U.S. Tightens Control over Strategic Economic Sectors Amid Efforts to Counter China
The United States is undergoing a significant shift toward strengthening national security by increasing government influence over key sectors of the economy.
The Biden administration announced plans to expand state involvement in critical industries, such as semiconductor manufacturing, minerals, and defense.
As stated by the U.S.
Treasury Secretary, the country requires a more aggressive industrial policy to counteract China’s dominance in the supply of rare earth elements, which are crucial for technological advancements and security.
This initiative involves government investments and measures that resemble Chinese strategies, with federal agencies acquiring stakes in major companies including U.S.
Steel, Intel, and MP Materials, and imposing restrictions on profits for firms like Nvidia and AMD operating in China.
The U.S.
has identified seven strategic sectors where control will be heightened, with a special focus on defense, urging firms to invest more in research rather than stock buybacks.
The country also plans to use mechanisms such as minimum prices and forward procurement to limit China’s influence in manufacturing supply chains.
Tensions escalated after China announced new licensing rules for exports involving rare earth minerals and products made with Chinese technologies, which will come into effect later this year.
These regulations require foreign companies to obtain licenses from Beijing for a wide range of goods, effectively blocking supply of vital materials to U.S.
and European defense contractors.
In response, Trump threatened to impose additional tariffs on Chinese goods and canceled a planned summit with President Xi Jinping.
Although later softening his rhetoric amid market turbulence, Trump left open the possibility of engagement with Beijing.
Experts note that America is striving for self-sufficiency and aims to lessen reliance on Chinese resources by fostering alliances and implementing economic protections.