Advancing Global Competitiveness

American prosperity at home and competitiveness abroad are tightly linked. Domestic economic vitality and political stability are preconditions for defending national interests globally. In turn, global competitiveness underpins the growth that makes broad-based prosperity possible. Access to raw materials, dynamic trade relationships, and safeguards against international chokepoints are foundations of economic stability. American business depends on market access, global relationships, and the U.S.’s competitive edge in innovation and execution. Respected leadership and sound decision-making from Washington keep our markets attractive and our economy on track. Gaps in these areas are creating uncertainty that threatens growth.¹

• China’s rise. China, with a population four times that of the U.S. and a manufacturing base fortified by massive state-directed investment, represents a formidable competitor across a wide range of industries, as well as militarily and diplomatically. Beijing’s interventionist approach to markets—involving heavy subsidies, preferential treatment for national champions, forced technology transfers, and uneven adherence to global trade rules—lets it scale strategic sectors and wield economic leverage that challenge U.S. business. China’s accelerating efforts to open new markets, circumvent trade restrictions, and influence global standards reflect a strategic coherence that American policy has not matched.² Chinese advanced manufacturing is flooding global markets and outpacing competitors.³ After many decades of lagging behind, China has now surpassed the U.S. in global approval ratings.⁴

• Troubling trendlines. The U.S. is in danger of forfeiting the historic advantages that have made it the world’s most desirable place to do business. Political volatility, abrupt policy reversals, cronyism, coercion, and erosion of the rule of law risk pushing away entrepreneurs, investors, and talent. New foreign direct investment fell to $151.0 billion in 2024, down more than 14% from 2023 and far below the ten-year average of $277.2 billion.⁵ The warning signs are flashing: the U.S. occupies a shrinking share of world trade, longtime partners are hedging their bets, and the dollar risks gradually losing its status as the world’s reserve currency. Responsibility for these trendlines does not rest with only one party or administration but is the result of years of slow slippage and misdirections as well as more recent policy turns. Recent volatility—in the form of inconsistently applied tariffs and international conflicts—have stoked inflation, cost jobs and inflated risk premiums.

A foreign policy geared to enhance America’s global competitiveness is essential to facilitate the supply chains that power today’s economy and position the U.S. to lead in fast-evolving industries into the future. Business’ interests in international affairs also encompass rule of law, alliance arrangements, international institutions, and the capability of international systems to manage and mitigate conflicts.

Leadership Now supports foreign policy approaches that position the U.S. to deliver on its domestic imperatives, strengthen its place in the world, build institutions and systems that advance U.S. interests, and forge a productive, accountable relationship between government and business.

Leadership Now believes that America’s global competitiveness depends on policy that prioritizes three objectives:

I. Don’t Let Tariffs and Chokepoints Undermine America’s Edge

• Align tariff policy with U.S. law, strategic interests, and business and consumer needs. U.S. trade policy has become defensive and erratic. Unilateral coercive tariffs and punitive brinkmanship have created unpredictability that has prompted partners to diversify away from the U.S. Broad tariffs function as a tax on U.S. production and consumption: a New York Fed analysis using 2025 import data found that nearly 90% of the economic burden of the Trump Administration’s 2025 tariffs fell on U.S. firms and consumers. Congress should reassert its role to ensure tariff policy reflects long-term strategy, appropriate differentiation by partner and industry, and democratic accountability.
• Secure, expand, and diversify global supply chains. Geopolitical shocks demonstrate how supply chain constraints can strangle the flow of goods and disrupt economies. Government should play an affirmative role in widening channels, unclogging chokepoints, and troubleshooting delays. The priority is to reduce avoidable chokepoints through enforcement capacity, improved data, and coordination with allies and industry. The objective over time must be diversification and co-production to eliminate single points of failure. While important steps have been taken to lessen U.S. reliance on Taiwan’s chip industry and on rare earth minerals from China, these strategies must be accelerated.
• Discipline and coordination to compete with China. To meet the China challenge, the U.S. should combine allied alignment, targeted enforcement, reduced strategic dependencies, and selective guardrails. This will involve coordination with major market-economy partners on responses to unfair trade practices; modernized customs and trade enforcement to curb illicit trade and forced-labor supply chains; and strengthened discipline to address subsidies, transparency, and industrial overcapacity. The U.S. should maintain tailored protections for genuinely sensitive technologies while offering partners credible alternatives to China through trade preferences, standards cooperation, development finance, and supply chain co-production.

II. Compete on the Frontiers of the Future

• Safeguard the U.S.’s reputation as a fair, stable, and transparent place to do business. America’s constitutional foundations, commitment to the rule of law, regulatory safeguards, independent courts, robust academic institutions, and free media have made our nation a mecca for global business. A pattern of crony capitalism, government self-dealing, circumvention of court orders, politicization of independent agencies, and infringements on press freedom are risking these priceless reputational assets. Such practices must be outlawed, sending a message to the world that the U.S. is committed to providing a stable, predictable, and level playing field for business.
• Use strategic industrial policy to strengthen positioning in key sectors. The U.S. must take urgent steps to strengthen its leadership in AI, quantum computing, and biotech,⁶ industries that underpin national security, productivity, and the next wave of high-value jobs. The U.S. needs to accelerate growth and reduce strategic dependencies across the AI hardware stack, rare earth processing, quantum computing, and biotech through targeted onshoring, early government procurement, and domestic manufacturing investment. Investments in research and longstanding partnerships between government and U.S. universities are essential drivers of innovation.
• Strengthen positioning in emerging domains. The Arctic, the deep seabed, and space will shape future trade routes, access to critical minerals, and the rules of the global economy. China has invested in aggressive strategies targeting each of these arenas. The U.S. needs a coherent, long-range approach for each—centering in the near-term on aligning allies on norms, monitoring, and enforcement and, over the longer term, on developing frameworks for sustainable access and governance.

III. Rebuild a Global System that Works

• Assert credible global leadership. The undermining of American alliances with threats, punitive tariffs, and derisive rhetoric risks the U.S.’s global position and threatens American businesses that operate globally. The U.S. government has traditionally provided a foundation of goodwill, mutuality, and reliability that has underwritten opportunities for U.S. businesses in Europe, North America, Asia, and elsewhere. In key areas, including national defense, confronting China’s massive advantages of scale will require pooling capabilities with allies.⁷ Creating a dependable atmosphere of mutual respect, consultation, and cooperation between allied governments will be crucial to American businesses’ ability to compete.
• Reform the global trade system. The WTO has played a central role in reducing trade barriers and establishing common rules, but it is plainly insufficient as a regulator of global trade, especially when it comes to disciplining China’s non-market practices. The U.S. should pursue a specific, time-bound reform package on WTO dispute settlement including faster decisions, clear limits on adjudicators, and improved compliance. Concurrently, the U.S. should expand alternate pathways for areas where broad consensus is unattainable: plurilateral and sectoral agreements with willing partners on clean energy, critical minerals, and digital trade.
• Invest in existing and new international institutions. If the U.S. disengages from areas such as global health policy, tech regulation, climate, and investment, it forfeits leverage over these processes and cedes space to competitors and adversaries. U.S. global engagement gives American business a seat at the table and the ability to advance priorities and reap competitive benefits. Given the pace of technological change, a forceful U.S. role in standard-setting is crucial, especially in geopolitically sensitive areas including artificial intelligence, 6G, energy and emissions, and cybersecurity.