About ITIF’s Aegis Project for Defending U.S. Technology Leadership
The United States is engaged in its most consequential technological competition since the War of 1812: a fierce rivalry with China, which is conducting a state-orchestrated campaign of innovation mercantilism to dominate the world’s advanced industries and degrade U.S. economic power.
In its quest to achieve global technological supremacy, China has built strength by protecting and leveraging its huge domestic market, showering support on its national champions, and subverting the rules and norms of the global trading system to expand outward, thereby capturing market share in advanced industries at the expense of the United States and its allies. In so doing, China has emerged as a formidably innovative and dynamic competitor—no longer merely copying Western innovations, but creating its own, such that it now stands as America’s greatest economic and national security rival.
Yet, precisely when America needs to bolster its technological edge—an edge it holds largely because of the innovative output of its leading technology companies—the U.S. government, U.S. states, and other governments around the world are advancing a growing set of non-tariff attacks: discriminatory regulations, targeted enforcement actions, digital taxes, and data and infrastructure mandates that are framed as neutral domestic policies but in practice are designed to weaken U.S. tech companies. These non-tariff attacks weaken U.S. competitiveness and ultimately cede ground to China.
This recent trend notwithstanding, large U.S. technology companies have driven American innovation in recent decades by investing hundreds of billions of dollars in research and development, which has yielded breakthroughs in semiconductor design, AI, quantum computing, biotechnology, and more. The scale of this private sector investment has exceeded the R&D budget of the entire federal government. So, while China leverages state funding to advance its technological ambitions, private investment has been America’s superpower, especially with the coming federal budget austerity. But while American firms’ massive investments in R&D benefit the entire U.S. economy, they are only capable of making large-scale investments when they’re able to operate at scale and attract top global talent.
Those preconditions are now increasingly in jeopardy as U.S. tech firms face mounting non-tariff attacks and regulatory pressure from all sides, tilting the playing field against them in favor of foreign competitors. These challenges threaten U.S. firms’ ability to sustain a technological edge, posing a significant risk to American economic power and national security. In Washington today, federal regulators and both political parties continue to grapple with how to respond to the power of large tech companies, with ongoing antitrust litigation and appeals and renewed focus on competition and AI policy. However, the partisan consensus around aggressive tech regulation that existed in prior years has weakened, as the Trump administration emphasizes tech competitiveness and innovation while still pursuing select enforcement actions. The European Union meanwhile has become a model for nations seeking to curb the influence of American tech companies, particularly through its Digital Markets Act (DMA), which specifically singles out U.S. tech platforms, tagging them as “gatekeepers” and imposing restrictions that could hinder their ability to innovate, integrate new technologies, and continue competing on a global scale. The DMA’s ostensible purpose is to rein in U.S. leaders to give European firms an opportunity to compete, but as a practical matter it creates a competitive opening for Chinese rivals to step in and capture market share.
This convergence of regulatory pressure comes despite fundamentally different motivations—from progressive concerns about market power to conservative fears about cultural influence. Those concerns and others, such as data privacy and content moderation, raise legitimate questions that policymakers must address. But while targeted interventions may be warranted to address specific harms, broadly punitive non-tariff attacks and structural breakups targeting a select few U.S. companies risk undermining U.S. technological leadership at a crucial juncture.
In the face of the competitive threat America now faces from China’s quest for technological supremacy, U.S. policymakers must recognize the critical role America’s technology champions play in maintaining the country’s economic power and national security; actively defend them against the storm of non-tariff attacks launched by both allies and adversaries abroad. The stakes are high. Failing to balance the need for targeted regulatory interventions to address specific harms with the need to spur continued innovation and bolster U.S. global competitiveness would risk ceding our technological edge to China at a pivotal moment.
ITIF’s Aegis Project for Defending U.S. Tech Leadership is dedicated to helping the United States prevail in the global competition with China by identifying and opposing non-tariff attacks that weaken the competitive position of major U.S. technology companies. Sustaining the U.S. technological edge against China will not be possible if U.S. technology companies are subject to an ongoing onslaught of slings and arrows designed to weaken them. As such, U.S. policymakers need to actively fight back against those governments, including in the United States, that would weaken U.S. technology companies, to ensure future U.S. techno-economic power, national security, and U.S. global leadership.
