After years of promoting globalization and free trade agreements, in the past decade, U.S. policymakers have coalesced around an economic agenda that emphasizes industrial policy and supply chain security. This pivot was in large part a reaction to the downsides of economic interdependence. Although the overall economic benefits of globalization are undisputed, they have been unevenly distributed. In many parts of the United States, unfettered international trade brought a decline of domestic industry and the loss of well-paid manufacturing jobs. Entire regions, especially rural and predominantly industrial ones, were left behind. The supply chain issues that emerged during the COVID-19 pandemic further highlighted the dangers of interdependence. As a result, both Republicans and Democrats have turned to industrial policy and trade restrictions to create more domestic manufacturing jobs and reduce the United States’ reliance on other countries.
But U.S. policymakers risk overcorrecting. By adopting a narrow focus on economic security, they could miss opportunities to court countries in the global South that want economic relationships with the United States. And with great-power competition heating up, now is not the time to look further inward. Instead, the United States needs to seek out ways to reinforce its existing relationships and build new ones in regions of strategic importance.
The Trump administration needs a policy that can balance both economic and geostrategic objectives. It must initiate a process of “reglobalization,” investing in industries that support U.S. supply chains in countries in the global South. Such measures are not the broad, often unpopular, and sometimes harmful free trade agreements of past U.S. administrations. They are targeted foreign investments that ultimately boost domestic manufacturing of high-end products. By adopting this approach, the new administration could both reindustrialize the United States and strengthen the web of partnerships it needs to compete with China, Russia, and other strategic rivals.
LOSING GROUND
A global power shift has changed the terms of U.S. alliances. The post–Cold War unipolar world, dominated by the United States, is becoming a multipolar one. No longer do countries naturally gravitate into Washington’s sphere of influence. Many countries, especially in the global South, are increasingly comfortable engaging with several major powers simultaneously. Vietnam, for instance, is a U.S. partner that also maintains close ties with both China and Russia. India is a member of the Quad (Quadrilateral Security Dialogue)—a grouping that includes Australia, India, Japan, and the United States—and is considered by Washington to be a strategic partner in countering Chinese influence in Asia. But India also works closely with Russia, including by purchasing discounted Russian oil and thus indirectly funding Moscow’s war in Ukraine. Turkey is a U.S. treaty ally as a fellow member of NATO, but it also signed a deal in 2018 to purchase a Russian antimissile defense system and more recently requested to join BRICS, the group whose early members included Brazil, Russia, India, China, and South Africa.
The United States and its closest allies, collectively, no longer represent the world’s largest economic bloc. The newly expanded BRICS, which now boasts ten members (the most recent additions are Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates), account for more than a third of global GDP, surpassing the share of the G-7, which includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. And as other countries build international partnerships, they are driven not by a sense of shared values but by economic benefits. Many African countries, for instance, have recently increased their economic ties not only to China through its Belt and Road Initiative but also to Russia, Turkey, and the United Arab Emirates, which have made investments in ports, clean energy, mining, and more.
The United States, meanwhile, has increasingly turned its attention to domestic priorities. Washington is focused on revitalizing former manufacturing hubs and building capacity at home. There is bipartisan agreement on the need to create new manufacturing jobs, especially in parts of the country most affected by deindustrialization and production offshoring. In 2022, the U.S. Congress passed the CHIPS and Science Act, which allocates more than $58 billion to boost domestic production of computer chips and semiconductors, with broad support from both parties.
Trump needs a policy that can balance economic and geostrategic objectives.
Washington is not about to expand its foreign economic engagement with new free trade agreements, either. Neither party has an appetite for such deals, as demonstrated by strong bipartisan objection to the Trans-Pacific Partnership, which led to the U.S. withdrawal from the 12-country agreement in 2017, and stalled negotiations with the EU in 2016 over the Transatlantic Trade and Investment Partnership. President Donald Trump, after renegotiating the North American Free Trade Agreement in his first term, has suggested he might impose 25 percent tariffs on goods from Canada and Mexico ahead of the planned review of NAFTA’s successor, the U.S.-Mexico-Canada Agreement, next year. Tariffs have become a mainstay of U.S. policy, used to protect domestic industries from unfair competition, primarily from China, and to ensure that products vital for U.S. national security are produced domestically. President Joe Biden maintained many of the tariffs on Chinese goods that Trump put in place in his first term, and Biden imposed new import restrictions on Chinese electric vehicles and other green technologies.
If Washington continues to train its focus inward, however, it could jeopardize its ability to build relationships with countries in the global South that could help the United States advance other strategic aims. The same countries are already growing wary of aligning with Washington. The United States’ recent foreign policy missteps and the perception of double standards in its divergent responses to the wars and human suffering in Ukraine and Gaza have damaged the country’s reputation. Many countries have started to look more favorably toward other global and emerging powers, such as China, Russia, or the United Arab Emirates, as a result. With its diminished economic and cultural appeal hampering its ability to forge new partnerships, the United States risks allowing its adversaries to deepen their ties to nonaligned countries in ways that harm U.S. interests.
The consequences are already visible in Africa, where China in particular has made significant inroads. Under its Belt and Road Initiative, China has offered loans to and invested substantial sums in infrastructure projects in countries such as Angola, the Democratic Republic of the Congo, Kenya, Nigeria, Tanzania, and Zimbabwe. Beijing has gained access to ports and natural resources in return. Mining projects in Congo, Zimbabwe, and elsewhere have helped China secure control of almost 90 percent of the global processing of rare earths, which are needed to manufacture computer chips, semiconductors, and batteries. Although African-sourced critical minerals still only account for a moderate proportion of global production, the industry has huge potential. By neglecting to invest in its development, the United States and its allies could miss an opportunity to reduce their dependence on China for access to these resources.
China has similarly expanded its economic influence in Latin America. Through its infrastructure investments, such as a megaport in Peru and a hydroelectric plant in Ecuador, Beijing is now the region’s second-largest trading partner after the United States. And its influence is not always benign: in March 2023, China pressured Honduras to sever diplomatic relations with Taiwan in exchange for economic aid. Beijing has begun to extend its involvement in the region beyond economic ventures, too. In Argentina, for instance, China operates a deep space station that has raised concerns among U.S. defense officials about the possibility it could be used to track U.S. satellites.
TARGETED APPROACH
The Trump administration needs updated strategies to effectively compete with China for influence among nonaligned countries. Building relationships in Africa and Latin America is important not only to secure U.S. access to critical resources but also to increase the number of countries that are willing to help the United States advance its interests. And in the Indo-Pacific region, Washington must create new partnerships beyond its established alliances with Japan, the Philippines, and South Korea to curtail China’s rising economic and military influence.
But to forge those partnerships—as well as strengthen existing ones—the United States must offer economic benefits. As former United States Agency for International Development Administrator Samantha Power said at an event at the Council on Foreign Relations in December, “No matter where I go, no matter what continent, no matter what community even, the message is the same: we want trade, not aid.” The United States therefore needs to ensure that its focus on boosting domestic manufacturing of high-end products does not lead to a wholesale rejection of new foreign economic partnerships. Such partnerships can be mutually beneficial. By investing in industries abroad that can provide inputs for U.S. manufacturing, Washington can both strengthen its supply chains and deepen its ties to pivotal countries in the global South.
The new Trump team should start by identifying the alliances it should strengthen and the countries it should build new relationships with in Africa, Latin America, and the Indo-Pacific region. In Africa and Latin America, this could include countries that are rich in the natural resources used in battery or semiconductor production, such as Chile and Zimbabwe, or are in strategically important locations, such as Djibouti due to its access to the Red Sea. In the Indo-Pacific, the United States should prioritize deepening its partnerships with countries such as Indonesia, Vietnam, and others where it competes with China for economic influence, as well as with Pacific Island nations whose military cooperation could prove useful to Washington in the event of a conflict with Beijing over Taiwan or in the South China Sea.
To forge new partnerships, the United States must offer economic benefits.
Next, the administration should work with U.S. business leaders in critical domestic industries, such as semiconductor manufacturing and car production, to determine the raw or processed materials that can be sourced from priority countries. The U.S. government should then invest in these countries to improve infrastructure and build up industries that can feed directly into U.S. supply chains. The Biden administration’s recent investment in a railway project in Angola followed this logic: the route connects Angola with the Democratic Republic of the Congo and Zambia, facilitating the production of critical minerals used in batteries. But Washington should be making far more of these strategic investments. In Chile, for example, the United States can invest in the copper industry, which is vital for semiconductor manufacturing. It can finance mining projects in Indonesia, which has large reserves of nickel, a mineral used to produce batteries for electric vehicles and other green technologies. In Vietnam, the United States can invest in electronic manufacturing to diversify its supply chains in this sector away from China and Taiwan.
Additionally, the United States can leverage its influence in international financial institutions such as the International Monetary Fund and the World Bank to facilitate lending and investment in U.S. partner countries in the global South. The United States is the largest shareholder of the World Bank Group, and together with its closest allies, such as Germany, Japan, and the United Kingdom, it has an outsized influence when it comes to making policy changes and approving financial assistance packages. Washington could thus push for measures that increase the foreign investment and economic aid to its new or existing partners in the global South, adding to initial U.S. investments and boosting these countries’ long-term economic development. Other U.S. allies, including Japan, South Korea, and European countries, could also benefit from better access to new markets.
This approach is more targeted than the United States’ traditional economic aid, which has primarily focused on grants, humanitarian assistance, and trade programs. It does not just provide economic benefits to U.S. partners in the global South but also meets the United States’ economic and national security needs. With a commitment to reglobalization, carefully crafting trade and investment packages to build relationships with critical countries, Washington can strengthen its domestic industries, protect its supply chains, and enhance the partnerships it needs to advance other national security and geostrategic interests—all at once.