans (53%).

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Introduction

As the danger of war rises in the Western Pacific, the United States is racing to reset its military strategy. China’s astonishing military modernization—especially its arsenal of anti-access/area denial (A2/AD) capabilities—has fundamentally challenged the old U.S. approach, which focused on defeating aggression by projecting decisive power into the first island chain. In response, the Pentagon is attempting a great inversion: to defeat Chinese power projection against Taiwan or another target, it is emulating Beijing’s A2/AD strategy in hopes of making the Western Pacific a no-go zone for hostile forces.

This change, which some defense analysts have advocated for years, is a necessary response to China’s daunting capabilities. It is a smart effort to make the geography of the region, and the inherent difficulty of power projection, work for, rather than against, the United States and its allies. Speed is essential in making this shift: Even as the stated U.S. view is that conflict is “neither imminent nor inevitable” in the Taiwan Strait, numerous U.S. officials have warned that conflict could plausibly occur in the region this decade. This urgency is catalyzing constructive action across multiple U.S. alliances and every U.S. military service as they seek to make the strategy real in the limited time that may be left.

Every strategy brings dilemmas, though, and this strategy—call it “anti-access with American characteristics”—presents six crucial trade-offs the Pentagon and U.S. civilian leaders must address. Many of these challenges, moreover, must be confronted in coordination with U.S. allies and partners, but these conversations are not as advanced as they should be given the shrinking timeline and urgency of action. Strategy is the art of making hard choices, and the United States is only starting to reckon with the hard choices its new strategy involves.

Washington’s Strategic Shift

U.S. strategy has been turned upside down by two key developments: China’s ballooning defense budget and its military-technological breakthroughs. Using defense resources made available by decades of rapid economic growth, the People’s Liberation Army (PLA) has developed a vast arsenal of capabilities—especially long-range missiles—designed to prevent U.S. forces from accessing bases along the Pacific’s first island chain, as well as in the waters and airspace within them. According to the Pentagon’s most recent public report on Chinese military power, for instance, Beijing now possesses roughly 1,000 medium-range ballistic missiles with a range of between 1,000 and 3,000 kilometers and 500 intermediate-range ballistic missiles with a range of between 3,000 and 5,500 kilometers. If a war were to break out, the PLA could now target nearly all U.S. forces within hundreds of miles of the Chinese coast.

The result is a weakening of America’s ability to project power in a crucial region. A quarter century ago, China could barely detect, let alone destroy, U.S. aircraft carriers operating near its coast. Into the early 2010s, the Pentagon could—according to think tank reports—pursue a strategy that envisioned defeating Chinese aggression with a devastating precision-strike campaign against radars, missile bases, command-and-control centers, and other targets on Chinese soil.

Today, however, Beijing can threaten aircraft carriers hundreds of miles away, as well as the surface ships that escort them and the bases they visit. A growing inventory of advanced fighters, as well as the world’s densest air defense network, can take a heavy toll on U.S. strike aircraft. Meanwhile, China’s rapid nuclear buildup makes the prospect of carrying the war onto its territory much riskier by giving Beijing more credible nuclear response options. In short, the days of easily projecting power to China’s shores are over.

The United States needs new capabilities and concepts—as well as enhanced coalitions—to offset this historic change in the military balance. To be sure, the United States will continue to require ways of breaking down China’s battle networks and degrading its A2/AD capabilities. But simply doubling down on the traditional power projection strategy will not work under the current defense budget and in view of how formidable China’s A2/AD capabilities have become. Instead, U.S. forces are trying to flip the script: they are trying to deny China the ability to project its power outward. Rather than rely so heavily on a few large, vulnerable bases and scarce, expensive platforms like aircraft carriers, this strategy would empower smaller units that operate from more austere locations and fight with cheaper, more numerous, and more expendable weapons. The goal is to create a more resilient, diversified military posture up and down the Western Pacific with sufficient firepower to inflict an awful cost if the enemy attacks. The United States will not be able to reassert the level of military dominance it once enjoyed in the region, but it can prevent an age of Chinese dominance.

What makes this approach attractive is the fact that holding U.S. forces at bay is only half the challenge China faces. To conquer Taiwan or otherwise upend the regional status quo, Beijing must replicate the traditional U.S. mission of power projection by moving troops, ships, and planes into hostile areas and sustaining them there indefinitely. In fact, Beijing is in the process of fielding four aircraft carriers with more to come; it is building other long-range ships and aircraft that can operate throughout the region and beyond. The more China invests in these larger, more expensive platforms and the more it tries to exert control in the Western Pacific, the more it makes itself the target of the very strategy its own military has employed.

The United States has recently advanced several aspects of such a strategy. The first is real estate. Washington has secured or expanded U.S. access to bases in countries from Japan and the Philippines to Australia and Papua New Guinea, a crucial step in making U.S. forces more survivable if China attacks. There is significantly more work to do, but 2023 has been the most transformative year in a generation for America’s Indo-Pacific posture.

The second aspect is capabilities. The Pentagon has announced programs such as the Replicator initiative, which seeks to build large numbers of small, cheap drones that can deliver devastating firepower. If these programs reach fruition, they could complement existing platforms, such as attack submarines and penetrating bombers, that can destroy Chinese forces within Beijing’s A2/AD zone.

A third aspect involves concepts. The services are developing new (and somewhat embryonic) ways of employing these technologies. Examples include Expeditionary Advanced Base Operations, a Marine Corps initiative that involves using antiship missiles and other ground-based fires to target Chinese vessels from small islands in the Western Pacific, and Agile Combat Employment, an Air Force project that aims to preserve U.S. striking power by getting planes off of large, exposed bases when a crisis begins.

And fourth is coalitions. To generate the necessary firepower, secure access to critical terrain, and confront China with the prospect of a big war against multiple adversaries, the United States has strengthened bilateral alliances with Australia, Japan, South Korea, and the Philippines while also investing in new partnerships—such as AUKUS—linking countries in the region and beyond.

To be clear, anti-access with U.S. characteristics is more of a complement to than a pure replacement for the Pentagon’s old approach. Aircraft carriers and major surface combatants would be needed to defeat a Chinese blockade of Taiwan, for instance, even if they suffered heavy losses. Tactical fighters, long-range bombers, and other manned aircraft will play an important role in delivering munitions and partnering with unmanned systems. The United States will still need to find ways of suppressing China’s air defenses and hindering its kill chains. But legacy approaches alone cannot defeat a Chinese attack at acceptable cost. The United States needs asymmetric ways of thinning out enemy forces and preventing them from achieving their objectives.

To succeed, the United States will need a two-part force. A blunting layer of dispersed forces must survive the initial onslaught and prevent Chinese forces from winning a quick, decisive victory. Then a follow-on force of U.S. ships and aircraft will need to push into the theater to decisively defeat the remaining Chinese units. Ultimately, this might not be sufficient to terminate a conflict, but it would neutralize the immediate threat and buy time for other options meant to persuade Beijing to call it quits, such as a long-term economic pressure campaign.

America’s new strategy, however, also raises new questions: Can a blunting force remain effective if it is exposed to devastating Chinese missile salvoes and cannot easily be resupplied? Could these smaller units deter a conflict as well as larger and more visible ships and aircraft could? Should U.S. power projection forces remain in the first island chain or pull back to more defendable positions farther away? How hard should the United States push for access to new bases? Are allies prepared to play their part in this new strategy? And to what extent would anti-access with U.S. characteristics just redirect China’s effort toward gray zone coercion?

These are difficult questions. They involve hard trade-offs between survivability and lethality, concealing and revealing, close-in and standoff operations, speed and sustainability, sovereignty and efficiency, and gray zone and high-intensity conflict. As the United States tries to prepare for or, preferably, deter a potentially devastating conflict, these six issues require urgent attention and debate.

Survivability or Lethality

A fundamental feature of today’s environment is the development of accuracy independent of range, which makes it possible to precisely strike targets at great distances. This is why China’s ballistic missile force, the largest in the world, poses such a threat to the aircraft and surface ships that the United States would need to project power into the Western Pacific. Hardening airfields and investing in air and missile defenses can help, but the cost-exchange ratio favors the attacker, since most missiles are significantly cheaper than the interceptors that engage them. If U.S. forces remain on large bases at Guam or Okinawa, they risk being destroyed. Military units must disperse and hide to survive. The dilemma is that once they do, they will struggle to generate the striking power—the lethality—needed to defeat a Chinese assault.

This problem involves logistics and sustainment: the more dispersed one’s forces, the harder it is to keep them well supplied. The Air Force, for instance, has shown it can get attack aircraft out of vulnerable places in a hurry. Less certain is whether it can deliver the fuel, weapons, and other support those planes will need to conduct combat missions from wherever they go to ride out the storm. If U.S. planes cannot fly strike missions in the opening days or weeks of a Taiwan crisis, Taipei might fold and close Washington’s window to respond. Similar challenges afflict the Army’s Multi-Domain Operations concept.

To be fair, the picture varies across the services. By making significant changes to its force structure, the Marine Corps has become better positioned to distribute small units across numerous islands while also equipping them with real firepower. Yet services that rely on large platforms (the Navy), large bases (the Air Force), or large formations (the Army) have more work to do to make their forces survivable without undermining their ability to land a lethal punch.

Conceal or Reveal

As new operational concepts take shape around smaller, more dispersed units, the Pentagon will face another challenge: how to deter China with less visible forces. The accuracy of today’s weapons means visible forces are increasingly vulnerable, but the best capabilities for deterring opponents and reassuring friends are those they can plainly see. Alternatively, concealing capabilities can help maximize their effect on the battlefield but undercuts their deterrent value before a conflict begins.

Take, for example, one of America’s most effective deterrents—the purported ability to disrupt Chinese power projection by using cyberattacks to disable PLA command, control, and communications. Disclosing the details of this capability would require revealing U.S. access to Chinese networks, which would give Beijing a chance to close breaches. The same basic problem would apply to revealing new operating locations or highly secretive systems, such as advanced undersea drones, stealthy aircraft, space-based capabilities, and others.

A related issue involves timing. Unveiling new capabilities during a crisis might bolster deterrence but could come too late, after Chinese leaders have made the crucial decision to act. Publicly revealing new capabilities in the opening phases of a crisis could increase tensions, complicate efforts to deescalate, and lead third parties to blame Washington for the conflict. Admittedly, these are not new problems. But they are made more difficult by the fact that the United States no longer has such overwhelming conventional superiority, so it must hold more in reserve to surprise Chinese military commanders and complicate their operations after the shooting starts.

Close-in or Standoff

A third trade-off involves geography: Where should the United States place these more dispersed forces? For decades, U.S. power projection was so effective that even massed forward-deployed forces were largely invulnerable to enemy attack, and U.S. dominance was so pronounced that even faraway forces could reach the theater in time to make the vital difference. Today, however, China could do catastrophic damage to the Pentagon’s forward-most forces, whether they be ships near the Taiwan Strait or units on the ground in Okinawa. Moreover, if China can quickly establish dominance in and around the Taiwan Strait, assets stationed farther away might not arrive soon enough to prevent a fait accompli.

Thus, the dilemma: if the United States stations most of its combat power along the first island chain, the PLA could conduct a crippling first strike. Yet if Washington keeps the bulk of its forces over the horizon at bases in the second island chain or even farther away, then China might be emboldened to try the fait accompli. Of course, if Beijing chooses to kill a large number of Americans in a first strike, it is probably choosing a long, bloody war with an enraged superpower as well. But even in that case, U.S. allies would face the possibility of being pounded as U.S. forces fight from distant locations—not exactly a recipe for alliance cohesion in a crucial moment.

An answer—albeit an uncomfortable one—is to divide U.S. forces into two elements. Some units would serve as frontline forces to blunt Chinese attacks and reassure allied publics. These forces would constitute a bulwark and a trip wire: they would deny China the option of using force without bloodying U.S. personnel. They would commit the United States to the fight while also giving Washington some combat power early on. The objective of these forces would not be to establish U.S. dominance within the first island chain but rather to prevent China from dominating portions of the first island chain itself. Mobile forces equipped with antiship and antiaircraft missiles would blunt Chinese attacks on U.S. allies and partners.

Ultimately, this blunting force would also buy time and serve as a shield behind which standoff forces, such as long-range stealth aircraft or other platforms capable of delivering munitions from a distance, could operate at somewhat decreased risk. Unfortunately, the costs to these close-in units could be very high, so the United States might not want to place its most advanced capabilities at risk—fifth-generation tactical aircraft, or aircraft carrier strike groups, for instance—until it has succeeded in degrading China’s A2/AD capabilities, primarily through strikes delivering from longer range. In the meantime, forward-stationed forces might suffer ghastly losses.

Speed or Sustainability

A fourth trade-off is political. Washington’s new strategy is predicated on rapidly diversifying U.S. operating locations from a handful of major U.S. bases to a range of ally and partner bases, austere sites, and even some civilian facilities. The United States has made remarkable progress in this endeavor; key allies like Japan are expanding their military footprints as well. Yet the harder Washington pushes to make use of these locations today, the more it risks damaging critical relationships.

This tension is on display in Japan’s southwest islands. Okinawa, Miyako, Ishigaki, and Yonaguni are critical real estate given their proximity to Taiwan. If the United States could, for instance, station hordes of long-range antiship missiles on the outermost islands, the military balance in the Taiwan Strait would change overnight. But populations on some of these islands are ambivalent about a growing Japanese military presence, let alone any sizable deployment of Americans. If Washington pushes too hard, it risks alienating local populations and causing diplomatic setbacks. If Washington does not push hard enough, the United States and its allies might not be ready if a conflict comes.

The same point could be made regarding the Philippines. Under President Joe Biden, the United States has made remarkable progress in jump-starting implementation of the Enhanced Defense Cooperation Agreement and gaining access to additional facilities in that country. In theory, these facilities—some of which are on the northern island of Luzon—could play a vital role in a Taiwan contingency. In reality, what access the United States would have to those facilities in a crisis remains uncertain. The more tensions increase, the greater the need for the United States to have clarity about this issue and to position more (and more capable) forces there. Those needs may clash, however, with the political incentives of the government in Manila, which would presumably prefer to defer hard choices that could put local communities in the firing line if conflict ensues.

Sovereignty or Efficiency

Allies and partners are central to U.S. strategy because the China challenge is more serious than anything the United States has faced in decades. Beijing can field a force so large and potent that the United States cannot succeed on its own. Even under the most favorable assumptions about the development of U.S. and Taiwanese capabilities, the United States will still need—at a bare minimum—access to bases in Japan and perhaps other countries. Yet, after several decades in which allied contributions were a “nice to have” but not a “need to have,” there is little muscle memory in Asia about how to conduct complex coalition operations in a high-intensity environment.

Getting the coalition dynamics right requires addressing tough questions about roles, missions, capabilities, and—most of all—politics. Which allies would be willing to commit their forces in advance of a conflict? Under what circumstances would they do so? And with what caveats about their use? The answers to these questions will vary greatly from country to country, even from leader to leader. And although it seems likely that close allies, such as Japan or Australia, will indeed side with the United States if shooting starts, their leaders are often unwilling, for understandable political and diplomatic reasons, to make that commitment explicit in advance.

Ideally, a U.S.-led coalition would maximize efficiency: Washington would rely on allies to build niche capabilities and focus on particular missions, freeing up U.S. forces for the most daunting tasks. A similar argument has been made for why Taiwan should ditch its expensive planes and warships, which will probably be destroyed or disabled at the outset of any conflict, and instead focus on antiship missiles, mines, and other asymmetric capabilities that can help it survive until help arrives. But Taiwan is hesitant to do this because it has no ironclad assurance help will come—not even from the United States.

This illustrates the larger dilemma: if no one really knows who will or will not fight in a crisis, a clean division of labor becomes dangerous because absent allies would create glaring gaps. Political leaders in the Western Pacific naturally want to preserve flexibility and protect sovereignty. Yet this undermines efficiency by forcing Washington to plan for the possibility that its allies will not show up. The dilemma works the other way as well: the less reliable the United States seems due to resurgent isolationism or political dysfunction, the less willing its allies will be to make potentially costly commitments to fight by its side.

Gray Zone or High Intensity

A final tension is between dealing with day-to-day gray zone challenges—maritime coercion, menacing aerial intercepts, and other pressure tactics short of war—and preparing for the potential outbreak of a major conflict. Gray zone engagements require frequent sorties, which wear down aircraft and their crews. There is a real trade-off between showing the flag in the South China Sea and training for high-intensity conflict. The Pentagon’s preference may be to concentrate intently on deterring high-intensity conflict—the fight that the United States simply cannot afford to lose—but even if it does so successfully, its friends will still suffer as Beijing salami-slices the status quo.

For example, the U.S. military is heavily focused on a potential war in the Taiwan Strait, most notably the challenge of rapidly sinking an invasion fleet. But although this is the most dangerous contingency, it is not the only, or perhaps even the most likely, one. Every day China is squeezing Taiwan, using a high operations tempo and boundary encroachment to nibble away at its buffer zones. Likewise, the challenge in the South China Sea is not a matter of Beijing mounting an all-out invasion of the Philippines. It involves using fishing boats, maritime militia, coast guard vessels, and other capabilities to undermine sovereignty.

Unfortunately, many of the capabilities needed for gray zone scenarios are different from those needed for high-end deterrence missions. Small units equipped with antiship missiles may be lethally effective against an invasion fleet, but they are of less use in helping the Philippines defend its sovereignty against everyday encroachment or helping Japan cope with pressure from Chinese aircraft over the East China Sea. In fairness, this dilemma might well attend any U.S. defense strategy in the Western Pacific. But the more Washington emphasizes high-end conflict scenarios and anti-access forces, the sharper this trade-off will become.

No Easy Answers

There are no perfect solutions to these challenges. Every choice comes with risks and consequences. The best the United States and its allies and partners can do is mitigate those risks to the extent possible, which begins with recognizing that the requirements of assurance, deterrence, and warfighting often cut in different directions—and that Washington cannot adequately address any of these dilemmas on its own.

As discussed, the Pentagon may envision addressing the competing imperatives of assurance, deterrence, and warfighting by effectively bifurcating the force. An “inside force” located within the first island chain would reassure allies of U.S. commitment and dissuade China from thinking it can succeed with a rapid fait accompli. If war occurs, it will be supplemented by an “outside force,” located mostly beyond the immediate reach of China’s most potent A2/AD assets, which would provide the bulk of the striking power needed to turn back a PLA assault and eventually end the conflict on favorable terms. Yet that is only a partial answer to the dilemmas raised here, many of which will persist even if the United States optimizes different parts of its forces for different tasks.

One requirement for more squarely confronting trade-offs between speed and sustainability, between survivability and lethality, and so on would be closer coordination between the officials responsible—in the United States and friendly countries—for operational planning, capability development, and alliance management. After all, the hardest trade-offs tend to arise at the intersection of these tasks. But even within the U.S. government, it is not clear that the dilemmas are as sharply understood, or as explicitly acknowledged, as they could be. When the authors recently traveled to the region, we were struck that many of these dilemmas are not really being debated yet with key allies and partners.

This is a potentially costly mistake. Each trade-off has extensive implications for Indo-Pacific allies and partners; addressing them requires not just understanding but also extensive military reforms and sensitive political guidance from U.S. friends. The U.S. military no longer possesses power projection capabilities so overwhelming it can determine its strategy independently and then seek the acquiescence of like-minded nations. For the first time in decades, Washington must truly integrate its Asian friends into its most crucial strategic debates—as well as the training, exercises, contingency planning processes, and wargames that both inform and flow from those debates. The alternative is a strategy that becomes dangerously disjointed as the United States and other defenders of the Asian order confront difficult choices in divergent ways.

Given the growing worry about crises or conflict, there is little time to waste. The shorter the time horizon gets, the starker the trade-offs will become. Hard dilemmas are the price to pay for decades of lethargy in dealing with a growing Chinese challenge. If the United States, its allies, and its partners do not confront these issues head-on today, the consequences could be ugly tomorrow.

Hal Brands is Henry Kissinger Distinguished Professor of Global Affairs at the Johns Hopkins School of Advanced International Studies and senior fellow at the American Enterprise Institute.

Zack Cooper is senior fellow at the American Enterprise Institute and a lecturer in public and international affairs at Princeton University.

To read the full brief as it appears on the Center for Strategic and International Studies (CSIS), click here. 

To read the full brief, click here.

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The report recommends streamlining redundant U.S. regulatory protocols, as well as emphasizing clarity and uniformity in countries’ regulations on sanitary and phytosanitary trade issues. International trade agreements should include agricultural biotech provisions, and science-based outreach is needed to boost public understanding of safe technologies such as gene-edited crops.

Participants in the Yeutter Institute project included high-level government officials from the current and previous presidential administrations, farmers, plus academics and practitioners in plant genetics, agricultural sciences, economics and law. The Yeutter Institute is part of the University of Nebraska–Lincoln’s Institute of Agriculture and Natural Resources.

Global population is on course to reach 9.3 billion by 2050, up from the current 8.1 billion, and ag biotech innovation is crucial to increase crop yields. But, the report says, “the U.S. regulatory process threatens to hold up innovation” because the “cumbersome regulatory structure can result in duplicative reviews and is a costly burden on innovators.”

U.S. officials can help, the report recommends, by streamlining and coordinating the redundant regulatory processes for ag biotech conducted separately by the U.S. Department of Agriculture, Food and Drug Administration, and Environmental Protection Agency.

The Yeutter Institute has begun preliminary briefings with Capitol Hill staff in Washington, D.C., about the group’s findings and will share with trade professionals and other interested groups, as well.

“Convening people who bring a variety of experiences and perspectives to trade policy discussions is core to the Yeutter Institute mission, and that is what we did with this project,” said Jill O’Donnell, Haggart-Work Director of the Yeutter Institute. “It’s important for policymakers to hear from a broad spectrum of voices as they make decisions, and that includes voices representing various aspects of the agriculture industry, as well as those from the Midwest.”

The document also underscores the need to remove trade impediments to be competitive globally. China has launched an initiative to dominate agricultural seed technology and innovation, and the Chinese government has put up roadblocks to approving U.S.-developed seeds in favor of domestic seed development, the report says.

Countries can use the World Trade Organization’s international agreement on sanitary and phytosanitary issues as a baseline to set uniform, science-based standards. Such a step, the report notes, would reduce complexity and complication in global agricultural trade, especially helping developing nations as they work to expand their ag export opportunities.

“The days of (free trade agreements) are not necessarily over forever, but in agriculture, we need transparency and science-based regulatory approaches as much as we need traditional market access,” the report says. Such an approach “is especially advantageous for developing countries that face a more acute need to improve their own productivity to feed their people.”

The report explains that gene editing for crops is an extension, at an accelerated pace, of trait-focused crop breeding used for millennia. “Gene-editing techniques can be a shortcut to a breeding process that occurs naturally,” the report says. “It’s a scientific way to introduce genetic variability, which farmers have been doing for decades. In fact, plant breeding dates back thousands of years to when people first domesticated wild plants.”

In the mid-20th century, Iowa agronomist Norman Borlaug devoted hundreds of hours to the meticulous breeding of wheat varieties and won international plaudits, including a Nobel Prize, for the resulting landmark improvements in crop yields. Modern gene editing for crops uses the same basic scientific method but at a far more efficient pace, the report notes. Such innovation is vital, the report says, to boost crop yields adequate to meet the world’s growing food demand.

Outreach efforts that explain the safety and importance of these scientific techniques are needed to enable further innovation, the report notes.

To read the news release covering the report, click here.

To read the full report summarizing the roundtable discussion held by the Clayton Yeutter Institute of International Trade and Finance at the University of Nebraska-Lincoln, click here.

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Under President Biden, the United States is reinvigorating its trade policy to better confront the major challenges of the 21st century, but key questions remain.

U.S. trade policy—and with it the rules and institutions that constitute global economic architecture—has rarely been static. But over the past five years, beginning with the passage of the U.S.-Mexico-Canada-Agreement (USMCA) and continuing with the Biden administration’s innovative trade initiatives currently being negotiated with partners in Europe, Asia, and the Americas, the future of U.S. trade has never been more open-ended.

Climate, once largely absent from global trade rules and agreements, has vaulted to the forefront of U.S. trade priorities. By contrast, market access, long considered the fulcrum of trade deals, is absent from the Biden administration’s signature trade initiatives in the Asia-Pacific and is being deployed selectively in a sectoral arrangement with the European Union involving steel and aluminum. These new policy directions are occurring against several major shifts in domestic economic policy and global economic governance: 1) a pivot toward industrial policy in the United States driven by three major pieces of legislation—the Inflation Reduction Act, the CHIPS and Science Act, and the Infrastructure Investment and Jobs Act (IIJA); 2) a dramatic turnabout in global attitudes toward supply chain management and the balance between efficiency, resilience, and security in cross-border trade; and 3) the obsolescence of the World Trade Organization (WTO) as a forum for resolving trade disputes.

This issue brief examines some of the key trade initiatives pursued by the Biden administration to date. It then sets out key questions facing U.S. trade policy in a global environment defined by volatility and renewed ambition to tackle the great challenges of the 21st century, such as climate change, inequality, and great power competition.

Overview of key trade initiatives

Over the past two years, the Biden administration has pursued a number of innovative trade initiatives that in different ways aim to redefine the scope and purpose of U.S. trade relations. These initiatives differ both in structure from traditional free trade agreements (FTAs) and also in their substance, most notably in the emphasis they place on climate aims and worker empowerment over tariff reductions.

Variation on a multilateral theme

The United States’ decision not to join the Trans-Pacific Partnership (TPP) it negotiated—now the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)—highlighted the skepticism among policymakers and the American public of traditional trade agreements. This does not mean that the United States should or will step back from multilateral engagement and even direct trade negotiations that could lead to enhanced access to the U.S. market, but it has forced a reimagining of what economic engagement looks like. Four examples of this are already underway in the Biden administration:

• The Indo-Pacific Economic Framework for Prosperity (IPEF): Launched in May 2022, IPEF established a framework for negotiations among 13 nations: Australia, Brunei, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, the United States, and Vietnam. These negotiations aim to establish an updated model of economic engagement across borders. Market access is not on the table, but there are four pillars that offer broad and potentially substantial levels of investment, regulatory alignment, and coordination around industrial standards and supply chains between the United States and participating nations—depending on the specificity of the outcome and its implementation. These pillars are: 1) connected economy, or trade; 2) resilient economy, or supply chains; 3) clean economy; and 4) fair economy. IPEF members may select among the pillars and are not required to agree to all four.
  
  There are two key points to consider: First, the nations associated with IPEF have significant—though not complete—overlap with the nations that negotiated the TPP. This clearly shows that economic engagement in the Indo-Pacific remains a priority for the United States, even if the nature of that engagement has shifted.
  

  Second, and related, the different pillars of IPEF use language that closely resembles previous FTAs without incorporating market access mechanisms—such as tariff reductions—that raised valid concerns on the part of climate and worker advocates in the United States. For example, the “connected economy” pillar seeks to increase and improve trade among the 13 nations by collaborating and coordinating on core issues such as labor rights, environmental protection, transparency in rule-making and regulations, and facilitation measures such as simplifying customs procedures.

• The Americas Partnership for Economic Prosperity (APEP): Since June 2022, the U.S. State Department and U.S. trade representative (USTR) have engaged with partner countries across the Americas—Barbados, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, Mexico, Panama, Peru, and Uruguay—on a similar series of negotiations aimed at producing a similar set of commitments as IPEF. The ongoing consultations have five focus areas: 1) reinvigorating regional economic institutions and mobilizing investment; 2) making more resilient supply chains; 3) updating the basic bargain; 4) creating clean energy jobs and advancing decarbonization and biodiversity; and 5) ensuring sustainable and inclusive trade.
  

  The APEP negotiations do not have as clear of a precursor as IPEF, which can partially explain the interesting collection of nations associated with this effort. Politics and existing trade relations vary among the included nations—though, on the latter, most of the nations included already have existing bilateral trade agreements or frameworks with the United States. With Ecuador, the United States has a Trade and Investment Council. With Uruguay, there is a Trade and Investment Framework Agreement. Barbados is the only nation where there is currently no agreement or framework. The rest have an existing FTA.

• The U.S.- Taiwan Initiative on 21st- Century Trade: Also in June 2022, the United States and Taiwan began consultations over ways to deepen the trade and economic relationship between the two nations. This evolved into official negotiations focused on building out the details listed within the negotiating mandate, which has similar construct and charges as IPEF and APEP—notably, a commitment to focus on core issues related to trade facilitation that could help further open economic doors, potentially in the form of an FTA.
• The U.S.-EU Trade and Technology Council (TTC): Among the Biden administration’s earliest trade-related actions, the establishment of the TTC occurred as part of a broader statement of joint work and commitments between the United States and the European Union. The TTC’s main charge is to foster cooperation in trans-Atlantic trade and investment, specifically focused on emerging technologies and infrastructure.
  

  The just-announced Clean Energy Incentives Dialogue will be a part of the TTC and focused on coordinating incentive programs. The main goals will be to avoid trans-Atlantic trade tensions and to ensure that such programs are mutually reinforcing and do not simply lead to windfall profits for companies that could play the two against each other for more and better subsidies. This type of dialogue is necessary to guard against excessive corporate welfare and keep the focus on clean energy deployment and strong domestic economies.

Trevor Sutton is a Senior Fellow at The Center for American Progress

Mike Williams is a Senior Fellow at The Center for American Progress

To read full report, click here. 

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