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Editor’s note: This article is the second in an 11-part series examining how the United States should organize, lead, and integrate economic statecraft into strategy, defense practice, and the broader national security ecosystem. This special series is brought to you by the Potomac Institute for Policy Studies and War on the Rocks. Prior installments can be found at the War by Other Ledgers page. 

Who actually runs America’s economic statecraft?

The answer matters because in today’s great power competition, national security increasingly hinges on economic decisions made across a sprawling federal system — and often outside government altogether.

At its core, economic statecraft refers to the deliberate use of the government’s economic policy tools and authorities to shape the behavior of commercial actors in ways that produce, mitigate, or manage national security externalities. Firms, not states, are the actors conducting global economic activity. The consequences of their transactions — from investment to supply‑chain structuring — often create strategic ripple effects. States can use government policy tools to intervene to align private incentives with national security priorities. This is the essence of contemporary economic statecraft.

What are the roles and responsibilities of the numerous U.S. government players involved in exercising economic statecraft authorities? This discussion about institutional architecture begins by offering a straightforward way to categorize the many authorities associated with economic statecraft. It then maps the landscape of key U.S. government players in this space before closing with several suggestions for how economic tools of national power can be used more effectively.

Traditionally, U.S. policymakers have understood and organized economic statecraft through the lens of the various tools in a toolkit, including sanctions, export controls, tariffs, development aid, and critical‑infrastructure investment. But this is not a strategically coherent approach. The number of tools is almost infinite, and the relevant authorities are legion. A better way to organize this conceptual landscape is by the strategic ends that economic tools of national power can be used to pursue. This begins with adopting a common definition of economic statecraft that supports the development of doctrine. This adoption should transcend interagency boundaries. It can serve as the basis for improving cross-silo communication as well as building out planning capacity and analysis related to economic statecraft. A serious effort to improve how we conduct economic statecraft might also involve institutional and process redesign. Perhaps most significantly, we should invest in the human capital pipeline of talented individuals capable of operating effectively across both the private and public sectors. Our higher educational system needs to begin developing the skills and knowledge for a new generation of economic statecraft professionals. The way to begin is by clearly articulating the ends to which economic tools may be applied.

The Four P’s of Economic Statecraft

The United States is a rule-of-law system and our economic statecraft institutional architecture reflects that transparent formality. When the government seeks to engage in economic statecraft, it acts through explicit “authorities”: legislation, executive orders, statutes, or other legal and regulatory capacities that are often exercised by specific parts of the federal government.

Most of these authorities can be grouped into four kinds of activities:

Promote describes targeted manipulation of incentives facing firms and actors that has the effect of advancing the opportunities of U.S. companies, investors, institutions, etc.

Protect deals with government intervention designed to shield firms, industries, sectors, etc. from the market outcomes and commercial trends that have produced or may be producing outcomes that harm U.S. security. This includes measures traditionally considered “protectionist.”

Prevent describes government actions that neutralize, block, remediate, or address acute (often discrete, specific) economic activities that threaten national security. This strategic effect is generally reactive and often involves specifically tailored measures (like Committee on Foreign Investment in the United States reviews).

Punish involves manipulating the economic levers designed to cause harm, reduce capacity, or undermine the target. Unlike the other three P’s that often include an instrumental element to their strategic objectives, punishment seeks to inflict economic damage as an end in itself.

These four P’s capture most of the ways the U.S. government conducts economic statecraft. Broadly adopting this framework and a private sector-centric approach to economic statecraft can help move the U.S. government toward an official, common operating picture.

Who’s In Charge?

The current institutional landscape responsible for U.S. economic statecraft is sprawling. More than 1,400 offices spread across 13 departments, and 10 federal agencies share authorities and tools relevant to managing the economic dimensions of national security. This dispersion poses significant challenges. Agencies rely on legacy systems and approaches built for earlier eras and threat environments, reducing their ability to respond cohesively to today’s challenges. Communication gaps between often siloed departments further complicates planning and implementation. There is a real need to develop a coherent interagency conceptual approach to economic statecraft that is doctrinally rigorous and includes planning and analysis capabilities that do not exist today.

The system tends to look upward for clear direction and instruction. Economic statecraft capabilities generally remain dormant until ordered into action by the White House or a proactive Department of the Treasury, State, Defense, or Commerce secretary. Although this passivity is somewhat understandable, the aggregate result is a tendency toward inertia and siloed economic statecraft in the face of myriad and complex challenges.

At the center of the U.S. government economic statecraft apparatus sits the Executive Office of the President that nominally coordinates cross‑government economic statecraft activity through the . The National Security Council, however, is structurally inclined toward crisis response, limiting its ability to serve as a long‑range integrator of economic statecraft. Other components within the Executive Office of the President — including the National Economic Council, the Office of Science and Technology Policy, the Office of the U.S. Trade Representative, the Office of Management and Budget, and the Office of the National Cyber Director — can also play significant roles frequently bringing distinct institutional perspectives into the process.

Interagency integration of economic tools has typically been channeled through a hierarchy of Policy Coordinating Committees, Interagency Policy Committees, and their working subgroups and Deputies Committees. These bodies often focus on specific issues or policy challenges, convening relevant departments when a decision or coordinated strategy is required. Yet even this structure tends to be reactive and fragmented rather than proactive, sustained, and strategic.

The Big Four (and Everyone Else)

Beyond the White House, there are four key departments that have typically been involved in leading various aspects of economic statecraft: the Departments of the Treasury, Defense, Commerce, and State. Improving information flows across these functional silos of economic statecraft would enhance the system’s ability to coordinate and marshal the various capacities toward more unified strategic objectives.

Within the Department of the Treasury lie many of the government’s most consequential economic statecraft authorities. Treasury houses the Office of Terrorism and Financial Intelligence, the Office of Foreign Assets Control, and the Financial Crimes Enforcement Network — agencies central to sanctions implementation, counter‑illicit finance efforts, and financial‑system security. Other Treasury offices track international markets, development finance, and multilateral institutions. While Treasury plays an indispensable economic statecraft role, its institutional culture traditionally emphasizes macroeconomic stability and financial‑system integrity rather than a strategic or security‑driven mindset. This can create dissonance when economic tools must be applied with geopolitical intent.

The Department of Defense represents another major player in economic statecraft. Although its authorities focus primarily on protecting defense missions and the defense industrial base, it brings advanced planning capacity, deep technical expertise, significant budgets, and a threat‑oriented strategic culture. Key Defense entities include the Office of the Under Secretary of Defense for Policy, the Defense Advanced Research Projects Agency, the Defense Technology Security Administration, and the offices responsible for elements of research, engineering, and acquisitions.

The Defense Department also has more explicitly economic statecraft-oriented components like the Office of Strategic Capital and the Office of Global Investment & Economic Security. A future article in this series will focus on additional Defense Department concepts like the Economic Warfare Operations Capability and the Economic Defense Unit. The Office of Global Investment and Economic Security evaluates national security risks associated with global transactions, serves as the Defense Department’s point of contact for the interagency Committee on Foreign Investment in the United States, assesses mergers and acquisitions affecting defense supply chains, and develops mitigation strategies for transactions deemed risky. It also participates in interagency bodies such as Team Telecom and contributes to antitrust reviews conducted by the Department of Justice and the Federal Trade Commission. Beyond domestic responsibilities, the Office of Global Investment and Economic Security collaborates with U.S. allies to strengthen and coordinate industrial‑base resilience efforts across partner countries.

The Department of Commerce also plays a central role in economic statecraft due to its control over export regulations, technology governance, and a host of other authorities. Its Bureau of Industry and Security administers export controls and maintains the Entity List, while the Export Enforcement Bureau and the Office of Export Enforcement investigate violations. Additional Commerce components — such as the International Trade Administration, the Bureau of Economic Analysis, and the National Institute of Standards and Technology — contribute analytic capacity, standards leadership, commercial promotion, data aggregation, and regulatory tools. Commerce wields many of the authorities central to technology‑focused economic statecraft, though its traditional commercial‑promotion culture can sometimes be in tension with the strategic imperatives of security‑driven economic statecraft policy.

Finally, the State Department functions as a natural integrator across many dimensions of economic statecraft by virtue of its diplomatic role. Its Bureau of Economic and Business Affairs works globally to support U.S. companies, promote foreign investment into the United States, and deploy economic tools to constrain adversarial actors, including terrorists, corrupt officials, and human‑rights abusers. Embassy teams — including ambassadors, commercial officers, Treasury attachés, and State Department economic officers — engage directly with foreign governments and businesses, often serving as frontline practitioners of American economic statecraft.

An interesting innovation in State’s approach to economic statecraft has been the deployment of Deal Teams, designed to mobilize interagency resources to support U.S. commercial competitiveness abroad. These teams help U.S. firms compete in strategic sectors by coordinating feasibility studies, financing packages, technical assistance, and diplomatic engagement. Operating across posts worldwide and supported by a central Washington‑based team, Deal Teams connect U.S. commercial activity with broader strategic objectives while leveraging the full interagency toolkit of the U.S. government.

In addition to these “big four” economic statecraft departments and their associated offices, there are numerous other departments and agencies (e.g., the Federal Reserve, Department of Transportation, Export-Import Bank, Federal Communications Commission, National Science Foundation, Commodity Futures Trading Commission, Department of Agriculture, Federal Trade Commission, Department of Energy, etc.) that might also own more specialized components of the economic statecraft responsibilities. Secondary and independent agencies can play substantial roles, but their contributions are rarely synchronized within a broader strategy.

Beyond these executive branch players, Congress acts as an important but structurally challenged participant. Legislative committees receive disparate information, and jurisdiction is splintered across multiple committees, complicating coherent oversight and strategic alignment. It is not clear that Congress is appropriately organized or institutionally prepared to effectively legislate on (or for oversight of) economic security challenges given its current jurisdictional committee lines. Economic statecraft issues need a defined path for legislation, oversight, and funding that currently does not exist in Congress. An institutional change may be in order, either by standing up a new committee with the appropriate jurisdictional and oversight authority to address the transcendent nature of economic statecraft challenges, or by establishing a coordinating body for leaders of standing congressional committees with jurisdictional and oversight interests to raise, analyze, prioritize, and act on such matters. Contemporary economic statecraft is still quite nascent for the federal government. Much of this terrain is unprecedented. The practice of economic statecraft is likely to continue to be somewhat experimental. During this period of maturation, we should be flexible in our willingness to experiment and deliberate in our evaluation of what is working and what should be adjusted.

The institutional landscape of U.S. economic statecraft is highly fragmented. The authority to influence commercial behavior in support of national security is distributed across numerous departments — each with unique cultures, priorities, and processes. The challenge and opportunity ahead lie in forging a more coherent and strategically aligned system that can better coordinate tools, communicate priorities, and engage effectively with the private sector. We should innovate our government institutional design to facilitate more effective economic statecraft. As the economic dimensions of national security continue to expand — from technology competition to supply‑chain security to financial‑system resilience — the need for integrated, modernized processes will only grow more urgent.

In addition to this institutional landscape, there are two high-profile standing interagency coordination processes that deserve attention: the Committee on Foreign Investment in the United States and the export control regime.

Committee on Foreign Investment in the United States

The Committee on Foreign Investment in the United States plays a central role in safeguarding U.S. national security by reviewing transactions that involve foreign investment or real estate acquisitions by foreign persons. The committee operates as an interagency body chaired by the Department of the Treasury, which oversees these reviews through its Office of Investment Security. Its core mandate is to identify and mitigate national security risks arising from foreign access to U.S. businesses, assets, technologies, or sensitive locations.

The Committee’s authority derives primarily from Section 721 of the Defense Production Act of 1950, as amended, and is implemented through Executive Order 11858 and regulations detailed in Title 31 of the Code of Federal Regulations. More recent presidential direction, including Executive Order 14083 issued in Sept. 2022, expanded and clarified the factors that the Committee on Foreign Investment in the United States considers, particularly in areas such as supply‑chain security, sensitive data, and technological leadership.

The committee’s work depends on coordinated analysis by the Department of the Treasury, the Department of Defense, the Intelligence Community, the Department of Commerce, and other agencies. The Foreign Investment Risk Review Modernization Act of 2018  marked the most significant update to authorities in decades, broadening jurisdiction to include certain non‑controlling investments and specific real estate transactions.

These efforts sought to modernize the process in response to emerging risks, but challenges remain. For example, the committee acts preventatively but only on a case‑by‑case basis, making it difficult to keep pace with the quantity of rapidly evolving foreign‑investment threats. The system’s reactive and bespoke approach can get overwhelmed and can miss activities, prompting calls for mechanisms to more easily clear benign and block clearly illegitimate transactions.

Export Controls

Export controls govern the transfer of specific items, technologies, and services that may pose national security risks if provided to certain actors or destinations. The process begins with identifying an item’s technical attributes and intended use, then classifying it under the appropriate Export Control Classification Number within the Commerce Control List, which determines the level of control required.

The Export Administration Regulations cover dual‑use, commercial, and less‑sensitive military items. Even low‑tech goods may require licensing depending on the destination, end user, or end use. The Bureau of Industry and Security evaluates four key factors to determine license requirements: what is being exported, where it is going, who will receive it, and how it will be used.

Effective export‑control administration requires extensive interagency coordination led by the Department of Commerce and involving the Departments of Defense, State, Treasury; intelligence agencies; and others. Export controls were initially designed during the Cold War to prevent the transfer of military technology to adversary nations. The expanded application of export controls in the semiconductor realm as part of a larger effort to hamstring China’s technological prowess and maintain U.S. leadership over key dual-use technologies of the future has strained existing institutions like the Export Control Review Committee. We are trying to do a lot of economic statecraft using interagency institutional coordinating mechanisms that do not scale well.

Where We Go from Here

As we seek to enhance and leverage American economic power, we should do so in a way that is politically and economically durable and redounds to our considerable natural strengths. We also should be humble and realistic as we try new efforts to improve economic statecraft. Much of this is uncharted waters for the United States.

William Norris, Ph.D., is director of the economic statecraft program and an associate professor at the Bush School of Government and Public Service at Texas A&M University.

**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: United States Department of Commerce via Wikimedia Commons.