America Can't Reshore Everything

 

“During Covid-19 and the rare-earths crisis, America learned that "just in time" globalization can leave the country dangerously exposed when foreign governments restrict critical exports. But building more-reliable supply chains is too expensive and time-consuming for the U.S. to address all vulnerabilities simultaneously.

 

Which supply chains deserve immediate attention can be decided by a simple three-part test. First, a supply chain warrants special focus when its disruption would quickly threaten lives, core defense missions or essential economic functions. Second, when substitutes or workarounds can't be instituted in time to mitigate the disruption. Third, when surge capacity can't be built on a reasonable timeline. This approach acknowledges that developing resilience is costly and helps ensure that scarce capital goes to the most vital choke points.

 

Apply this framework to the Department of Homeland Security's 16 "critical infrastructure" sectors. Stadiums, shopping malls and government offices may attract terrorists or hackers, but their supply chains don't give Beijing or Moscow decisive leverage over American security. Even in sectors like emergency services, dams and water treatment, foreign content in supply chains for crucial technologies is often limited, diversified across suppliers, or replaceable with domestic production over acceptable time horizons. The U.S. solar energy transition could slow if the supply of Chinese-made solar panels were suddenly cut off, for instance, but that wouldn't be an immediate national-security catastrophe.

 

A specific set of dependencies do satisfy the test's conditions. The U.S. faces vulnerabilities in microelectronics, port cranes and large power transformers as well as in rare-earth minerals and the magnets made from them, all of which underpin economic activity and military readiness.

 

The Pentagon has begun to address these vulnerabilities by targeting microelectronics, explosives and rocket motors, shipbuilding and key stockpile materials such as rare earths for reshoring, diversification, and surge capacity. These efforts point toward a more deliberate and strategic approach to the national security industrial base, consistent with the framework in our recent Brookings Institution study.

 

An underappreciated area of exposure is in chemicals. China has become a major supplier of ingredients for small-molecule medications, coatings and sterilization agents for medical devices, and the chlorine and caustic soda used to keep water safe to drink. It also plays a large role in pesticides, chemicals for drilling and refining, and the specialized compounds, coatings and composites used in advanced electronics and defense manufacturing. These aren't luxury goods that can wait out a crisis; they are essential inputs to healthcare, the water supply, food production, energy and weapons systems -- areas where rapid disruption and scarce substitutes make for true vulnerability.

 

The task ahead isn't to stick a "national security" label on the entire economy but to focus on a bounded set of supply chains where dependence on China or other adversaries could threaten lives, defense or essential economic activity. The point of a disciplined framework is to show where more must be done without implying that every product with a foreign component constitutes an unacceptable risk.

 

The Brookings analysis suggests that the problem of these combined vulnerabilities, while serious, is bounded. The heavy lifting has already begun, in efforts to strengthen the traditional defense industrial base and shore up supply chains for semiconductors, rare earths and infrastructure. America's next steps are analytical as much as operational: applying the three-part test to narrow the list of truly critical inputs, then carrying out a detailed, government-led analysis to identify remaining vulnerabilities in overlooked areas such as key chemicals.

 

That kind of disciplined, data-driven process won't satisfy every industry seeking help in one of its sectors. It isn't meant to. The purpose of this framework is to reserve the application of serious national-security interventions -- whether subsidies, trade measures or other forms of industrial support -- to the few supply chains where failure would undermine confidence in the basic functioning of American society. Without such discipline, "national security" risks becoming a catch-all justification for every economic government intervention. But with it, the U.S. can build resilience where it matters most, at a scale the country can actually afford.

 

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Mr. O'Hanlon and Ms. Wosinska are senior fellows at the Brookings Institution and co-authors, with Mark Muro and Tom Wright, of the report "Building Greater Resilience and Capacity in the U.S. National Security Industrial Base."” [1]

 

The reasons why the West might reconsider starting, and extending a war:

Every country can actually afford some difficult to get thing, if everybody in the world wants to buy the thing because of high quality or low price. The West has no high quality or low price in rare earths. This is why China does, and we don’t afford many difficult to get things, and never will.

Western countries don’t need many drones now, and China is selling the rare earth magnets for them. If a drone war with the participation of the West starts, the West will need many more small exploding drones and China might stop selling the magnets to the West.

 

1. America Can't Reshore Everything. O'Hanlon, Michael; Wosinska, Marta.  Wall Street Journal, Eastern edition; New York, N.Y.. 31 Dec 2025: A15.