Global Affairs Expert Webinar: American Economic Security and Defense

Heidi Crebo-Rediker, senior fellow at CFR, and Jonathan E. Hillman, senior fellow for geoeconomics at CFR, colead the conversation on American economic security and defense. Carla Anne Robbins, senior fellow at CFR, moderates the discussion.

These webinars provide an opportunity for college and university educators and students to discuss global issues with CFR fellows, Foreign Affairs authors, and other leading experts. To register for future invitations, please complete this form or email [email protected] with your name, title, and academic affiliation. 

Speakers
Heidi Crebo-Rediker
Senior Fellow
Council on Foreign Relations

Jonathan E. Hillman
Senior Fellow for Geoeconomics
Council on Foreign Relations

Presider
Carla Anne Robbins
Senior Fellow
Council on Foreign Relations

Transcript

ROBBINS: Thank you so much, and welcome to the final session of the Fall 2025 Global Affairs Expert Webinar series. And I’m Carla Anne Robbins. I’m a senior fellow at the Council on Foreign Relations. I’m also a longtime journalist. And I’m faculty director of the Master of International Affairs Program at the Baruch College Marxe School in New York. And thank you all for joining us.

Today’s discussion is on the record, and the video and transcript will be available on education.CFR.org, and if you’d like to share them with your colleagues or classmates. As always, CFR takes no institutional positions on matters of policy.

And we’re really lucky to have with us today Heidi Crebo-Rediker and Jonathan Hillman to discuss American economic security and defense.

Heidi Crebo-Rediker is a senior fellow in the Center for Geoeconomic Studies at CFR. And she specializes in international political economy, U.S. economic competitiveness, economic security, and international finance. She also directs the Roundtable Series on Global Political Economy. She served as the State Department’s first chief economist in the Obama administration, advising two secretaries of state on integrating economics with foreign policy and helping launch “Economic Statecraft.” She was also chief of international finance and economics for the Senate Committee on Foreign Relations. And before that she had a very long and successful career in the private sector.

Jonathan Hillman is a senior fellow for geoeconomics at CFR with expertise spanning economic and security issues, including investment, trade, infrastructure, and technology. He has served as a senior advisor to three U.S. Cabinet officials—does that mean you’re trumping Heidi on that?—and held research positions at the Center for Strategic and International Studies and the Belfer Center for Science and International Affairs at Harvard. He’s the author of The Digital Silk Road: China’s Quest to Wire the World and Win the Future and The Emperor’s New Road: China and the Project of the Century. Mr. Hillman was the project director of the recent CFR Task Force on U.S. Economic Security—Winning the Race for Tomorrow’s Technologies, and that’s linked in the background readings you all got. And Ms. Crebo-Rediker was a project observer for the task force.

So welcome, Heidi and Jonathan. Thank you so much for speaking with us today.

So just to give you all a sense of how we’re going to do this, we’re going to chat among ourselves for about fifteen or twenty minutes and then we’re going to open it up to your questions.

So, Jonathan, can we start with you? How do you define the term “economic security”? And what are the global forces that are shaping that definition? Is this a new term? And is it because of COVID, is it because of the competition with China, is it because of evolving technology?

HILLMAN: It’s a—it’s a great question and it’s one that, I guess, is not incredibly easy to answer. A lot is being done by governments, governments intervening in the market much more frequently these days under the banner of national security. And so we can see globally, you know, government interventions in the market going up, and often national security being associated or used to sort of justify those interventions.

This task force, I think, took a very practical approach to this question, which was to say let’s not spend, you know, several months having a debate about exactly how to define the term; let’s focus on a set of objectives that we can agree are important. And so really for the purpose of this task force, the focus on economic security is to preserve U.S. leadership in a set of foundational technologies, and specifically AI, quantum, and biotech. So we’re not saying at all that that is the only way to define this, but as we approached the question it became pretty clear that we needed to pick a scope that would allow us to go deep and come out with some actionable recommendations. And so that’s how we sort of narrowed the focus a little bit.

ROBBINS: Is it a new term, “economic security”? And I just was sort of wondering where it came from. And is it because of COVID and supply chains, or is it just that I wasn’t aware of it before?

HILLMAN: No, I think—look, I think economics has always mattered for national security. Some of the very first estimates of GDP were developed in Europe, and they were used to basically compare the ability of countries to raise and maintain armies, right? So we—you know, there’s on the one hand nothing new about the importance of economics for national security, but I do think that there are sort of recent developments that have brought this to the forefront.

I think COVID in particular was an event that really exposed some vulnerabilities in global supply chains. Much more recently, we’ve seen China weaponizing its control over certain parts of global supply chains, rare earths being one important example. And the—sort of the competition that’s now happening technologically and otherwise has, I think, put a premium on trying to understand where are these vulnerabilities and what do we need to do to address them. So I think that’s sort of what’s giving this a little bit of urgency now, even if economics has always mattered.

ROBBINS: Heidi, I just want to do a teeny bit of history here and then—and then talk to you about the bigger question, about vulnerability. How did you—they create this job for you about economic statecraft? Because that does suggest something new. Can you just give us a—

CREBO-REDIKER: So, yeah, first of all, this is a great conversation and I’m glad we’re having it today.

The concept of economic statecraft was really, I think, as a—as a—you know, a buzz term was unveiled as a strategy at the State Department during the Obama administration. So it was really kind of putting the dots back together between national security, foreign policy, and economics—domestic economic strength, and using the power of U.S. economic statecraft as both a carrot and a stick. And so I think, you know, Jonathan is absolutely correct; a lot of the vulnerabilities that have defined what we are now looking at, economic security and the heightened—the heightened overlay of technology competition which is really driving a lot of this. But this was something that, you know, fall of the Berlin Wall, collapse of the Soviet Union, we took our eye off the ball to a certain extent. And so economic statecraft was really a reintroduction of what we needed to have in our diplomatic toolkit.

The one thing I would add is that technological competition element of it post-COVID—because you have so much dual-use capability in all of the topics that were covered in this report, but you also—you have a China that has risen and become very dominant in areas it invested in for decades. And it has very significant national security ambitions. And so using the technology—(inaudible)—to facilitate use within the Chinese military is something that was also, you know, a driving consideration for many countries’ understanding that economic security is imperative.

ROBBINS: Thanks for that. I think that’s a great sense of sort of the historical development of it.

Can we talk a little bit about our present vulnerability? The task force, of course, focused on several areas. We hear a lot of talk about chips and critical minerals, hear about pharmaceuticals. Obviously, we can worry about lots of things. Can you talk about the areas of greatest vulnerability?

HILLMAN: Sure. So I’d direct, I guess, everyone’s attention to the very end of the Task Force Report, which has some pretty granular information if this is something that they’re interested in, where there’s a summary of supply chain vulnerabilities for the three areas of technology that we focus on.

So just maybe to do a sort of high-level version of that, in AI think we recognized that although there’s been a little bit of progress made in trying to make semiconductor supply chains more resilient through the CHIPS Act, you know, most notably, there’s still a lot to do there. And for datacenters in particular, there are other pieces of equipment that are important, other components that are important, that we have—for which we depend on foreign sources, probably to a degree that needs to be addressed. And so, for example, there’s some power equipment that’s important. There’s some optical networking equipment that’s important. And then obviously the critical minerals piece too, which Heidi can describe in greater detail.

On quantum, similar story there in the sense that this is actually a little bit even more challenging, because there’s not one approach to quantum right now that everyone agrees will be the approach that wins, but there’s several competing approaches. And they have different supply chains. But trying—when we were trying to look at some of the common components across those competing approaches, there are some single points of failure in those supply chains. Not all of them are coming from China. There are a couple partner countries that produce. You know, it’s a failing business producing—or, a smaller business producing a critical input. And so we highlight a few of those areas. Cooling systems, for example. There’s also a specialized mirror that’s quite important that we’re sourcing almost exclusively from a single source.

And finally, in the biotech space, there’s both a dependency on some of the raw ingredients—the APIs and key starting materials that we need to make things that would be in your medicine cabinet, like painkillers or antibiotics, that we’re heavily dependent on foreign sources, China in particular, for. And then maybe, to me, one of the most concerning trends that we highlight in this report is the increase in outsourcing by U.S. companies to companies in China for some of the research and clinical trials that are going on. So, you know, the supply chain, in that sense, is not only the sort of physical ingredients you need, but also the research that is being done. And so, again, would recommend the end of the report for anyone who really wants to get into that in greater detail.

ROBBINS: So we should jump to the end? (Laughter.) APIs are active pharmaceutical ingredients, for those of you who don’t live in jargon-world. So, Heidi, can we talk about critical minerals? I mean, the Chinese very briefly threatened to cut us off or at least make it very, very hard. In the report it says that the United States is dependent on China for rare earths, 70 percent overall, 99 percent for heavy rare earths. I mean, that’s a pretty extraordinary thing. I mean, on a certain level how would we ever dare pick a fight with them? And how long would it take us to get—in any way be able to produce our own? Can you talk to us about it? Just is it as grim as it sounds?

CREBO-REDIKER: So we—not only the United States, but the whole collective—

ROBBINS: Did we lose Heidi?

(Pause.)

Did we lose Heidi? 

HILLMAN: Yeah, I think she’ll be trying to log back on. In the meantime, happy to sort of get us started on the critical minerals piece, which Heidi knows much better than I do. But I think what we—what we lay out in the report is a range of actions that we feel like is basically—it’s the sort of kitchen sink approach to reducing our dependence on China for critical minerals. So part of that is domestic. And it involves trying to expedite mining and processing, where possible, in the U.S. Part of that’s working with partners and allies in cases where they have capabilities that could be useful. And there is—and we name specific countries in that context. Japan, Norway, others have capabilities both on the mining side of things as well as recycling, which is an interesting area. You know, you can—there are processes that are being developed that will allow us to more efficiently recycle, extract, and then reuse some of that material.

ROBBINS: She’s back! We were just talking about working with allies and a little bit of recycling. But we didn’t get very far into it, because we know this is—please.

CREBO-REDIKER: I am so sorry about that. That’s my tech goblins here.

So, anyway, just in terms of—in terms of chokepoints, this is China’s greatest chokepoint right now. And they are very confident in their ability to dial up and dial down, not only on the U.S. but the entire world, for these. So we’re not the only ones that have a massive over-concentration in the rare earths—and critical minerals as well, but specifically in rare earths. And heavy rare earths because they are what we need to produce magnets. So this is something that is focusing the minds of not only the U.S., but our allies. And in this report, we came up with a couple of recommendations. 

The first was to stockpile. And that is really the low-hanging fruit right now. The National Defense Stockpile is designed to ensure that we have key inputs during a national emergency, but it’s been way under-resourced, under-funded for many years. And it’s not flexible. So that would be the first. Mapping and permitting, you know, these are steps that we could take that were—that would need more funding, and also some innovation—investment in innovation and opening up to some of the AI—the AI technology that is able to really do a much better job at sourcing and mapping and looking at quality of where the critical minerals and rare earths are.

And then the last is my favorite, which is disruption and new materials. We have—we actually have a history of being able to solve for and innovate our way out of chokepoints, like this one that we have with China right now. I don’t think we’re going to win this battle taking China on with our own industrial tools, the same way that China has invested over the decades. So I think we—one of our biggest bets should be on innovation. And I’m happy to take a deeper dive on, you know, where we have some powerful not only R&D, but we have companies now that create, you know, magnets that don’t require rare earths. Or we have recycling of magnets and the ability to manufacture domestically with a completely closed domestic supply chain of magnets.

We have biotech innovation that is able to precise mine using proteins to go in and—sort of, like, robots—target rare earth elements out of waste. And, you know, phytomining, which is, like, you have plants that grow and can be hyper-accumulators, and actually take up critical minerals and rare earths from the soil. So there’s just a lot—there’s a lot out there. And they’re in the process of scaling right now. Some of them have actually received government funding—substantial government funding recently.

ROBBINS: And timeframe on something like this? Or how long are we—if this sort of innovation gets a measure of support and is allowed to grow, are we going to be in thrall to the Chinese for decades, or is this more years?

CREBO-REDIKER: So this is—some of the timelines with these companies building out fast are in the sort of eighteen- to twenty-four-month timeframe in terms of being able to actually scale production. For certain of the rare earths that are defense-related, the quantities are not as substantial as you would—as you would expect. So, you know, it’s—that’s one of the reasons they’ve never been commercially viable to actually produce, because you don’t have a natural market that’s substantial enough for commercial expansion. But that doesn’t mean we don’t have the technology. 

And it doesn’t mean we can’t actually use some of the new innovations that can cut costs. They can cut costs because they are able to rapidly—like, facilitate, you know, rapid mining, as opposed to sort of doing traditional, you know, seventeen years you discover a mine, start extracting from it. It’s a very—it’s a very long process. With a lot of this innovation you just go into waste—coal waste, e-waste, different types of waste that we don’t really recycle right now. And if we started to do that more systematically, we’d actually have—it’s like the buzzword is, you know, waste is our next best mine.

ROBBINS: So I could talk to you guys for the entire time, but that would be wrong because we have a lot of students out there. So thank you for this. And this is a great start for our conversation. So we’re going to open it up to questions.

(Gives queuing instructions.)

And I turn it over to the voices of God out there, our colleagues who will be managing this. Thank you so much.

OPERATOR: We will take the first raised hand from Mümin Ahmedoğlu. Please accept the unmute prompt.

Q: Yeah. Do you hear me now?

ROBBINS: We do.

Q: Yes. I’m Mümin Ahmedoğlu. My affiliation is actually University of Vienna. There you have Technical University of Munich, but this was last month. I will update it soon.

So, actually, I wanted to take us back to a more fundamental question about, yeah, when we talk about the economic security, and we see the USA now, I see more competition using, let’s say, new ways of competition including sanctions against China and other world—other countries in the world. And, like, I feel like we were talking about open markets, and globalization, and so on. But when the problem becomes serious, I see that the USA is not competing fairly in this. And so I’m asking actually about what do you think about this? And the sustainability of competing over AI, or microchips, or other technologies by only putting limitations on other countries that they can’t proceed, and then the USA has a chance to get a step forward, and step more than these countries. Firstly, what do you think about this? And, secondly, how sustainable is this actually for the USA, and for the whole world? Thank you.

ROBBINS: Heidi, you want to take that one?

CREBO-REDIKER: Sure. So just on—taking a quick step back, I mean, a lot of the tools in the toolkit have been around for a long time. So if you’re looking at—you know, if you’re looking at sanctions or export controls, and inbound investment restrictions, things of that nature, those have been around for quite some time. I think in this context, there’s a—you know, there’s a degree of where you draw the line in technology competition. I think, you know, it’s been an evolving line because I don’t think that the idea is really to keep countries down, necessarily, as to protect national security. And I know that that’s—you know, that’s where—that’s more of an art rather than a science, to kind of, like, where do we draw that line. 

I think that’s something that’s an ongoing conversation here in the United States. But the bottom line is that we know that a lot of U.S. and other technology has been either stolen over the years, or, you know, in many cases, the Chinese and other—you know, other competitor countries have really—you know, have innovated and are using U.S. chips and technology in order to accelerate their military capabilities. And I think that’s something—that’s a world we really can’t have. And it’s a situation we really can’t accept. So I know that’s not a perfect answer. The tools have been there for a long time. It’s just how you use them. 

And this is not a—in the U.S.—not a political issue, in terms of Democrats versus Republicans. It’s an issue of to what extent, and what scale, and to what end. And the end is all agreed on. I think that the desire to protect national security and to make sure that the capacity that we develop is not used for the military use, that’s going to eventually, you know, potentially, hopefully not be used against us.

ROBBINS: Jonathan, do you think that—Heidi, thank you—do you think that maybe we’re using the term “national security” on too many different fronts? That people—it’s so overused that no one believes that we’re actually trying to protect national security in the trade—when it comes to trade and sanctions?

HILLMAN: Yeah. So I think—look, I think for the purpose of this Task Force Report I think we were very clear that we wanted to focus on areas that, as Heidi mentioned earlier, have dual-use capability, and for which the national security linkage is quite clear. And I think quite clear in the report too about the sort of role of the government, and having the government intervene in cases where there’s a market failure or a market impediment. And, you know, a national security cost if that intervention doesn’t happen. And so we were trying to be judicious in our use of this, I think recognizing that in the past there have been instances of this being stretched, right? And then that, I think, poses a challenge domestically as well as internationally, because you’ve got to justify these actions with your partners and allies, whose cooperation you will want to seek in order to have these actions really have their full impact.

So I think—I think, sure, there definitely has been—the term has been misused in the past. But we were trying to be narrow in our usage here, targeted on technologies that are very linked to national security. And then there’s one other part of the report that I’ll just mention in case people are interested. There’s a sort of guiding principles section which talks about how and when some of these tools should be used. It includes a whole bunch of questions that policymakers could ask themselves to sort of basically have higher or lower confidence in what they’re considering doing. And that’s not stuff that we just sort of pulled out of thin air, but it’s the result of interviewing a couple dozen former officials who sat in those seats and made decisions about when to use and when not to use some of these tools. So, again, hopefully trying to strike the right balance there too, but that may be of interest to some people.

ROBBINS: Thanks.

OPERATOR: We will take the next raised hand from Jack Galligan, who is a graduate student at Vistula University in Warsaw.

Q: Hello. Am I audible?

ROBBINS: You are.

Q: Yes. So, as was stated, my affiliation is Vistula University, where I study international relations. But I’m American, rather than Polish. 

So I really enjoyed the discussion and was particularly interested regarding the rare earth. There’s been a lot of discussion recently about the role that climate change will potentially play, specifically regarding the Arctic and the increasing importance that it will play regarding not just rare earth minerals but also trade routes. So I was wondering if you could discuss both China and the U.S., what they potentially have in the Arctic regarding—you know, for example, how they can access it, and what they—what their best routes are. And what role that the Arctic can play for both sides in the future. Thank you.

ROBBINS: Heidi.

CREBO-REDIKER: So I have a lot of colleagues who study Arctic—you know, Arctic issues, and particularly national security-related around the Arctic. I am not one of those people, so I will not, you know, try and just make up an answer. But I will say, there are obvious challenges that come with open trade routes. And particularly, you know, whether you’re looking from a military perspective, a commercial perspective in shipping routes, or an opening up of new areas for mineral exploitation. And so that is—those are three that I’ll put on the table for conversation. But I’ll see—maybe Jonathan has more substance to add on how we—you know, how he looks at Arctic security.

HILLMAN: Yeah, nothing to—nothing to add from me. It wasn’t an issue that we got to with this effort, but certainly one that I could imagine being part of a follow-up. Obviously, China is active in the Arctic. It has referred to itself as a near-Arctic power. And, you know, there are others that come to mind too, Russia being another important actor there. And I think, you know, there’s maybe a clear linkage here in the report, in that we’ve got a whole bunch of recommendations that call out specific partners and allies. You know, we’re not recommending just sort of working with people for the sake of working with people, but trying to find specific instances in which we’ve got a partner with a capability—you know, a technological capability, or a natural endowment, or, you know, something to add—a common interest. And this is obviously one where the U.S. and Europe could be working quite closely together.

OPERATOR: We will take the next raised hand from Mike Nelson, who is an affiliate adjunct professor at Georgetown University.

Q: Thank you very much. I also do a lot of guest-lecturing at other universities.

I want to talk about data, and particularly efforts of some countries to hoard or restrict the flow of data. Not just personal data, but in some cases research data, perhaps economic data. There’s this idea that was on the cover of the Economist about eight years ago that data is the new oil, which may be the worst analogy ever except for data is the new plutonium. In my world, data is the new water; it flows freely, and you get to use it over and over and over again. Any words of wisdom on how politicians in various countries should protect their national security and foster their economic growth with intelligent data policy? Thank you very much for a great presentation.

CREBO-REDIKER: Jonathan, do you want to—do you want to take a stab at that?

HILLMAN: Sure. Yeah. So, Mike, thanks for your question. And, you know, again, with this Task Force Report, I think we—at least in the case of AI, although data is obviously important for the other areas that we’re looking at as well, quantum and biotech—we made a—and you could say slightly artificial—but we made a decision to focus primarily on hardware, right, and the sort of tactile pieces of the supply chain. Data is obviously massively important for training models. It’s an advantage that arguably China has in its approach to AI, and the government’s role as a sort of data collector and provider. But it’s not something that we got into in great depth in this—in this Task Force Report.

I do think it’s encouraging—slightly encouraging, in an environment, that there’s been a lot of trade friction, that we may be beginning to see some discussions on data make a little bit of headway bilaterally between the U.S. and some partners. I think there’s been—there have been some recent agreements where that’s been the case. And so that’s obviously one way in which, you know, the U.S. could continue to be encouraging the sort of—the free flow of data, working with foreign partners to do so. But it—I’m also, I guess, struck by the fact that we’ve probably got a lot of work to do domestically on some of these questions so that we—you know, we have the right sort of privacy regime in place, and we’re not spending so much time struggling on a case-by-case basis as issues arise, but that we’ve got a framework to handle that. And I’m sure that’s something that you’ve done a lot of thinking about.

ROBBINS: So I’m going to start calling on students, which is something I—(laughs)—I’m sure there’s lots more questions out there. So if you don’t want to talk, you can put your questions in the Q&A and we will read it for you. So while you cogitate on your questions, because it’s a chance to ask questions of these very cool people, I have questions, because I’ve been restraining myself.

Can we talk about chips for a minute? This seems like another major chokepoint, and particularly people’s concerns about what’s going to happen with Taiwan. So can we talk about how much progress the Biden administration made on protecting the United States, nearshoring, bringing that home? And how did that process go? How well did we do on that? Are we going to continue to do it? Are we still hugely vulnerable on that front? Is the Trump administration continuing to make progress on that? And what lessons did we learn from that first effort at something close to an industrial policy?

Jonathan, you want to start, and then, Heidi, you can jump in?

HILLMAN: Yeah, happy to—happy to start. So the stat that comes to mind here, for sort of one gauge of the progress that has been made but also the work that remains to be done, is that the U.S. semiconductor industry is expected to produce 23 percent of the world’s leading-edge chips by 2030. And that’s up from 15 percent last year. And, you know, there’s been large amounts of investment that CHIPS Act has helped mobilize. And I think there are some, you know, interesting industrial policy lessons to be learned from that. And actually some of the people who were involved in setting up the CHIPS office now have a new—a new publication called Factory Settings, where they’re writing about some of the lessons. So I would recommend that to folks.

I think where the task force sort of drilled down a little bit deeper is pointing out some of the supply chain vulnerabilities that relate to chips but have not been maybe adequately addressed yet. So that’s things like some of the chemicals that are required to produce chips, some of the other physical dependencies like integrated circuit substrates—IC substrates. You know, and some of the boards that chips are ultimately mounted on. And so just trying to, kind of, make sure that we’ve got enough of the critical components here, and enough of the production. And there’s still quite a bit to do.

CREBO-REDIKER: So I would just add there—you know, we—there are different approaches to industrial policy. And the CHIPS and Science Act was one that, you know, it took a certain basket of incentives and, you know, grants, loan guarantees, tax incentives. And you sort of—we have some—you know, we have some actual experience now with what that did. And I think if you look at TSMC in Arizona right now, outside of Phoenix, they actually were able to stand up their fab using a very significant chunk of the CHIPS funding. And now are able to—they’ve just started to manufacture a U.S.-made Blackwell wafer. And so they—I think in terms of where we thought we would be in—you know, and Arizona being able to have, you know, four nanometer process chips, that was a really big deal.

I spent some time in Phoenix looking—outside of Phoenix and got to see the TSMC plant when it was just about to open up. It was amazing. That was an all-of-community—you know, how they trained people to actually construct the facilities, trained people in University of Arizona to actually work there in the facilities. It was the creation of an ecosystem. I think that’s really positive, because we also have to have the workforce that’s able to not only stand up facilities to a level that you can actually manufacture chips of that high quality in the United States. It was a learning process, but that’s only—that was a very—like, it’s a big success for onshoring into the United States. So I would look at examples of where, you know, certain types of industrial policy has actually worked with onshoring.

ROBBINS: And so can you just give a little bit more background for people who—so TSMC is the big Taiwan producer. Could you just give us a little bit more background? A fab is a big factory. (Laughs.) And they trained Americans to build it, Americans to work in it. So, I mean, this is all—this is an American-made, but not necessarily American-owned? Or just give us a little bit more background on this.

CREBO-REDIKER: So, I mean, TSMC, Taiwan Semiconductor Manufacturing Company, TSMC. It’s really—it’s the—you know, they are the fab the world’s main design and production companies look to, to have their chips manufactured. And so they are a serious chokepoint—not—chokepoint in meaning there’s a huge overdependency on this one company, on this one vulnerable island, just south of the Chinese mainland. So, you know, being able to have a diversification of the TSMC manufacturing facilities was actually core to U.S. interests because, you know, we have Nvidia, Apple, when you have a lot of the big companies that are our champions here actually depend on, on TSMC. So having the facility there was really important.

And then you spend time there and you learn that it was actually—you know, there was a lot of learning going on. We didn’t have the construction workers that were at the—even though we had an Intel facility there for many years, they needed to be able to take it to another level and have a fab that was to the quality where they could manufacture these very specialized chips. They’re standing up new fabs out there right now. It’s growing. And I think that, you know, they outdid all expectations in a fairly short amount of time. So I think we want more of that. Whatever the incentives that we can get to have that kind of investment come into the United States for resilience purpose, that is, I think, a huge win. And the whole workforce that comes around it—the learning, you know, the jobs that they’re going to be creating there. It’s all—I think it’s a win that we have to, you know, chock up as a win.

ROBBINS: Thank you for that. Jonathan, you said by 2030—it’s still a very small percentage if something were to happen in Taiwan. And if you look—not that—I mean, if you look at what, you know, PACOM, Pacific Command, talks about the vulnerability of Taiwan, how fast the Chinese are going to be potentially—I mean, I’ve never taken those dates particularly seriously, but there are a lot of people who take them seriously. Given our vulnerability on chips, shouldn’t we be moving there faster on that? As well as you talked about the inputs as well. Why is it taking so long to be able to—you know, to build this up? And do we need additional legislation to move forward on this? Do we need more money? Another CHIPS Act two? These seem to be—the vulnerabilities seem to go everything from the inputs, to not training people, to building new fabs.

HILLMAN: Yeah. So I think this gets at an even bigger question for considering industrial policy, and maybe considering government intervention in the markets more generally. There’s a little bit of, I guess, cost-benefit analysis that you have to do in terms of what are you willing to pay to get some of this increase in resiliency? And so we’ve made, you know, again, sort of on a more positive trajectory. You know, we’ll go up from 15 percent to 23 percent. And that’s a meaningful—that’s a meaningful increase, especially in an industry that’s incredibly capital intensive. You know, these facilities are just so expensive. And, you know, I think—I think maybe from a sort of pure national security standpoint, you want to make sure you’ve got access to what you need for defense purposes and critical infrastructure. And then applications beyond that would be beneficial, but maybe they’re not as, you know, top-tier priority, if you’re going to start to make some tradeoffs.

We do think it’s worth thinking about building out some of the production of some of the components that need to sort of go with the chips. And, you know, there’s—I guess there’s also a scenario in which depending on how this is done, depending on how also things like the Department of Commerce’s ICTS rule could be used in the future, that could basically ban products—classes of products from untrusted sources. They’ve already done that with connected vehicles from China and Russia, which use lots of chips. You could—you could start to see—and some foreign partners are following that as well. You could start to see a sort of broader ecosystem develop that is a little bit more self-sustaining, self-supporting. But you’re right that it is a gradual process. And someone’s got to pay for it, right? (Laughs.) And so I think that’s the—that’s the challenge. There’s a lot of other competing priorities too. 

CREBO-REDIKER: But I think, just to take from where Jonathan just left off, I think, you know, when we think about, more broadly, industrial policy, we really do need to play to our strengths. So it’s not, you know, how much do we have to spend, but how do we spend it wisely to catalyze private investment. And so we have very powerful capital markets. We are having an interesting moment where there’s an alignment of market and private investment, but we need to have the right carrots that de-risk some of that investment where there’s market failure. And so we do have a lot of tools in our toolkit to do that, from—you know, from Defense Production Act, that you’ve seen the Defense Department really, you know, fine-tool that instrument. Defense Production Act allows for the departments—not just the Department of Defense—but basically to have offtake agreements for putting—you know, for making sure that, for a company that has a national security objective or, you know, dependence, that they have a price and a buyer. 

And off of that, you can get financing from private markets. And so you look for points of leverage. You have—you know, we’ve seen very creative use of some of these tools, particularly in the critical minerals and rare earth space. Really—I mean, I have to say, it’s been a creative, more sophisticated use than we’ve seen in the past. They’re taking risk. We have to be, as a country, prepared that when you take risk, you know, you’re preparing yourself, the tradeoff, having the risk of taking a loss. But these are big national security decisions that are being taken as we speak right now, because of the vulnerability. So we have to be comfortable making mistakes and not—you know, not politicize and be hugely dramatic, I think, about when we do make a mistake. 

But I do think, you know, we all would benefit from more disclosure, sunshine on—you know, on the process, the terms of the deals, since we’re talking about taxpayer funds. And, you know, what the guardrails are going to be forward. It’s a work in progress on industrial policy. And I think it’s something we’ll be talking about for years to come, but it’s happening right now. And, you know, whether we agree with how it’s being done, it’s being done in the national interest. And to—you know, reinsure, you know, the United States, and increasingly our partners, on those risks where there are the greatest chokeholds. 

ROBBINS: Thank you for that. We have questions in the Q&A, so I’m going to hand it off.

OPERATOR: We will take the next written question from Sloane Duys, who is an undergraduate student at Fordham University. She asks: How would you say the increasing prevalence of AI data collection initiatives in companies impacts global economic security?

CREBO-REDIKER: So I know what direction I would take that in, but I’ll let—I’ll let Jonathan, just in terms of looking at—pulling from the threads of the report, if there are—if there are any lessons learned or risks to be flagged and mitigated.

HILLMAN: And, sorry, could I ask just for the question one more time? I think I had an audio break there.

OPERATOR: Sloane Duys asked: How would you say the increasing prevalence of AI data collection initiatives in companies impacts global economic security?

HILLMAN: Got it. Thanks. So, yeah, happy to start. I think we may even have a graphic in the report that lays this out probably more clearly than I’m about to. But I think we look at AI leadership in a couple of different dimensions. There’s the sort of the innovation side of things, where you’re working on trying to produce frontier models for which, obviously, the data is incredibly important. There’s a sort of domestic deployment version of that, which arguably China is doing an even better job than the U.S. is right now because the government’s very focused on—the Chinese government is very focused on incorporating AI into everything, right, from elementary schools, to factory floors, and robotics, and everything in between. 

And then there’s the global piece of this, the sort of global diffusion piece, where you’ve got providers of AI services and products that are competing in foreign markets. And part of the—depending on sort of what they negotiated with their customers, that also can include a sort of data piece of this that could, you know, then enhance their ability to go back to the first part of that cycle and innovate more. And so I think we could see the relevance there really across all three of those stages. And, yeah, this is another area—you know, as Heidi mentioned—the U.S. private sector has—you know, when we talk about playing to our advantages, that’s a—that’s a key set of actors. 

We’ve got, you know, customers that are making massive investments in AI. And we’re pretty clear in the report that we think that there is quite a lot of money going to AI. We’re not calling for more government money to go AI, in the same way that we’re calling for some government support for something where money isn’t—where enough money isn’t go, like quantum computing. But, again, you know, trying to harness the U.S. private sector advantage that exists there. And, you know, I think as this competition progresses, we’ll probably see even more action in that third stage, that sort of global competition, the competition in third markets. And so I would, I guess, keep an eye on that piece of it in the coming years.

CREBO-REDIKER: Privacy will play a big role in how this actually—you know, how these—how the data collection evolves, because, you know, different paths are leading to different vulnerabilities of that data. And so I think that’s something that is—we’re just—we’re learning as we go right now. But we have a lot of people focused, you know, particularly in the U.S. right now, on how that data collection is happening, and how it’s being used within the different models that we’re developing here.

OPERATOR: We will take the next written question from Avery Bender, who is an undergraduate student at Temple University: Could you speak some more to the effectiveness of working with allies with capabilities that are useful to reducing dependence on China? Do capabilities such as focus on expedited mining or recycling reflect the general timeline you mentioned in scaling production, eighteen to twenty-four months? And do you think there’s sufficient focus on the two domestically?

CREBO-REDIKER: So on the role of allies, I mean, the rocks are where the rocks are. (Laughs.) And so, you know, and it’s not just that, the know-how and technology really resides in certain places where you have a developed mining community and history. That’s something that we need to invest in pretty dramatically here in the U.S. We’ve just done it—we’ve really—we’ve really outsourced a lot of that over the years. 

So working with allies, you know, I think you see that really, you know, front and center in the Trump administration’s approach to foreign policy. Strong leaning on the bilateral critical minerals agreements, on having complementary financing capabilities for countries that we partner with, having, you know, especially at the G7, having this be, first and foremost, one of the areas that the Trump administration is actually looking to go multilateral on. So watch this space. It’s really top of mind for this administration. So much so that they’re working very closely with allies and partners on that.

On the domestic side, I think we really have to get our act together around recycling. We have—there are a lot of reviews and estimates about what, in the different categories of waste, we could recycle. Everything from our e-waste, which we’re very bad at actually collecting and recycling e-waste. I mean, like, your computer—your hard drives, your phones, batteries, different components that would go into sort of the e-waste bucket. And that—you know, those have a lot of magnets in them, they have a lot of the rare earths that we need. In the Defense Department, you know, things like the night vision goggles, in terms of having rare earths that we actually, you know, are having China restrict right now.

There just is a huge space in the recycling space. You have coal mines and, like, toxic, you know, waste that we’re—you know, we’re trying to mitigate the toxicity, where you have new technologies that can actually help solvent and mine rare earths from those piles of waste. And then you have ongoing mining operations where the tailings, the less-commercially viable, you know, at scale, you know, critical minerals, and rare earths, and metals, can easily be extracted using new technology, as long as we—you know, as long we don’t consider it as, like, waste that we just, you know, leave hanging there and don’t take advantage of. 

So waste is a really big deal. And that is something where I’m very bullish on—it’s, you know, a combination of policy and incentives that could get industry—sort of whole of country onboard to actually recycle some of the stuff that we actually need for our own economic security in the critical minerals space.

OPERATOR: Our next written question is from Michael Strmiska who’s a professor of world history at Orange County Community College. And it has an upvote. His question is: How does the shift in energy policy between the Biden administration and the second Trump administration affect our national economic security, with Trump seemingly intent on disabling green energy development, yet green energy seeming important for the future to most outside the Trump administration?

HILLMAN: Thanks. I can start. You know, this is an area where we didn’t get into sort of broader U.S. infrastructure and broader U.S. energy policy too deeply in the Task Force Report. That was just one of the decisions we made, to try to go deep on basically the—you know, what’s in a data center, and where are the supply chain vulnerabilities. Obviously, the importance of, you know, low-cost and renewable energy is important, as is, you know, upgrading the broader grid that supports those data centers. And I think at least maybe in one case we do mention one set of battery systems that we do think are going to be in higher demand in the coming years. And that’s probably included in that supply chain vulnerability summary at the end of the report.

So I think, you know, it’s definitely—we have seen some changes in priorities. That’s sort of natural as administrations change. But certainly the desire to continue to lead on AI remains unchanged. And we thought that there was, you know, definitely an opportunity there. And I think that’s why some of the recommendations were sort of scoped as they were.

CREBO-REDIKER: Just on that energy question. I would say sort of it cuts both ways. So, as Jonathan mentioned, on the battery side, losing a lot of the incentives for the creation of a domestic—a strong domestic battery market was you need to have a demand, which is EVs. You know, the demand for the—you know, it’s sort of like there’s a supply chain where you end with batteries as being the demand signal for commercial ramping up of a lot of the other critical minerals and rare earths we’re talking about. 

The other is that—I’m optimistic that the energy demand, writ large, is going to need an all-of-the-above strategy. So you’re not going to see industry pulling back on investment that is going to be all-out, you know, whatever we need to have the energy that we need to move forward, particularly to support data centers and AI. That it’s just—it’s going to be a market decision as to whether—you know, as to, you know, more investment in solar, whether President Trump wants it or not, in wind and windmills. And so I do see that as being—as it’s going to continue.

The last is that on the critical minerals and rare earths side, it’s also—those are—those are key to energy—development of energy resources. And so that is an area where I’ve seen actually on the VC side some of the climate and impact funds investing in some of the interesting biotech companies that are looking at cleaner extraction methods, and things like that. So I think there’s—you know, it cuts both ways.

HILLMAN: One other thought, which I should have mentioned, where I think the current administration is serious, or getting serious, is related to some of the supply chain challenges with specific types of batteries. So the latest round of Chinese export controls hit rare earths, which I think got most of the headlines, understandably so, but they also hit a certain subset of lithium batteries that are important for defense products, potentially more important in the future of data centers, for robotics. And for all of those reasons, I do think that this is something that has sort of—is beginning to get on the radar of more decisionmakers who, you know, may be serious about trying to reduce that dependency. You know, in a way similar to what you see them doing already on rare earths. So I would offer that as one space where maybe the sort of—the appreciation for the importance of it hasn’t changed, and for which we could see action in the future.

ROBBINS: I want to thank you guys for this. And, of course, now I’ve called on everybody we have many, many, many more questions, and they’re all fantastic. So we’ll have to do this again. Heidi and Jonathan, thank you so much for sharing these great insights with us. And, to all of you, for your great, if belated, questions and comments. CFR will be announcing the Winter/Spring Global Affairs Expert Webinar lineup in the coming weeks. And in the meantime, I encourage you to learn about CFR paid internships for students and fellowships for professors at CFR.org/careers. And visit CFR.org, ForeignAffairs.com, and ThinkGlobalHealth.org for research and analysis on global issues. And education.CFR.org—yeah, they wrote this all down for me—for free expert-informed teaching and learning resources.

I wish you all good luck with finals, and a wonderful Thanksgiving and then winter break. And we look forward to your continued participation in our webinar series next semester. And, Jonathan and Heidi, have a great Thanksgiving. And thank you so much for doing this for us.

CREBO-REDIKER: You too. Thanks for hosting.

HILLMAN: Thank you.

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