EXPERT INTERVIEWS — President Donald Trump’s sweeping tariffs have spared no nations, slammed several longtime allies, and sent global markets into a tailspin. They will likely carry national security implications as well.
On Wednesday – what Trump called “Liberation Day” – the president announced tariffs ranging from a baseline 10% levee to a high of 54% for “worst offenders.” The Trump administration has touted tariffs as a way to restore U.S. manufacturing and correct trade imbalances, and it has also said that they may be used as tools to pressure other countries on separate priorities like immigration and drug trafficking.
The Economist called the announcements “the biggest break in America’s trade policy in over a century,” and was one of many major publications around the world to question the economic foundations for what Trump said and did Wednesday.
But while the initial impacts of “Liberation Day” involve the global economy and financial markets, experts say there will be national security consequences as well. Military supply chains stand to be impacted, including imports of critical minerals from China, which is home to the vast majority of those minerals. Experts have also raised concerns about whether traditional U.S. allies will now be as likely to support the U.S., if and when Washington comes calling for help on any number of global security priorities.
The Cipher Brief spoke about these national security implications with Isaac Stone Fish, the founder and CEO of Strategic Risks, a research firm which measures corporate exposure to China, and Jonathan Hillman, Senior Fellow for Geoeconomics at the Council on Foreign Relations.
Hillman spoke with Cipher Brief reporter Alison Spann; Stone Fish spoke with Cipher Brief Managing Editor Tom Nagorski. Their conversations have been edited for length and clarity. You can watch the full discussions at The Cipher Brief YouTube channel.
The Cipher Brief: Talk if you could about what implications from a national security standpoint there may be, given what the Trump administration has announced in terms of tariffs – and of course, all the responses that are to come from Beijing.
Stone Fish: There are massive national security implications. One is the reshaping of military supply chains, and the link between the U.S. military and major weapons producers who still import quite a bit from China, especially RTX [the U.S. aerospace and defense conglomerate].
The other is how this may continue to fracture relations between U.S. and allies, not only on intelligence sharing, but on willingness to work together in the case of, say, a [Chinese] invasion of Taiwan.
I think there's also the question of distraction. Is there going to be focus on just economics? I do hope that national security plays a big role in the conversation, and certainly part of the justification from folks in the Trump administration, both publicly and privately, about the tariffs on China, was squarely aligned with national security. But I think a lot of times people miss that part of the message.
The Cipher Brief: What exactly are the issues that the tariffs will create when it comes to supply chains for the U.S. military?
Stone Fish: There's a real problem. At Strategic Risks, we rank companies on their China exposure, and some military companies rank quite highly on that, which is stunning. RTX is in our top 10, and they have pretty heavy supply chain exposure to China.
Companies will often say, Hey, we don't import weapons from China. We import other things from China. But the exposure to China and the ability of them to jeopardize certain lines of your business is incredibly impactful. Boeing is a very clear example of that. Boeing is mostly Boeing government, which is a weapons contractor, and Boeing commercial, which makes planes. The aviation side of the business is heavily exposed to China. The Chinese Communist Party is Boeing's second largest customer; it gets roughly 10 to 15% of its revenue from China. So understanding that exposure and how tariffs are going to change that equation is really important.
The justification for tariffs is to bring manufacturing back to the United States. Whether or not that will actually happen is very difficult to say, but if not, companies like Boeing and RTX need to understand that the price of importing from China goes beyond the cost of goods, and has all of these other externalities. And tariffs are, in a way, a tool to try to correct those externalities.
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The Cipher Brief: What then are the weapons or other materials that the United States may now be in peril of not getting – or having to pay much more for?
Stone Fish: Critical minerals are a big piece of that. Those are essential. The existence of DJI, the Chinese drone maker, and their prominence in America, is quite dangerous from a defense perspective. Skydio is the United States biggest domestic drone maker and they have – or had – China as a choke point technology in their supply chain.
These weapons systems are mostly maddeningly complex. The idea isn't that the entire tank or missile gets made in a Chinese factory and shipped to the United States. It's that there are choke point technologies controlled by China that would make it far more difficult or far more expensive to manufacture certain items without China being part of the supply chain.
The Cipher Brief: Your other point – about the willingness of allies to help the U.S. in the event of a U.S.-China conflict – game that out for us. Is the notion that as some of our longest-term allies get punished by the U.S. tariffs, they may be much less willing to help us?
Stone Fish: Canada has a lot to lose from a dominant China. And six months ago, I would have said pretty absolutely that the U.S. and Canada would work together to push back against China. They're certainly not aligning on that right now, because of President Trump's tariffs and his attacks on Canada. So one could see a scenario where tensions between the U.S. and China increase, or there's a war, and Canada doesn't involve itself at the same level that it would before.
It’s very difficult to know, when push comes to shove [between the U.S. and China], who's going to join us, or when they're going to join. It's hard to imagine any way it could not be an allied conflict. So what type of alliances would we have? And how much are we able to use our real weapon against China, which is the system of alliances we've built over the decades?
The Cipher Brief: How have tariffs historically been used as a national security tool, and how has that strategy evolved under the Trump administration?
Hillman: On the one hand, using tariffs for national security is not new. Many of the authorities that the Trump administration is using have been on the books for quite some time, in some cases half a century or longer. So there's a track record of using some of these. Some of them have been used for national security purposes in the past. Others, it's a little bit more of a stretch, so there are some legal questions as well.
The Trump administration is also continuing a trend of expanding the definition of national security. That's something that goes back to the period just following 9/11, when there was a willingness to look at trade and national security. And in the past, tariffs had been assessed mainly in the context of protecting national defense and critical infrastructure. After 9/11, there was a willingness to expand that to include other critical parts of the U.S. economy. And so now you see the Trump administration using things like Section 232, which is a national security tool to protect things like lumber from Canada, which on their face don't seem to be as immediate to national security.
When these tools are used, they can have unintended consequences. There's a whole set of potential diplomatic consequences and strategic consequences for using these tools. All of our trading partners have their own constituents and stakeholder groups that they need to stand up for. And I'm struck right now by a lot of the language that is being used by close U.S. partners and allies like Canada, the EU, and others. It's tough language, like we're going to stand up for our own interests, we're prepared to fight back. It would all sound familiar if they were talking about Beijing instead of Washington. And so there will hopefully be negotiations and some firmer ground that this all lands on. But in the meantime, there is this risk that extends beyond economics toward harming diplomatic relations, pushing partners away and potentially pushing them closer to our competitors.
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The Cipher Brief: In your opinion, to what extent have tariffs already damaged the diplomatic relationships with our key allies?
Hillman: I think we're seeing different degrees of restraint from our partners and allies right now. A lot of them want to negotiate and get to a better place on trade. Hopefully that still happens. But the rhetoric that they've used, even as restrained as it is, is quite striking. From Canada, for example, we had Prime Minister Mark Carney talking about how Canada was going to have to do things that would have been unthinkable, and it's going to have to do them faster than ever to diversify their trading relations. Again, [he is] talking about the United States and not China. So we can expect that that rhetoric may heat up before it cools down.
And look, it's OK for close friends to speak candidly with each other. In the world of diplomacy, you hope that that happens behind closed doors and not out in public. But that is a concern right now. There's some dynamics and incentives in place here that could cause unintended escalation and go beyond the temporary exchange of words. We've got South Korea and Japan having trade discussions with China in a format that they haven't had for about five years. We've got other trading partners speaking with each other.
But again, hopefully there's some negotiation and some ratcheting down.
The Cipher Brief: Can you go into some of the specifics regarding where the U.S. is vulnerable in the supply chain?
Hillman: The U.S. military has its own set of supply chains that are important. U.S. critical infrastructure has its own set of supply chains. And the U.S. cannot – just from a purely economic perspective – it cannot afford to reshore all of that and become entirely self-sufficient, just with the limited resources that the government has. And so I think the question is about where to prioritize, how to spend the limited resources that do exist, and then who to work with, which partners and allies to work with, because the U.S. cannot address all of these areas alone.
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