Trade, Technology, and the Missing Industrial Middle
At the 2026 Emerging Tech Symposium at Johns Hopkins SAIS, one of the most substantive conversations of the day focused on a question that sits at the center of U.S. economic security strategy: how trade policy, technology leadership, and industrial competitiveness are now converging in ways that can no longer be treated separately.
The discussion featured Ambassador Rick Switzer, Deputy United States Trade Representative, in conversation with Dr. Seth Center, Senior Fellow at Johns Hopkins SAIS, and it offered a broader strategic framework for understanding why trade is no longer a downstream issue in technology policy. It is increasingly one of the central mechanisms through which governments will either preserve or weaken their long-term position.
What made the exchange so important was that it did not treat technology leadership as a matter of innovation alone. It treated it as a function of production capacity, market structure, strategic capital, industrial depth, and the ability of the United States and its partners to respond to forms of competition that do not operate on traditional market terms.
A defining thread throughout the conversation was that the United States is confronting a competitor whose economic model does not fit neatly into older assumptions about trade or globalization. The challenge is not simply that China is large or technologically ambitious. It is that it combines participation in global markets with the internal logic of a command economy, allowing it to channel capital, subsidize sectors, and shape industrial outcomes in ways that market economies do not naturally replicate. That creates a structural imbalance, particularly in sectors tied to national security and advanced manufacturing.
From that perspective, trade policy is no longer just about market access or tariff levels. It is about whether the United States can rebuild the industrial capacity required to remain competitive in strategically important sectors. It is also about whether the West can restore functioning market conditions in areas where distorted pricing, state intervention, and predatory practices have undermined the private sector’s ability to invest sustainably.
That point came through especially clearly in the discussion of critical minerals. For years, Western governments have studied supply chain dependencies, funded research, discussed standards, and supported transparency initiatives. Yet despite years of attention and billions of dollars in cumulative effort, the underlying position has not fundamentally improved. The deeper reason is that information, standards, and financing mechanisms, while important, do not on their own solve the core problem if the market itself remains broken.
The real issue is whether firms can produce, refine, and sell strategically necessary materials at prices that make investment viable. If they cannot, then even the strongest strategic awareness will not translate into durable capacity. This is where the conversation moved beyond diagnosis and into one of the most important policy debates now taking shape in Washington: whether the United States and its allies are finally prepared to use pricing tools and trade mechanisms to restore market conditions in sectors that have been hollowed out by non-market competition.
It reflects a broader recognition that national resilience will not come from slogans about de-risking alone. It will require mechanisms that allow private firms to enter or re-enter difficult sectors with some confidence that the market will not immediately be undercut by subsidized oversupply. In other words, rebuilding industrial capability in the West is not only about investment. It is about creating an environment in which investment has a rational path to survival.
This matters because many of the inputs most essential to advanced industry are not themselves large or glamorous markets. They are often niche materials, intermediate chemicals, or specialized industrial components that sit deep in the supply chain. They may represent a small global market in dollar terms while having enormous implications for aerospace, energy systems, defense production, and advanced manufacturing. That mismatch between apparent market size and strategic significance is one reason these sectors were allowed to erode. They often looked marginal from a short-term profitability standpoint, even when they were foundational to broader industrial strength.
What emerged in the discussion was a deeper critique of the assumption that the United States could continue moving up the value chain while allowing the industrial middle to weaken. That approach may have looked rational in a less contested era. It looks far riskier in an environment where manufacturing knowledge, process capabilities, and material inputs are all tied to strategic competition. Once production leaves, innovation does not remain untouched. Over time, distance from the manufacturing floor also means distance from the tacit knowledge, design feedback, and process learning that help sustain leadership.
This is why the conversation kept returning to the idea that the United States has developed a kind of imbalance. It remains exceptionally strong at the top end of technology, finance, and innovation, and it remains strong in commodities and energy. But parts of the industrial center, especially those tied to specialty chemicals, processing, and intermediate manufacturing, have thinned out. That missing middle is not only an economic issue. It is increasingly a strategic one.
The discussion also pointed to a second major shift underway: the rethinking of how government should support long-term industrial competitiveness. Not through endless subsidy for its own sake, and not through replacing the private sector, but through shaping the conditions under which private capital is willing to move. That includes not only tariffs or pricing mechanisms, but also more sophisticated thinking about strategic finance.
One important line of argument in the session was that the United States should focus less on trying to micromanage industrial winners and more on reducing the risk profile around strategic investment. In sectors such as semiconductors, the challenge is not merely technical expertise. It is also the scale and volatility of capital required. Building advanced fabrication or memory capacity involves enormous costs, long timelines, and deep exposure to cyclical demand. Competitor systems often provide implicit or explicit public backstops that lower the risk of those investments. U.S. firms, by contrast, are often expected to navigate those cycles with less systemic protection.
That raises a broader strategic question: how can the United States maintain a private sector-led model while recognizing that it is competing against ecosystems in which the state plays a much more direct role in lowering risk and supporting scale? The answer suggested in the conversation was not to abandon the American model, but to update it. That means creating structures that attract strategic capital into sectors critical to national security and future competitiveness, while still relying on private actors to make investment decisions.
This is where the conversation became especially valuable because it connected trade policy to the larger question of techno-industrial strategy. The discussion made clear that in a contested environment, trade tools are not peripheral. They are part of the architecture of industrial renewal.
The dialogue then moved into AI, but in a way that resisted the more familiar hype cycle. Rather than treating AI dominance as a simple race narrative, the conversation placed it inside a broader hardware, energy, and industrial framework. The current U.S. lead in AI was presented not as an abstract inevitability, but as the product of long-term basic science investment, institutional depth, entrepreneurial ecosystems, and, in some cases, historical contingencies that produced powerful advantages in computing architecture.
That framing suggests that today’s AI position rests on layers of prior scientific and industrial decisions, not just on recent breakthroughs. It also underscores that preserving leadership will require more than celebrating current advantages. It will require protecting bottlenecks, securing infrastructure, and ensuring that the next major value layer in AI also remains anchored in the United States and trusted partner ecosystems.
One of the most important insights in the session was that the hardware layer, while essential, may not ultimately be where the largest long-term value sits. The current generation of dominant firms may be building the routers and infrastructure of the AI age, but the eventual winners of the broader AI transformation may emerge elsewhere in the stack. That makes it all the more important not only to maintain technological leads in hardware, but also to create the conditions under which the next generation of applications, platforms, and integrated systems develop inside the U.S. innovation ecosystem rather than outside it.
This also helps explain why export controls, hardware restrictions, and trade tools remain so central. They are not ends in themselves. They are part of a broader effort to preserve time, space, and strategic leverage while the next layers of value are being built.
The conversation also touched on a broader concern that runs through many of these debates: the gap between strategic awareness and actual implementation. The United States often produces excellent analysis, strong roadmaps, and compelling ideas. What it has struggled with, repeatedly, is operationalizing them with consistency over time. Other governments, including competitors, are often more disciplined in turning strategic concepts into sustained policy execution.
That point resonated well beyond the specific sectors discussed. The challenge is no longer simply recognizing what matters. It is developing institutions and policy tools capable of acting early enough, coherently enough, and persistently enough to shape outcomes.
The exchange ended by looking ahead to technologies beyond AI, particularly quantum, as an area where the strategic consequences may arrive faster than public policy systems are prepared for. Unlike AI, where markets, infrastructure, and corporate actors are already visible at scale, quantum still sits closer to the frontier of basic science and early capability, making it easier to underestimate until its implications become harder to contain. A reminder that strategic technology policy must remain forward-looking.
What made this session stand out was not only the substance of the remarks, but the larger implication running through them. The United States is no longer in a position where it can afford to separate trade policy, industrial policy, and technology policy into parallel conversations. They are now part of the same strategic problem.
If the goal is to preserve leadership in advanced technologies, sustain national resilience, and compete effectively in a world shaped by non-market power, then the focus must move beyond innovation alone. It must include production, refining, capital, pricing, infrastructure, and the institutional ability to convert strategy into action.
That is where the real contest increasingly lies.
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