DECOUPLING: The True Cost of Decoupling from China.

The EY study tallies the costs of Western investment in manufacturing, infrastructure, and research and development at $23.6 trillion—a large headline number. But let’s add some context. Using simple assumptions of 2% U.S. GDP growth through 2050 and 1.5% GDP growth for Europe and the United Kingdom, total economic output from the West will reach more than $1.7 quadrillion in nominal dollars. In that case, $23.6 trillion turns out to be less than 1.5% of total GDP.

For further comparison, the U.S. will spend about 3% of its GDP on defense this year, while the European Union, where defense expenditures are rising, will spend more than 2%. If China remains America’s preeminent strategic competitor over the next several decades—a view that most U.S. foreign policy and elected officials share—spending about half of what we spend on defense in order to decouple from the Chinese Communist Party is not an unreasonable proposition.

Even that comparison is likely too generous. Most of what EY counts as the cost of decoupling is actually investment to produce goods needed to do so, such as mines, processing facilities, and electrical grid equipment. These investments would not only create resilience against China but would employ millions of our own people in construction and production.

Weighed against those potential costs, meanwhile, are the costs of not decoupling and instead maintaining today’s strategic dependencies.

Indeed.