When ‘national security’ becomes an excuse for big government

Each cronyist proposal invokes “supply chain resilience,” “strategic autonomy,” or the imperative of not depending on adversaries. Carried to its conclusion, this logic justifies protecting virtually any domestic industry that can retain a competent lobbyist and identify a defense application for its product.

The security concerns animating this debate are real. China threatens Taiwan, the world’s dominant semiconductor supplier, and has systematically engaged in industrial espionage against U.S. firms. Even as Europe and the United States stifle manufacturing to comply with net-zero climate demands, China ramps up its industrial base, freely skirting these absurd rules. 

China further strengthens its grip on global supply chains with its Belt and Road initiative, tightly controls the supply of critical minerals, and attempts to expand control across the South China Sea. COVID-19 exposed genuine fragility in pharmaceutical and medical supply chains. With China controlling roughly 60% of global processing capacity, the rare-earth concern isn’t theoretical. Furthermore, China’s dominance gives Beijing uncomfortable leverage over technologies central to modern warfare.

The response to these threats matters as much as identifying them. Free trade with free peoples bolsters growth while strengthening supply chains. NAFTA produced one of the most sustained expansions of prosperity in U.S. economic history. U.S. exports nearly tripled in inflation-adjusted terms. American manufacturing output rose by more than half. Middle-class real family income increased by more than $28,000 in inflation-adjusted terms. Foreign direct investment, partly attracted by the stability and openness of the American market, exploded by more than 500% in just seven years. 

The CHIPS Act is instructive here. The underlying diagnosis was defensible: Advanced semiconductor manufacturing matters enormously for national security, and American capacity had atrophied. But the remedy of subsidies is contorted. Bureaucratic requirements have multiplied. The same government that struggles to run the post office is now attempting to pick winners in one of the most dynamic and technically complex industries on Earth. 

We’ve forgotten the basic framework: The government should secure the conditions for voluntary exchange and let the free market allocate capital and production. This allows the magic of comparative advantage to work. Political interference in that process handicaps the free-market economy that built the most prosperous middle class in history. Special interests recognize that they can leverage “strategic importance” to obtain government intervention. Defense contractors, farmers, automakers, steel producers, and even airlines have made the case for their own indispensability. All have found receptive ears in the current environment.

The honest response to genuine security vulnerabilities looks quite different from what is currently being sold. 

Targeted strategic stockpiles for genuinely critical materials, rare earths, and key pharmaceutical inputs are a reasonable and limited intervention. Likewise, targeted penalties on Chinese companies are in order. But the primary solution should be to remove the onerous government interventions that created these problems in the first place. That starts with scrapping the Green New Deal-type mandates and subsidies artificially driving up the demand for the components used in wind turbines and solar panels and enacting permitting and regulatory reforms that allow the U.S. and our allies to extract and process the abundant critical minerals and rare earths we possess. 

Export controls on advanced semiconductor technology and AI systems with clear dual-use military applications are defensible on grounds that would satisfy even a strict free trader: They restrict what we sell to adversaries, not what we buy from allies. Yet current policy veers into contradiction: invoking national security to justify intervention at home while green-lighting sensitive technology flows abroad so long as the government takes a cut. This is both unlawful, since export taxes are prohibited by the Constitution, and strategically incoherent. 

“Friend-shoring” has merit when it reflects genuine free trade agreements with allies, rather than politically managed trade by another name. But that’s not what we’re getting. The Trans-Pacific Partnership would have provided a counterweight to the China threat by giving a similar framework to allies across the Pacific. President Donald Trump rejected this, a decision that weakened our position. Instead, he has built tariff walls that raise costs for American manufacturers, consumers, and exporters alike. Tariffs are taxes paid by U.S. businesses and families. Over time, the industries protected by tariffs become less competitive, not more, because insulation from competition removes the pressure to innovate. 

There is also a deeper strategic irony. The argument for managed trade rests on the premise that American economic strength requires protecting domestic industries from foreign competition. But the economic dynamism to fund a $1 trillion defense budget, sustain technological leadership, and outcompete authoritarian rivals depends on the opposite: competition, efficiency, and prudent capital allocation. Protectionism suppresses these forces.

Free markets and national security are not in tension; history shows they’re intertwined. The postwar economic order championed by conservatives was built on free and open trade, strong alliances, and American institutions anchoring global commerce. Abandoning that order erodes freedom, slows growth, and weakens the very national security the protectionists claim to defend. If conservatives fail to make this case for free trade and free markets, no one else will.