Massive container ships crisscross the world’s oceans, some traveling west, some traveling east. They are a symbol of the interconnectedness of today’s modern economy—vast, moving monuments to global trade. The ships traveling to the Western world carry products manufactured in Asia, bound for American and European markets. The ships traveling to the East—many of them, at least—carry garbage.

Companies that rely on certain countries in Asia for their supply lines will face continued challenges as geopolitical stresses, let alone global pandemics, cause supply shortages. Beyond causing economic harm, these shortages pose a direct threat to U.S. national security interests.

Nowhere is our overreliance on Asia more apparent than in the global computer chip market. Currently, 75 percent of the world’s chip supply is manufactured in Asia, leaving the United States open to fluctuations in the availability of chips due to economic stressors and geopolitical tensions.

For a quick example of what such disruptions might look like, look no further than the market for new cars. The massive disruption in the chip supply chain has led to a severe shortage in new car inventories and a 14 percent decline in new car sales, causing a severe dent in the American economy.

The free market is stepping up to the plate and addressing this threat. Intel announced in March that it plans to spend $20 billion on two new manufacturing plants in Arizona. The market immediately rewarded Intel with a 3.6 percent bump in its stock price. The market will invariably reward other companies that capitalize on domestic solutions to supply chain threats once these are outlined in corporate impact reports.

Economically, the United States maintains a trade deficit with Asia, especially with China. We import far more than we export, as we have for decades. At the same time, corrective actions such as tariffs are creating a drag on the economy. Now, nearly three dozen trade groups are calling on the Biden administration for renewed trade talks with China and the lifting of those tariffs. For some, that may be perceived as “talking up their own books.” Tellingly, among those seeking relief are representatives of the chip manufacturing industry.

For an example of what supply chain disruptions look like in another industry, take the recent disruption in the U.S. health care supply chain. The majority of Personal Protective Equipment (PPE) is manufactured in China due to cost-cutting measures by American manufacturers. The unfortunate side effect was a dramatic shortage of N95 masks and other PPE during the initial surge of the COVID-19 pandemic when America needed it most. We simply were not able to manufacture enough locally to meet our demand.

As far as those container ships full of garbage traveling to the East go, the growing danger is electronic waste, which, if not disposed of properly, allows bad actors to mine electronics for sensitive data. There is a growing trend in organized crime of utilizing child laborers for such data scavenging, and it puts individuals and institutions at risk of identity theft and loss of data. There is also the risk of counterfeit components coming back to the United States in sensitive electronics. As we rely more and more on certain countries in Asia to take our garbage and recyclables, we open ourselves to the risk of literally shipping our secrets overseas to be mined by criminal elements.

For still further evidence of our overreliance on Asia, look at where many technology companies place their data centers. The market for data in Southeast Asia is currently growing at close to 10 percent per year, and it will soon eclipse the market in the United States. One company, Zoom, has already admitted that data from its American users was being routed through Asia and pledged to stop the process. How many other companies will soon find their own data at risk due to geopolitical pressures? 

Fortunately, for every problem, a solution looms. In this case, yet again, it rests in the free market adapting to current circumstances and developing a solution.

One of the hottest trends in corporate America today is the move to enhanced corporate transparency, evidenced by the number of companies embracing corporate impact reports. Corporate impact reports provide a microscopic view into how businesses function, what they prioritize, and where their priorities lie. Yet the corporate impact report does not currently analyze a company’s commitment to national security, the strength of a company’s data security, or the independence of its supply chains.

BlackRock’s Larry Fink has called for a universal reporting standard to address sustainability initiatives under a standard reporting framework. We should take this a step further and call for national security and supply chain risk disclosure, which is essential to understanding a company’s commitment to protecting the national interests of the United States.

Let us go back to the shortage of PPE at the height of the COVID-19 pandemic. Again, the free market stepped forward to close the gap and address the problem, turning production lines for making shoes and other items into production lines for manufacturing PPE. Again and again, the free market is showing that it is willing to step forward and solve big problems.

America’s national security and economic vitality are clearly compromised today, but our future on that front can be brighter, not dimmer. Companies that demonstrate they are committed to ensuring U.S. national security and securing their data centers and supply lines from geopolitical upheaval will be rewarded by the market. Even more importantly, customers will reward companies with a demonstrated interest in America’s national security.

The end result? Strength in our manufacturing, strength in our economy, and strength in our commitment to the American worker. Unleash again the power of the free market, enhance corporate transparency through expanded corporate impact reporting, and signal the resurgence of American economic empowerment.

Ambassador Paula J. Dobriansky, Ph.D. is the Former Under Secretary of State for Global Affairs; Senior Fellow, Harvard University Belfer Center for Science & International Affairs; and Vice Chair, Scowcroft Center for Strategy & Security (Atlantic Council.) She is a Member of Concordia’s Leadership Council.

Nate Morris is the Chairman & CEO of Rubicon, the category creator of digital waste and recycling, and a member of Business Leaders for National Security (BENS). He is a Senior Advisor at the Scowcroft Center for Strategy & Security (Atlantic Council).

Image: Reuters.