An Economic Shield of the Americas: How Washington Can Counter China and Build a More Prosperous Hemisphere

EXECUTIVE SUMMARY

No region matters more to the future prosperity and security of the United States than the Western Hemisphere. Deeply integrated supply chains connect the United States with Canada and Mexico, while the wider region possesses the energy, critical minerals, agricultural capacity, and technological and industrial bases that the U.S. economy will require over the coming decades. Over the last twenty-five years, however, the United States has left a vacuum in the hemisphere, and China has moved to fill it. Beijing is now the first- or second-largest trading partner for most of the hemisphere’s economies, as well as the region’s largest bilateral official creditor. Chinese firms have embedded themselves in telecommunications networks, invested in dozens of ports and logistics facilities, and occupied increasingly important positions in critical-mineral supply chains. Unless the United States takes action, even governments friendly to Washington will become dependent on China.

Washington should forge an integrated regional economy, offering U.S. public- and private-sector economic resources in return for collaboration and reform, while helping participating countries become more prosperous and not reliant on Beijing. This effort should be implemented through an Economic Shield of the Americas partnership, which would start with like-minded governments that meet a common set of business-climate and trusted-collaborator standards and are aligned with U.S. concerns about China. By demonstrating that closer economic alignment with the United States brings advantages, the Economic Shield arrangement would incentivize other countries to join. The partnership should aim to concentrate U.S. diplomatic, financial, and commercial tools in these willing partners and on strategically important sectors for at least a decade.

The strategy rests on four priority sectors:

Taken together, these ambitious aims can create self-reinforcing momentum for economic reform and investment, transforming the Western Hemisphere into the most attractive place to do business in the world and securing U.S. prosperity and security for decades to come.

INTRODUCTION

The United States, if it is to be strong, prosperous, and secure in the coming decades, will require full access to the Western Hemisphere’s energy, food, minerals, and technology. If those assets and resources can be secured, the benefits will be immense. American jobs can be created, migration pressures reduced, technological progress ensured, and security enhanced. To grasp those opportunities, Washington should develop an economic partnership with countries in the region, offering U.S. public- and private-sector economic resources in return for collaboration and reform. The objective should be to make the hemisphere the world’s most attractive place to do business.

The Western Hemisphere is fundamental to U.S. prosperity. But over the last twenty-five years, the United States has left a vacuum in the hemisphere, and China has moved to fill it. Beijing, formerly so absent, is now the first- or second-largest trading partner for most of the hemisphere’s economies, as well as the region’s largest bilateral official creditor. Chinese firms have embedded themselves in telecommunications networks, invested in dozens of ports and logistics facilities, financed and invested in oil and gas, and occupy increasingly important positions in critical-mineral supply chains.

Despite Beijing’s advances, Washington still has great advantages in the region: proximity, trade relationships, educational and familial ties, and the largest consumer market in the world. Yet the United States has never fused those advantages into a coherent hemispheric commercial strategy, one that mobilizes American business to secure leading positions in the sectors on which economic growth, technological capacity, and national security depend. The time is ripe for a change, and there are, at present, an unusually large number of pro-American, pro-business, reform-minded governments in the hemisphere. Now is the time to build a partnership with this coalition of the willing and, through its success, encourage others to join. Washington should not seek to own the hemisphere’s resources through this partnership. Its objective should be to forge a regional economy in which American and trusted-partner companies provide the capital, technology, infrastructure, and commercial relationships that help participating countries become more prosperous and not reliant upon China.

This effort should be organized around an Economic Shield of the Americas, a framework for cooperation on investment, strategic infrastructure, supply chains, energy, critical minerals, and technology. Like the Trump administration’s Shield of the Americas security partnership, the first members should be like-minded governments—like-minded in their support for economic reform and aligned with U.S. concerns about China. There will be substantial overlap between that group and countries already participating in the security-focused Shield of the Americas. But a close political relationship should not guarantee participation; countries that align with the United States politically but have not undertaken economic reforms may not be the best partners for viable projects, while countries that undertake reforms without safeguards for sensitive infrastructure will not advance the initiative’s strategic purpose. Over time, additional countries should be encouraged to join if they have demonstrated progress on economic governance, openness to American investment, procurement transparency, and the protection of critical systems.

If countries meet those standards, they should receive priority access to U.S.-backed financing, project preparation, trade and investment missions, technical assistance, and senior-level commercial engagement. This kind of sustained and concentrated application of U.S. financial and commercial tools on willing partners, along with measurable country and sector targets and a statutory framework capable of enduring across administrations, has the capacity to generate unprecedented growth.

THE STRATEGIC CONTEXT: THE COST OF INACTION AND AN OPENING

The current situation in the Western Hemisphere has become unacceptable. The United States is dependent on supply chains and infrastructure that a competitor can monitor, disrupt, or block. Meanwhile, China is free to influence commercial rules, technology choices, and port alignments. The combination of those factors, as well as the lack of a unified strategy, is costly for American companies, depriving them of markets, projects, and opportunities.

In some countries, the United States has succeeded, albeit after a slow start, in responding to the China challenge in the region. In 2021, Paraguay came close to switching diplomatic recognition from Taiwan to mainland China in return for access to vaccines. Paraguay ultimately decided to maintain its relationship with Taiwan, in part because the Taiwanese government worked with India and other democratic partners to help Paraguay obtain vaccines. But the pressure from Beijing was enormous, and Washington initially had no answer or competing offer.

That same year, Panama renewed the concession for the Balboa and Cristóbal ports at both entrances to the Panama Canal. The ports were managed by Hutchison, a Hong Kong‒based company subject to pressure from Beijing. During peacetime, control of those ports allows surveillance of commercial and military traffic. In a crisis, these ports could be used to delay or complicate U.S. military access. Only after U.S. President Donald Trump’s inauguration in 2025 did Washington act with the necessary urgency. Under U.S. pressure, Panama withdrew from the Belt and Road Initiative, subjected the port concessions to greater scrutiny, and ultimately reclaimed control of the ports after its Supreme Court invalidated the concession. Making those changes after the fact was far harder than it would have been to prevent Chinese access in the first place. But the United States succeeded in securing a critical channel.

Washington has, at times, failed in its dealings with Buenos Aires. Despite the fact that Argentine President Javier Milei is a close ally of Trump’s, the country has occasionally disregarded U.S. concerns. Argentina’s economic dependence on China limits Milei’s room to maneuver: Beijing is one of the country’s largest trading partners, a major investor in mining and infrastructure, and an important source of financial support. But China’s influence in the region is a phenomenon of the last twenty-five years. In the 1990s, China was neither a serious trading partner nor a major creditor to Argentina. But in August 2026, Argentina renewed a roughly $19 billion currency-swap agreement with China, including $5 billion already activated to support financial stability, giving Beijing considerable leverage over a country still struggling with currency and financing pressures. The limits of U.S. influence in Argentina are demonstrated by the Espacio Lejano radio station, in the west of the country. The station is operated without adequate Argentine oversight by an organization linked to the Chinese military and has dual-use capabilities. Washington has raised these concerns repeatedly, but Buenos Aires has declined to terminate the fifty-year agreement.

Unless the United States takes action, Chinese influence will expand across the Western Hemisphere, and its dominance of mining, telecommunications infrastructure, strategic ports, and artificial intelligence (AI) stacks will grow. Beijing could remain the indispensable buyer of the region’s commodities and become the lender of last resort. If this were to happen, even governments friendly to the United States would become dependent on China. They would feel obliged to support Chinese positions, back Chinese candidates for leadership positions in international institutions, and adopt Chinese technical standards in areas including electric vehicles and AI. Without a permanent change in course, when U.S. and Chinese interests diverge, Washington will not be able to count on its neighbors’ support.

Not only is action needed, but there is now an opening in which such action would be welcomed. Two decades ago, a swath of the hemisphere was governed by instinctively anti-American administrations. Today, however, there is a sizable cohort of center-to-right governments that are pro-American: in Argentina, Bolivia, Chile, Colombia, the Dominican Republic, El Salvador, Honduras, Panama, Paraguay, and Peru. These countries want greater investment from the United States, as well as alternatives to excessive dependence on China. Many are also willing to undertake reforms that their predecessors postponed. The United States should take advantage of this opportunity, and target governments that want closer strategic relations with Washington, as well as with American companies. Washington should demonstrate that closer economic alignment with the United States brings advantages, including greater access to development financing, more American investment, faster project development, and participation in initiatives on energy, critical minerals, food and fertilizer, water, and digital infrastructure. The success of that effort should lead other countries to join. Membership should remain open to governments willing to meet high standards on business climate, treatment of U.S. investors, transparency, and trusted strategic infrastructure.

AMERICAN INTERESTS AND OBJECTIVES

The United States needs a secure supply of energy, critical minerals, food, fertilizer, manufactured inputs, and digital infrastructure in the Western Hemisphere. Events since 2020—including the COVID-19 pandemic, wars in Europe and the Middle East, shipping disruptions, and long-term competition with China—have demonstrated the risks of depending on fragile, distant supply chains. The Western Hemisphere is the only region that offers the vital combination of proximity, resources, and existing trade relationships. Canadian and Mexican energy and manufacturing supply chains are already deeply integrated, while Latin America and the Caribbean offer energy, critical minerals, agricultural capacity, labor, manufacturing potential, and growing technology markets.

China has established positions in the Western Hemisphere in mineral extraction and processing, strategic ports, electricity infrastructure, telecommunications networks, and digital systems. The United States must, therefore, work to reduce existing dependencies that pose unacceptable strategic risks, while ensuring that the next generation of critical-mineral supply chains, energy infrastructure, ports, telecommunications networks, and digital systems is built principally by companies based in the United States or in trusted partner countries.

A NEW APPROACH: AN ECONOMIC SHIELD OF THE AMERICAS

The Economic Shield partnership will require the type of sustained commitment that the United States has not brought to the region in decades. It would concentrate U.S. diplomatic, financial, and commercial tools on a limited number of willing partners and strategically important sectors for at least a decade. Agreements would link preferential access to U.S.-backed support with measurable targets. Rather than another regional assistance program, the Economic Shield of the Americas would be a long-term commercial strategy, led by private investment and supported by the full weight of the U.S. government.

The first countries to join should be aligned with U.S. concerns about China, as well as united in their willingness to undertake economic reforms. The countries that meet this threshold should receive access to U.S. financing and commercial support for high-quality projects, in return for measurable economic reforms. Canada and Mexico should be engaged from the outset, due to their energy, manufacturing, agricultural, mineral, and technology strengths. Similarly, Brazil, due its economic and productive heft, must be included. Likely early partners would also include Argentina, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Honduras, Panama, Paraguay, and Peru. A center-left government such as Uruguay’s could qualify by maintaining predictable rules, welcoming U.S. investment, and protecting critical systems.

Although the initial coalition will not be able to achieve every hemisphere-wide production objective, it could lay the groundwork for future success by bringing together a critical mass of energy and mineral producers, agricultural exporters, manufacturing centers, technology markets, and strategic transportation hubs. Working together, this group could establish trusted supply corridors, complete a first batch of major projects, and demonstrate the commercial value of closer alignment with the United States. Visible success could incentivize additional governments to join the initiative.

To create more investable projects in the sectors most important to the United States, Washington should fully mobilize its economic toolkit: the U.S. International Development Finance Corporation, the Export-Import Bank of the United States, the U.S. Trade and Development Agency, and its large shareholdings in the Inter-American Development Bank and IDB Invest. To signal that the U.S. commitment is serious and long-term, Congress should provide an initial ten-year pledge of approximately $10 billion, which would seed new projects through feasibility studies, project preparation, geological and technical assessments, permitting and regulatory assistance, workforce development, transaction support, and limited equity or first-loss capital to reduce early-stage risk. To finance commercially viable projects that are ready to proceed, Congress should also authorize another $50 billion in lending, loan-guarantee, export-credit, and political-risk capacity.

The members of the Economic Shield should expand the capital base of the North American Development Bank and extend it to cover Southern Mexico and Central America. Projects relating to water, energy, logistics, nearshoring, and strategic infrastructure should receive support. The United States should join the Development Bank of Latin America and the Caribbean (CAF) as a large shareholder to shape infrastructure finance across the region. Washington should also pursue membership of the Caribbean Development Bank (CDB) while immediately creating a dedicated cofinancing and guarantee facility with the CDB.

The Economic Shield would concentrate U.S. commercial and financial public resources, target them to willing partners that meet a common set of business-climate and trusted-collaborator standards and commitments, and by doing so aim to mobilize at least $250 billion in private capital over the next ten years. Private capital should come from American companies, partner governments, development banks, pension funds, infrastructure funds, and other private investors. In addition, countries receiving concentrated support would be expected to contribute their own resources, undertake agreed reforms, and create the conditions required for commercially sustainable projects.

A High Energy Pact

The Western Hemisphere possesses extraordinary energy resources, but too many countries lack the power required for sustained economic growth. This must change. The Western Hemisphere should become the battery, gas station, and oil derrick of the world. Over the next decade, the United States and its partners should seek to increase Western Hemisphere oil and natural-gas production by as much as 50 percent. They should expand electricity generation, transmission capacity, pipelines, LNG facilities, and the other infrastructure required to deliver reliable power to industry and consumers.

This would benefit the United States and the broader hemisphere. The resulting infrastructure could power industrialization and prosperity, while reducing the demand for foreign suppliers. Latin American and Caribbean countries need reliable electricity to support their own growth and to attract American companies seeking to build mines, processing facilities, factories, data centers, and other major projects.

Several countries are already moving to develop this infrastructure, although at different speeds. Argentina has introduced major investment incentives and is expanding the pipelines, oil-export capacity, and proposed LNG facilities needed to unlock the colossal oil and gas reserves on the Vaca Muerta site. Meanwhile, Ecuador is seeking new investment in oil but is struggling with regulatory uncertainty, infrastructure limitations, and opaque project development. Colombia’s new government has pledged to reverse the previous administration’s restrictions on hydrocarbon development and resume exploration. Those efforts are needed. Latin American and Caribbean producers could replace a meaningful portion of Russian gas exports to Europe and Asia, thereby reducing Russia’s revenues and geopolitical leverage. Washington should also help these countries create a pipeline of commercially and technically viable nuclear energy projects, including through the provision of U.S. small modular reactors.

Securing Supply Chains

There are around sixty critical minerals essential to energy, defense, manufacturing, and advanced technology. The Western Hemisphere possesses large quantities of roughly two-thirds of them. Developing secure hemispheric supply chains will not solve every critical minerals problem, but it would address many of the United States’ most pressing vulnerabilities. Yet much of this immense mineral wealth remains undeveloped or is exported for processing to China. The long-term goal should be complete hemispheric supply chains for every strategic mineral possible: from exploration and extraction through processing, recycling, supporting infrastructure, and purchase by an end user. Every link in the supply chain should be located either in the United States or in trusted countries within the hemisphere. Over the next ten years, the region should become not only a leading global source of minerals but also a major center for processing, refining, and mineral-based manufacturing. American companies and trusted partners, rather than Chinese state-owned or state-backed firms, should become the leading international investors, operators, technology providers, and purchasers supporting that transformation.

New mines, processing plants, and refineries require enormous up-front investments and often take years to permit, finance, and build. The United States cannot compete with China with project financing alone. Instead, U.S. policymakers must bolster investor confidence that reliable customers will purchase their output at commercially sustainable prices once these projects begin.

Project Vault—an independently governed public-private partnership to protect American manufacturers from critical-mineral supply disruptions—should be replicated. It is backed by up to $10 billion in long-term Export-Import Bank of the United States financing and nearly $2 billion in private investment, and will purchase and store essential raw materials in secure facilities across the United States. It will then be able to give participating manufacturers access during market disruptions while creating a large, creditworthy source of demand for mineral suppliers.

Agricultural Abundance

The Western Hemisphere is one of the world’s great bread baskets, feeding more than a billion people. The United States and Canada have highly productive farms, while Mexico has extensive manufacturing capacity. South America and the Caribbean possess additional agricultural land, freshwater, and energy, and the potential for substantial productivity gains. The long-term goal should be to move the hemisphere from agricultural strength to agricultural abundance, increasing current output by 50 percent within twenty years while protecting water supplies, soil quality, forests, and other natural resources. Over the next decade, the United States should lead an effort to increase combined Western Hemispheric agricultural output by at least 25 percent. This would require sustained annual growth of more than 2 percent. It is an ambitious target, but it is achievable.

Fertilizer will be essential to increased agricultural production, but Brazil and other Latin American producers are highly dependent on imported fertilizer, including from Russia. Preventing Russia or any other external supplier from disrupting agricultural production will require sufficient hemispheric capacity and diversified supply. Fortuitously, the essential inputs to fertilizer are already present in the hemisphere. Canada possesses world-leading potash resources, while the United States and several regional partners possess natural gas, phosphate, industrial capacity, and fertilizer expertise. Further, the hemisphere’s research institutions and companies are working to generate alternatives to these conventional inputs.

Water is also essential to agricultural production. The hemisphere possesses enormous freshwater resources, but they are unevenly distributed and frequently disconnected from the farms, cities, and industrial centers where water is most needed. Further, aging systems, leakage, groundwater depletion, drought, and inadequate storage limit the amount of available water. Participating countries should establish national water-productivity targets and invest in efficient irrigation, wastewater reuse, desalination, reservoirs, leakage reduction, and modern water-conveyance systems. Over the next twenty years, the hemisphere should seek to improve agricultural water productivity by at least 50 percent, allowing output to increase without a corresponding decline in freshwater levels.

Greater agricultural production will also depend on scientific innovations that increase productivity even without bringing more land under cultivation. The United States and its partners should expand joint research into more resilient seeds, biological inputs, precision agriculture, robotics, and more efficient uses of water and fertilizer. Governments should establish predictable science-based approval systems and accelerate the movement of proven technologies across participating countries.

Making American Technology the Default

Whoever builds the hemisphere’s telecommunications networks, cloud systems, data centers, and AI infrastructure will shape its technical standards, gain access to critical data, and acquire lasting commercial and political influence. The experience with 5G should be a warning for Washington. While the United States stalled, Huawei’s technology spread across the Western Hemisphere, and its presence has been hard to dislodge. Once supplied, a country’s telecommunications backbone is expensive and politically difficult to replace. The same danger now exists across subsea cables, cloud computing, data centers, digital payments, satellite systems, cybersecurity, smart infrastructure, and AI. If American companies do not build these systems, Chinese companies will.

The United States should not aim to eliminate all Chinese technology from the hemisphere, but rather to supplant China as the preferred partner for the next generation of strategic infrastructure and to prevent participating countries from becoming dependent on Chinese-controlled technology. American and trusted-partner companies should compete to win new projects involving sensitive government communications, subsea cables, cloud infrastructure, data centers, advanced telecommunications, energy networks, cybersecurity, and AI. Participating governments should remove untrusted equipment from the most sensitive parts of existing networks as fast as is technically and commercially feasible.

Successive American administrations have begun this effort. The first Trump administration sounded the alarm about Huawei, and the Biden administration used the CHIPS Act, international semiconductor partnerships, and support for the Open Radio Access Network technology to strengthen trusted supply chains and encourage alternatives to Chinese equipment. The second Trump administration has established the American AI Exports Program and supported the export of complete American AI technology packages. The Economic Shield would concentrate and sustain these efforts in the Western Hemisphere, aiming to make the secure American and trusted-partner technology stack—the full collection of infrastructure and capabilities required to develop and use AI—the preferred platform for the hemisphere.

Countries such as Brazil and Mexico would not have to end every commercial relationship with China to participate in the Economic Shield. They should, however, protect their most sensitive infrastructure through secure and interoperable systems, transparent procurement, effective cybersecurity, and safeguards preventing any foreign supplier from controlling critical data or communications. Rather than a rigid hemispheric mandate, individual technology roadmaps should identify the energy, telecommunications, data center, and other investments required to expand trusted technology in that country. In return for the tech policy commitments of participating governments, the United States should help assemble industry-led packages combining hardware, services, and long-term financing.

CONSTRAINTS AND RESOURCES

There are numerous, serious constraints. There will always be a crisis in Europe, Asia, or the Middle East to pull Washington’s attention away. And, in the longer term, inadequate power and digital infrastructure, political turnover, and attractive Chinese offers are all substantial challenges. Many countries in the Western Hemisphere have suffered from chronic underinvestment, unpredictable regulation, slow permitting, and inadequate pipelines and transmission systems. And, in the United States, financing, technology, and diplomatic support have often been insufficient to enable U.S. companies to compete. Consequently, resources remain undeveloped, electricity remains expensive and unreliable, and Chinese firms gain opportunities to finance, build, and influence strategically important energy infrastructure.

Potential partners’ vulnerability to sovereign-debt crises is another constraint. When governments lose access to capital markets, servicing debt becomes the priority and economic reforms become politically unsustainable; in that environment, China can present itself as the lender of last resort. Given the deficiencies of the international debt architecture in meeting this challenge, the United States should use its leadership in the International Monetary Fund (IMF), the Group of Seven, and the Group of Twenty to require full disclosure of sovereign obligations, establish firm timetables for creditor negotiations, enforce comparable treatment among creditors, and extend an expedited restructuring process to vulnerable middle-income countries in the Western Hemisphere. IMF assistance should provide temporary liquidity and support serious economic reforms, but it cannot restructure debts that are genuinely unsustainable.

In addition, the Treasury Department’s Exchange Stabilization Fund (ESF) gives Washington the capacity to respond rapidly when a friendly government pursuing difficult reforms confronts a short-term currency or liquidity crisis. Although it should not become a permanent bailout facility or a substitute for the IMF, temporary currency swaps, loans, or guarantees can be a bridge to an IMF program. For example, the United States used the ESF to help stabilize Mexico in 1995, and Argentina earlier this year. When used properly, the ESF can prevent a temporary financial shock from destroying reforms or from forcing an important hemispheric partner into China’s arms.

Overcoming these constraints will require better coordination of existing American tools and additional resources as commercially viable projects emerge. Lifting American export controls will also be a sensitive but necessary step.

CONCLUSION: FORGING A LASTING FRAMEWORK FOR HEMISPHERIC PROSPERITY AND SECURITY

No region matters more to American prosperity and security than the Western Hemisphere. Deeply integrated supply chains connect the United States with Canada and Mexico, while the wider region possesses the energy, critical minerals, agricultural capacity, and technological and industrial bases that the American economy will require over the coming decades. Proximity gives American companies an advantage over their competitors. The Economic Shield would harness these advantages, using American finance, technology, and private investment to ensure that the region’s most important economic infrastructure is not shaped by China.

The Trump administration has restored the Western Hemisphere to the center of American national security and economic policy. Turning that renewed focus into a strategy capable of operating for multiple decades, and across multiple administrations, will require congressional authorization, multiyear financing, common targets across federal agencies, and long-term agreements with participating governments. Future administrations can build on these foundations.

The United States is uniquely positioned to offer Western Hemisphere countries a powerful combination of private capital, technology, government finance, energy, and market access, in return for cooperation. It can knit the hemisphere together into a mighty grouping and establish the Economic Shield as a lasting framework for hemispheric prosperity and security.