The Case for Reglobalization - Roger W. Ferguson, Jr., Maximilian F. Hippold (Foreign Affairs)

 The Case for Reglobalization

Turning Inward Won’t Secure America’s Interests

Roger W. Ferguson, Jr., and Maximilian F. Hippold

Foreign Affairs, January 30, 2025

 

ROGER W. FERGUSON, JR., is the Steven A. Tananbaum Distinguished Fellow for International Economics at the Council on Foreign Relations.

MAXIMILIAN F. HIPPOLD is a Research Associate at the Council on Foreign Relations.

 

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.

How China’s Nuclear Ambitions Will Change Deterrence - Andrew F. Krepinevich, Jr. (The Economist, Hudson Institute)

O mundo será mais instável a 3, ou a 3 e meio (EUA, Rússia, China, UE), do que ele foi a dois: EUA e União Soviética. O desafio nuclear dos três grandes é o de não cair na busca infinita de dissuasão a três, isto é, de um contra os outros dois....

How China’s Nuclear Ambitions Will Change Deterrence

Shifting from a bipolar system to a tripolar one.

Andrew F. Krepinevich, Jr.

China is expanding its nuclear arsenal, from a few hundred weapons to roughly 1,000 by 2030. It may have 1,550 warheads or more by the mid-2030s—the limit agreed to by Russia and America in a deal originally signed between them in 2010. This Chinese buildup is changing geopolitics. The American-Russian bipolar nuclear system, which has dominated the nuclear balance for over half a century, is evolving into a less stable tripolar system that risks undermining long-standing pillars of deterrence and triggering a nuclear arms race.

All this comes as America prepares to modernize its ageing “triad” of nuclear-weapons delivery systems (land-based and submarine-launched ballistic missiles, and long-range bombers). China’s gambit raises questions over how best to proceed, as a tripolar system will erode several critical pillars of deterrence that proved effective in the bipolar system.

One pillar of deterrence, “parity”—a rough equivalence in nuclear forces—has been a cornerstone of all arms agreements between America and Russia over the past half-century. It is rooted in the belief that if neither power enjoys a significant advantage, each is less likely to use its nuclear weapons. As a senior Russian official declared in 2021, parity “stabilizes the entire system of international relations”. The need to maintain parity is particularly important for America, which seeks not only to deter nuclear attacks against itself, but also against crucial allies such as Australia, Germany, Japan and South Korea that lack nuclear forces of their own.

China’s decision to “superpower-size” its nuclear arsenal suggests Beijing seeks nuclear parity with America and Russia. Parity can be enjoyed by both rivals in a bipolar system. But it cannot be achieved in a tripolar system, because it is not possible for each member to match the combined arsenals of its two rivals. Any attempt to do so risks triggering an arms race with no possible end state, or winner.

A similar problem exists with respect to another pillar of the bipolar system, known as “assured destruction”. It holds that deterrence is strengthened when a country’s nuclear forces can survive an all-out surprise attack and still retain enough weapons to inflict unacceptable damage on its opponent’s society in a retaliatory strike. During the cold war one American estimate concluded that 400 weapons would suffice as an assured-destruction capability against such an attack by the Soviet Union.

But what about maintaining an assured-destruction capability against both Russia and China? America will need a substantially larger cache of weapons so that a surviving force could provide an assured destruction capability in a tripolar system. As with maintaining parity, this state of affairs could cause Moscow and Beijing to build up their arsenals too, resulting in an open-ended arms race.

Some argue that maintaining parity and assured destruction does not matter much, noting that China maintained a “minimal” nuclear deterrent of a few hundred weapons for decades. But when it comes to nuclear weapons, it seems Beijing has never been comfortable being a distant third to Russia and America. Others say that half of America’s deployed nuclear weapons could be placed on submarines, which are exceedingly difficult to detect. But this assumes that America’s submarines will remain undetectable over service lives lasting half a century, despite the proliferation of increasingly advanced detection technology. It also ignores the fact that, at any given moment, roughly half of American submarines may be in port where they are not stealthy sharks, but sitting ducks.

Although the shift from a bipolar to a tripolar nuclear system risks destabilizing the fragile balance of power, we have at least some understanding of how things will change. Yet we are only in the early stages of thinking through the tripolar system’s characteristics and their implications. A similar intellectual enterprise early in the bipolar era by some of the West’s best strategic thinkers paid great dividends for America’s security, and that of its allies. This kind of effort is needed now.

Fortunately there is time for this, as it will take the better part of a decade before China reaches the force levels of America and Russia. There is no need to rush pell-mell into new arms-control agreements or to expand America’s arsenal. The first step is to understand the dynamics of a tripolar nuclear system and what they mean for security. Only then should America consider whether or not, for example, to sign a follow-on agreement to the New START treaty (the Russian-American deal limiting each side to 1,550 warheads) when it expires in 2026.

America should keep its options open and its powder dry. This means energetically pursuing the administration’s plans to modernize the country’s triad of nuclear delivery systems until America has a clearer picture of how best to ensure its security in a tripolar system. The modernization program, even in its most expensive years, would probably consume less than 7% of the defense budget.

Modernization creates the possibility for serious negotiations with the Chinese and the Russians, who are already modernizing their nuclear forces. They will have far less incentive to negotiate if America allows its triad to age into obsolescence.

Proceeding with triad modernization will also enable America to expand its arsenal should China and Russia blow past the New START treaty’s 1,550-warhead limit. Exercising this option will require a “warm” industrial base with active production lines. As the Pentagon is discovering after transferring large quantities of munitions to Ukraine, its inability to boost production to meet unanticipated needs risks compromising America’s security, and that of its allies. Hence the importance of triad modernization as the best way to hedge against an uncertain future.

Read in The Economist.