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Editor’s note: This article is the eighth 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.
In Sept. 2010, following a collision between a Chinese trawler and Japanese coast guard vessels near the Senkaku Islands, Chinese authorities halted shipments of rare earth minerals to Japan. The move disrupted supply chains for everything from consumer electronics to advanced defense systems, driving immediate shortages and cost spikes.
At the time, many treated the episode as a discrete diplomatic flare-up. In retrospect, it was an early demonstration of something larger: that economic interdependence could be weaponized, and that the systems underpinning global commerce were becoming instruments of strategic competition.
When I joined Business Executives for National Security as CEO two and a half years ago, following a career in the U.S. Air Force that culminated in commanding Air Force Global Strike Command, I thought I understood the challenge. Like many who have spent their careers in government and uniform, I assumed much of the task would involve reconnecting business leaders to national security risks they had grown too distant from and helping the government understand more effective tools used in the private sector. The implied theory of change was straightforward: Government defines the problem and the private sector helps deliver the solution.
I have since come to think that diagnosis is incomplete — not because it misidentifies the problem, but because it misidentifies the nature of the relationship now, in an era increasingly defined by economic statecraft.
Over years of conversations with business leaders, I have come to understand that many are working from a strategic model that does not fit with the risks, exposure, and pace of this environment. In a world shaped by globalization and the assumption that commerce and stability reinforced one another, broad geopolitical risk was not understood to fall within the ordinary scope of fiduciary responsibility.
That environment has changed. In a logic reminiscent of the Cold War, the United States has reentered a period in which economic endurance and stability is central to national security. Today, the terrain of competition runs through supply chains, energy systems, financial infrastructure, communications networks, and technology ecosystems. Private firms are instruments and arenas of that competition, operating directly on the front lines. They are not indifferent to the risks, to be clear, but they lack the full story of what’s at stake and the resources and knowledge to understand how to respond.
This new environment does not require firms to adopt a foreign policy agenda or subordinate commercial judgment to government priorities. It requires something more practical: a recognition that the strategic risks now confronting the United States and the operational risks now confronting American firms are increasingly one and the same. A shared understanding of that exposure is the only foundation on which a serious response, from the U.S. government and private sector alike, can be built.
For most of the postwar era, the alignment between American commercial and strategic interests could be taken largely for granted. The United States built the modern international economic order — Bretton Woods, the dollar-denominated financial system, the architecture of global trade — and the rules of that system reflected and reinforced American power. Firms pursuing profit within it were, in a meaningful sense, also reinforcing the structure that protected them. The assumption underlying this era of increasing globalization was that economic interdependence, including the integration of China into the global economy, ran in roughly the same direction as American interests.
That assumption no longer holds. The United States is no longer the most effective actor wielding economic tools to achieve its strategic ends. Competitors, most notably China, are applying economic pressure in ways that are often more opaque, more targeted, and more integrated with national strategic objectives. American firms that have built their strategies around the assumptions of the prior era will find themselves caught between foreign economic coercion on one side, and a U.S. policy environment increasingly oriented toward de-risking, friend-shoring, and the reconstruction of domestic industrial capacity on the other.
The telecommunications industry shows most clearly what happens when one side figures that out before the other.
The United States invented cellular technology and — along with allied firms — led telecommunications infrastructure for decades. That position eroded over the course of two decades not because American firms were out-innovated, but because they played by the rules of the existing commercial market: If firms remained competitive on commercial terms, the national interest would take care of itself.
China operated from a different premise. For Beijing, telecommunications was a strategic industry tied directly to technological sovereignty, industrial power, and long-term geopolitical leverage.
Subsidized by the state, provided with cheap credit, and shielded from the normal disciplines of competition through protected access to the state market, Huawei was able to both absorb Western technology and vastly undercut global market prices. Beijing extended this advantage beyond Huawei’s own balance sheet, as state-owned lenders extended billions in financing directly to Huawei’s customers, effectively making it easier for foreign buyers to choose Huawei over any Western alternative. Huawei, accused by the U.S. government for years of constituting a possible security risk, now holds roughly 30 percent of the global market — a larger share than the next most popular vendors, Nokia and Ericsson, combined.
The failure here was not that American firms were uniquely incompetent or that American engineers were outclassed. Many of these companies were highly capable and, in narrow business terms, often acting rationally. But decisions that were individually rational inside the commercial logic of the time — offshoring production, competing aggressively on cost, prioritizing financial efficiency over manufacturing depth — became collectively corrosive when applied inside a contest that was never purely commercial to begin with. The problem was that they were operating within a strategic framework that no longer matched the environment, while their principal competitor was operating within one that did.
Ten years ago, it was still possible to argue that parts of the American business community were naive about China’s motives, methods and long-term strategic ambitions. That is much less true today. In my experience, few business leaders are under any illusion about the nature of the Chinese system or the risks of deep dependence on it. What many are wrestling with is not recognition, but response.
Untangling from China is not a matter of simply waking up and walking away. For many firms, it is a board-level decision governed by legally binding fiduciary obligations, supply chain realities, sunk capital, customer exposure, and the practical limits of how quickly production can be relocated without damaging the enterprise itself.
The range of private sector responses reflect that reality. Some firms have concluded they will remain until the environment becomes untenable. Others want to reduce exposure but cannot do so responsibly without a viable alternative. Still others are actively moving, only to find that unwinding years of integration takes years more.
The strategic problem, then, is no longer primarily one of awareness. It is that many firms remain structurally entangled in a system they increasingly understand to be risky and lack a clear framework for thinking about what responsible adaptation actually requires. Washington will eventually have to build that framework, but firms cannot afford to wait for it to be finished before they begin to act.
That adaptation starts with redefining corporate self-interest. The central question is no longer simply what maximizes efficiency under stable conditions. It is what protects the long-term viability of the enterprise in an environment where geopolitical exposure and strategic dependency increasingly shape business outcomes. For most boards and executive teams, this does not require an entirely new way of thinking: It requires expanding familiar categories of risk to reflect the environment as it actually exists.
Four of those categories deserve particular attention.
The first is input dependency. If a firm relies on a single region, supplier base, refining process, software stack, or politically exposed market for inputs it cannot easily replace, it needs to move beyond asking if the dependency is profitable under normal conditions, but whether it is tolerable under stress.
The second is market access as leverage. A company that builds deep revenue dependence in a market where access can be restricted as an instrument of statecraft has a pressure point that can be used not only against the firm, but against broader U.S. policy choices in moments of crisis.
The third is infrastructure and ecosystem concentration. As competition increasingly runs through the systems on which commerce depends — communications hardware, cloud architecture, logistics nodes, and energy reliability — dependence on infrastructure becomes a material strategic liability. The issue is no longer simply who your customer is or where your factory sits, but what larger system you are implicitly betting the enterprise on.
The fourth is time horizon, which relates implicitly to each of the above considerations. Some parts of the private sector already manage this well — banks, insurers, and internationally exposed firms often have more developed instincts for political and systemic risk. But that adjustment is far from universal. In many other firms, greater analysis and strategic inquiry are still needed to properly incorporate the broader risk environment into the enterprise’s overall calculus. The issue is not simply the pace of decision-making, but whether the firm is fully accounting for the strategic trends and systemic exposures that increasingly shape its operating environment.
None of this means firms must subordinate commercial judgment to government direction or treat national objectives as a substitute for fiduciary duty. It means the opposite: Boards and executive teams should update their own definition of prudent stewardship to reflect the strategic environment. The market — for now — does not consistently price these risks, which is why firms cannot wait for market signals to tell them when recalibration is necessary. The firms that adapt fastest will be the ones that understand where strategic risk sits inside their own business model and move early enough to preserve optionality before events remove it for them.
None of that adaptation happens in isolation. Every significant investment, industrial commitment, or supply chain decision of strategic consequence ultimately requires a stable and predictable policy environment — one that only Congress can fully provide. That makes the broader relationship and alignment between Congress, the military, and industry foundational to America’s response to economic statecraft.
When the relationship between these three entities works in harmony, the results are visible. One of my last roles in the Air Force was overseeing the acquisition of the B-21 Raider. The B-21 is both on schedule and maintaining unusual cost discipline — an outcome rare enough in major defense acquisition to surprise even seasoned observers. The success of the programs is a direct result of Congress, the Air Force, and the relevant prime contractors maintaining genuine alignment: shared visibility, shared tolerance for risk, and clear prioritization, with everyone in the same room solving the same problem.
The challenge today is that the terrain of competition has expanded well beyond the traditional defense industrial base, while the mechanisms through which all three parties interact have not kept pace. Closing that gap is a shared problem.
For Congress, it means developing visibility into how modern firms actually allocate capital and assess risk to ensure that policy is grounded in how these systems work in practice. Incentives, tax structures, and capital formation mechanisms need to be oriented toward long-term productive capacity and national security interests, not just short-term efficiency. Permitting and regulatory timelines should be reconciled with the speed at which strategic competition is unfolding. For the military, it means translating operational requirements into terms that connect clearly to the commercial ecosystems on which readiness increasingly depends. For industry, it means engaging with transparency about where dependencies exist, how long transitions take, and what tradeoffs are unavoidable. And, for all three actors, it requires a more deliberate and sustained dialogue — rather than episodic engagement during crises — grounded in shared exposure to strategic risk.
Congress is, after all, the closest thing this government-industry partnership has to a corporate board. It sets the conditions — through policy, incentives, and capital — on which the entire three-party alignment depends. When it is a well-informed partner, the system functions. When it isn’t, Congress risks exercising authority without sufficient visibility into the systems it is trying to shape.
Neither the scale nor the complexity of these challenges should be cause for fatalism. Americans have a habit of rising to meet moments like this one. The architects of the post-World War II economic order were not responding to a world they fully understood, but they nonetheless built forward, leveraging American economic weight, industrial ingenuity, and institutional confidence to shape a system that reflected U.S. interests and values. The task now is not to replicate that era, but to recover the strategic discipline that made it possible.
What that discipline produces, when firms and government develop a genuinely shared picture of the strategic environment, is a national security industrial base broad enough to reflect how power is actually generated — and protected — in this age of economic statecraft.
That broader understanding rests on three mutually dependent pillars. The first is the classic defense industrial base: the specialized capacity to produce munitions, submarines, combat aircraft, and missile defense, and the industrial depth required to sustain military operations over time.
The second is the dual-use technology and manufacturing base, where the most strategically consequential capabilities of this era are emerging and scaling. Software, autonomy, microelectronics, advanced manufacturing, and AI-enabled tools may not originate inside the traditional defense sector, but they are increasingly central to military advantage and economic power alike. They are best generated not through tightly managed government structures, but through a dynamic private sector capable of moving faster, iterating more rapidly, and scaling in ways the traditional defense system often cannot.
The third is resilient infrastructure, the physical and digital systems on which both pillars depend. This includes energy grids, ports, logistics networks, communications architecture, cloud infrastructure, and undersea cables. They are the connective tissue that allows the other two pillars to function at all.
None of these pillars stand alone. A world-class defense industrial base without dynamic dual-use innovation becomes too narrow, too slow, and too expensive. A vibrant technology sector without resilient infrastructure remains exposed and brittle. Infrastructure alone, no matter how hardened, cannot substitute for either. Each depends on the others — which is precisely why the alignment between firms and government matters as much as any individual investment or policy. And that alignment has to hold not just in periods of competition, but also under targeted, adversarial pressure.
That pressure is not abstract. For much of the post-Cold War era, the United States operated as though the homeland could be treated as a secure rear area: a stable base from which power could be projected without meaningful contestation. That sense of sanctuary is increasingly under duress. Adversaries now have multiple ways to impose costs and generate pressure well below the threshold of conventional attack through economic coercion, supply chain disruption, and sustained pressure against these three pillars, on which military readiness and economic continuity depend.
The same vulnerabilities that leave companies vulnerable to missing their profit margins are those that threaten U.S. security at home. An adversary that believes it can impose enough economic pain to limit U.S. options is a credible threat to U.S. security — in addition to firms that would be the first-order victims.
In that environment, resilience is not only a defensive virtue, but also a strategic signal. A country that can absorb disruption, maintain production, and keep its private sector functioning under pressure is harder to coerce and less likely to be tested in the first place. Deterrence, in this sense, now includes deterrence by resilience: not just the capacity to prevail in a fight, but the demonstrated ability to absorb economic pressure without altering course.
The objective is not to “out China” China, or to replace the dynamism of the American private sector with a centrally planned alternative. It is to recognize that the United States now needs a national security industrial base broad enough to reflect how power is generated in this century and resilient enough to endure the kinds of pressure that will increasingly define strategic competition.
If shared strategic risk is the foundation for a new alignment between government and business, then deterrence through resilience is the condition that allows that alignment to hold under stress. Without it, the very systems on which American power depends become vulnerable to coercion before a crisis ever becomes a war.
Gen. (ret.) Timothy Ray is the chief executive officer of Business Executives for National Security. He last served as the commander of the Air Force Global Strike Command and Commander of Air Forces Strategic-Air, U.S. Strategic Command.
Image: Midjourney
