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In 432 B.C.E., a year before the outbreak of the Peloponnesian War, the Megarians received an unusual decree from the Athenian assembly: They were prevented from accessing the vast Athenian Empire’s harbors and marketplaces due to their alliance with Sparta, a rising empire that posed a clear threat to Athens’ hegemony. While the official reasoning is lost to history, many scholars believe that Athens, fearful of the rising great power, used sanctions to force Megara’s economic decline.

So began the deliberate use of economics as a tool of statecraft.

In the millennia since, economics remained an important enabler of state power. Yet over the course of the 20th century, the tools of economic statecraft transformed in response to globalization and its gnarled, twisted webs of overlapping capital markets, supply chains, multinational commercial banks, and international organizations. Economic statecraft has quickly become more critical than ever.

Since World War II, the United States has shaped both global governance and the international economic order, as it boasts the world’s most powerful economy. The U.S. dollar serves as the world’s reserve currency. Together, America’s strong economy and the dollar’s exorbitant privilege have allowed it to unilaterally wield economic weapons against its foes while rarely being the target. Yet that postwar dynamic has shifted significantly in the past decade. This is in part due to “America First” politics, which broadly seeks to renegotiate the terms of U.S. economic engagement with the rest of the world, but also from China’s rise as America’s primary strategic competitor. A manufacturing superpower and the world’s second-largest economy, China’s behavior contradicts its common refrain that it is participating in a win-win “community of common destiny.” Rather, experts believe that China — and arguably the United States — is playing a zero-sum game at the rest of the world’s expense.

China and America each draw their international political power from the strength of their economies and access to capital markets, and throughout the aughts, there was a sense that the two countries could together build a more prosperous world. Yet in the past decade, both countries have begun to exert their economic leverage, and the economic relationship between the United States, China, and the rest of the world has instead become outright coercive. And industry, both directly affected by economic statecraft and critical to its success, is on the frontlines.

In the past several years, China has expanded its economic statecraft toolset: restricting access to critical minerals supply chains, opening up antitrust investigations of U.S. tech companies, ramping up its well-known intellectual property theft (increasingly enabled by cyberattacks), and increasing strategically significant investments in wealthy countries. The United States, too, has expanded its economic statecraft policy options. In addition to maintaining its crippling sanctions regime, it has sought access to critical minerals, tightened some restrictions on foreign investments, introduced new limits on the imports of strategic resources in the defense supply chain, aggressively pursued reindustrialization, and slapped large tariffs on friend and foe alike.

While current economic statecraft policy is at times bewildering, there is no doubt that the cost of losing ultimate economic leverage is high. In America, increased economic pressure from China would lead to higher prices, goods shortages, and ultimately, slow growth. More broadly, it will lead to a more neo-mercantilist and illiberal future. America, and its friends — if they are still friends — will ultimately suffer.

Yet despite an increased reliance on economic tools to accomplish national security objectives and the high stakes, America is unequipped to address China and other threats to its economic security.

Currently, there doesn’t seem to be a whole-of-government economic statecraft policy driving decisions. While economic statecraft assumes a central role in the Trump administration’s 2025 National Security Strategy, the document is short on specifics. Similarly, the Fiscal Year 2026 National Defense Authorization Act contain few allusions to it, with a few exceptions.

The Defense Department has emerged as a potential coordinating agency in focusing heavily on important economic security issues: supply chain vulnerabilities, the availability of critical materials, cybersecurity, and emerging technologies. Efforts to further empower the Office of Strategic Capital and stand up the new Economic Defense Unit indicate that the department is serious about these threats.

Yet the Defense Department has generally been separated from the traditional instruments of economic statecraft wielded by the Treasury, Commerce, and State Departments. Without a more defined role handed to the Defense Department by Congress or the White House, its impact is limited. Such ambiguity within the U.S. government does not send strong demand signals to industry partners, enable strategists to begin developing tools and networks for successful policy, or lay the bedrock for effective inter-agency coordination.

Americans haven’t had to consider a post-liberal world in decades, much less what weaponized interdependence would do to the international economic order. It is perhaps unsurprising, then, that consequential, uncomfortable questions have largely gone undiscussed: What does an economic security doctrine look like for the Defense Department? What agencies or departments own the problem set, and how can they receive funding? How may governments and private industry interact or share business intelligence? How can industry be incentivized to cooperate with the Defense Department? If economic statecraft fits in the Defense Department, what consideration for economic statecraft should be given across the planning, programming, budgeting, and execution process, and who is responsible for coordination and alignment?

America needs a broader strategy, and that starts with an informed conversation. Concerned about the existential stakes of this issue, the Potomac Institute for Policy Studies and War on the Rocks are teaming up to elevate this debate. This special series will seek to answer those questions and more in a series of 11 articles, each building upon the last. While these authors will provide some high-level policy recommendations, they are in no way intended to be exhaustive solutions to complex, billion-dollar problems.

We’re extremely excited to partner with the Potomac Institute on this important effort. The Potomac Institute — a leading science and technology policy research center at the intersection of government and business — has been behind the scenes coordinating these discussions for several years. They’ve brought to bear their network of experts, and other representatives of this small but passionate community, and we encourage you to explore their research on these topics.

This is a perilous time for the United States and its allies, as we all navigate a more uncertain world. The team at War on the Rocks hopes you’ll feel as concerned and inspired by these challenges as we do.

Nicholas Hanson is the chief operating officer of War on the Rocks.

Madeline Field is the assistant editor of Cogs of War, a vertical at War on the Rocks focused on defense technology and the defense industrial base.

**Please note, as a matter of house style, War on the Rocks will not use a different name for the U.S. Department of Defense until and unless the name is changed by statute by the U.S. Congress.

Image: The White House via Wikimedia Commons.