Allied governments have no shared methodology for identifying and prioritizing the most dangerous economic dependencies, according to a new report from Hoover's Allied Coordination Working Group and the Hoover History Lab. The report, titled "Critical Conditions: An Operating Framework for Allied Economic Statecraft," finds that the United States and its allies broadly agree that critical commodities, products, and technologies lie at the heart of strategic competition with China, but they lack a robust, shared framework for defining economic criticality and evaluating which resources are more critical than others. The result: resources are spread too thin, allies are working at cross-purposes, and no one has institutional cover to say a particular dependency can wait.
The report describes a world where roughly one-third of global gross domestic product sits in countries that are neither formal US allies nor adversaries, meaning their participation in production networks can quickly diversify any single state's monopoly control over production. Market interventions are only democratically legitimate and politically sustainable when the public accepts they're necessary, the authors note, and political institutions don't have unlimited space to trade efficiency for security. The analysis examines multiple channels through which weaponization can work: hostile states can disrupt supply if they monopolize production of a resource or product, regulate and selectively share access to intellectual property to build coalitions, or exploit vulnerabilities in third countries that are themselves susceptible to economic coercion.
"If everything is critical, nothing is," the report states, warning that policymakers are rushing to act without weighing which dependencies are most likely to be weaponized, how the global economy would adapt to weaponization, and how much it would cost to correct for critical dependencies in advance. The authors argue that the default presumption should be that most dependencies are of low to medium criticality, with high criticality an exceptional designation that must be earned. The report finds that economic actors have perverse incentives to confuse the public conversation about criticality: domestic companies that want subsidies or trade protection have incentives to exaggerate their products' criticality, while foreign governments and firms that want sustained access to overseas markets can understate the criticality of products or technologies they export.
The report's analysis centers on why autarky—bringing production entirely onshore—is almost always a mistake, even when products are genuinely critical. Trade barriers invite retaliation, reduce access to foreign markets, and dampen innovation, while achieving autarky often involves heavy ongoing subsidies and forces consumers to pay higher prices for inferior products. The authors explain that trying to copy China's strategy of building a "complete industrial system" forfeits America's main comparative advantage: its ability to mobilize its large and efficient capital market and organize broad coalitions of countries that need access to the US market and technology. The more of the global economy mobilized to mitigate a dependency, the report argues, the lower the economic cost and the greater the geopolitical and technological benefits.
The report recommends that the United States and its allies align around a robust method for speedily identifying the most acute vulnerabilities, then tackle them first. Rather than reflexively seeking autarky through domestic subsidies, policymakers should prioritize broadening the coalition of producers, leveraging allies and neutral nations to lower the fiscal cost of resilience and create a better buffer against coercion. The authors propose a four-layer rubric that addresses production concentration, adversary intent, and adaptive capacity together, identifying a small number of dependencies that demand urgent government action and a much larger number worth monitoring but not warranting costly intervention. Only by narrowing focus to what's truly critical, the report concludes, can economic security policies be both strategically sound and democratically sustainable.