Economy and national security: US foreign economic policy under Trump and Biden

Abstract

The United States sees the rise of authoritarian China as the primary risk to its national security and the global order. US foreign policy views the economy across party lines as being part of "national security" - especially vis-à-vis China. In its competition with China, the United States is increasingly resorting to coercive economic instruments, some of which can also apply to companies in third countries. These are primarily tariffs, financial sanctions as well as export and investment controls. Industrial policy, including large-scale subsidies, complements these defensive economic measures. US allies and economic partners see both coercive economic measures and industrial policy as challenges. Biden's customised technology controls ("small yard, high fence" approach) are being met with scepticism concerning their scope, practi­cability and effectiveness. Biden's new industrial policy was seen as a risk to the economic base of the European Union and was introduced at a particularly bad time - when European industry is struggling most with energy price increases and rising production costs. In this situation, the European Commission has rightly initiated a process to focus on the EU's own vulnerabilities and to strengthen the coordination of external economic policy decision processes beyond trade policy. Regard­less of the outcome of the US presidential election in 2024 - and in order to reduce dependence on an authoritarian China - the European Commission and the governments of the member states should work together with companies to further develop de-risking strategies and to control critical technologies. The Commission's recently published package of measures on economic security is an important step in this direction. The next European Commission should set up an Economic Security Coun­cil to independently assess issues relevant to the EU's security and economy and enable faster and better informed decisions by the member states. (author's abstract)