A few days from now, Commerce Secretary Wilbur Ross will receive a report indicating whether steel is being imported into the U.S. to an extent and under conditions that threaten to undermine national security. This inquiry is being conducted under a statute that is over 50 years old and has rarely been used for any product other than oil. That measure was designed to encourage domestic drilling during an era before the U.S. could seriously see itself becoming energy independent. It is clear that there will be some trade restrictions put into place on steel. There will be an extensive debate at home and abroad about the merits of whatever decision President Donald Trump makes.
That debate will detract from the need to address a larger question: What set of policies best serves America’s national security? Clearly, the composition of the American economy matters. Most prior U.S. administrations have largely ignored this question. There were clearly exceptions for specific defense needs—for example, making sure that there were at least a few shipyards that could build the Navy’s war ships. But on the whole, the market was to decide which industries would succeed and which would fail. It was generally felt that to decide, industry by industry, what is in the national security interest is both impractical and unwise. But this does not mean that public policy decisions affecting the make-up of the U.S. economy don't matter.
The nation’s security rests on two pillars: the strength of the U.S. economy, which includes its composition, and the maintenance of a multilateral world order.
On the first pillar, the level and growth of economic activity matter to America's ability to defend itself, not just in military interventions abroad but to project the strength necessary to avoid war. That means having a growing economy. Congress and the administration have the right idea that tax policies should be designed to make the U.S. as an attractive a location to create products and ideas for products as any place on the planet—and better if possible.
Beyond getting the national tax system right, the nation’s policies must also foster innovation. If the federal budget makes the wrong choices, and national spending on research and development from both public and private funds fails to keep pace with what is needed, that will undermine innovation. In addition, the nation’s physical infrastructure should be second to none. Two of our greatest presidents recognized this—Lincoln seeing the need and laying the foundation for a transcontinental rail system, and Eisenhower almost a century later accomplishing the same for the nation's interstate highway system.
Lincoln also got another thing right. He founded the National Academy of Science. Ideas and commercialization of those ideas are the foundation upon which the future of the economy depends. The global economic environment is competitive. Innovation can notionally flourish in any country, given the right conditions. Fostering both innovation and infrastructure will serve both the quality and the composition of the U.S. economy and the level of economic growth. These support not only U.S. national security, but the economic well being of the American people.
The other, equally important, pillar of the nation’s security is the multilateral world order. The U.S. has served as founder and executive chairman of a beneficial world order since World War II. It is essential that it remain so. It has led the creation of the World Bank, International Monetary Fund, and regional international development banks to foster global growth that contributed to the extended period of relative world peace experienced since 1945. It created an international trading system that set rules and kept markets more open than at any prior time in history. None of this existed at the end of World War I, and it was in part due to that failure that there was a second global war just 20 years later. While the international economic system is not about to collapse, the U.S. is still the indispensable country to assure that it continues.
The Trump administration and Congress need to urgently consider the full range of America’s domestic and international policies that will best secure the country’s future. Hopefully the debate over steel imports will impel America to have this important conversation.
Alan Wm. Wolff is a senior counsel of the international law firm Dentons, and is chairman of the National Foreign Trade Council. He has served as a senior U.S. trade negotiator in both Republican and Democratic administrations.