Reducing U.S. Dependency on China While Promoting Global Trade

Abstract: The strategic rivalry between the United States and China is increasingly driving firms in both countries to decouple their supply chains, as both sides can no longer depend on unfettered access to raw materials and components sourced from the other. However, U.S. efforts to reduce dependency on China must begin by evaluating why supply chains became so intertwined in the first place. Doing so will help clarify what types of actions are feasible and which may be difficult to put into practice. As it implements industrial policies and changes its trading patterns, the United States should leverage its strengths in R&D, advanced manufacturing, and dual-use technologies. It should leave space for collaboration with traditional allies in fields where they possess complementary strengths and with the Global South in fields like agricultural or laborintensive production for which it is not suited. Collectively, this will enable the United States to draw on a broader pool of resources and talent and strengthen its economic resilience in the face of geopolitical turmoil.