Managing Systemic Supply Chain Risk to the U.S. Economy From Trade Concentration and Geopolitical Conflict
•February 18, 2026
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Why It Matters
Concentrated trade links expose the U.S. to economic shocks, prompting urgent policy action to safeguard critical industries. Strengthening supply‑chain resilience is essential for national security and economic stability.
Key Takeaways
- •Trade concentration heightens disruption vulnerability
- •Geopolitical tensions threaten critical material flows
- •Diversification reduces systemic risk exposure
- •Public‑private collaboration essential for resilience
- •Policy frameworks must incentivize supply‑chain flexibility
Pulse Analysis
Global supply chains have become the arteries of the U.S. economy, delivering everything from raw materials to finished products. Yet, an increasing reliance on a limited number of foreign sources—particularly in high‑tech and strategic sectors—creates a single‑point‑of‑failure scenario. When geopolitical tensions flare or a dominant supplier faces internal turmoil, the ripple effects can stall production lines, inflate prices, and erode consumer confidence. Understanding these dynamics is the first step toward mitigating systemic risk that could reverberate across the broader economic landscape.
Policymakers and industry leaders are now urged to adopt a dual‑track approach that blends diversification with strategic stockpiling. Diversifying supplier bases reduces dependence on any one nation, while targeted investments in domestic capabilities and allied partnerships can fill critical gaps. Moreover, the report emphasizes the importance of real‑time data sharing and joint risk‑assessment platforms, enabling faster response to emerging threats. Incentives such as tax credits, grant programs, and streamlined regulatory pathways can encourage firms to re‑engineer supply chains without sacrificing competitiveness.
Looking ahead, the United States must embed supply‑chain resilience into its broader economic strategy. This includes fostering innovation in alternative materials, supporting advanced manufacturing hubs, and strengthening diplomatic ties that secure reliable trade routes. By aligning national security objectives with commercial interests, the country can transform supply‑chain risk from a vulnerability into a strategic advantage, ensuring continuity of essential goods even amid geopolitical upheaval.
Managing Systemic Supply Chain Risk to the U.S. Economy from Trade Concentration and Geopolitical Conflict
Global trade delivers materials and manufactured goods through supply chains worldwide to fuel national economies. This report examines policy issues related to managing systemic supply chain risks from trade concentration and geopolitical conflict. The purpose of this analysis is to improve understanding of this area of economic risk so that the private and public sectors can work together to manage them effectively.
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Funding for this research was provided by the generous contributions of the RAND Feinberg Center for Catastrophic Risk Management and Compensation Advisory Board, gifts from RAND supporters, and income from the operation of RAND Education, Employment, and Infrastructure. he research was conducted by the RAND Institute for Civil Justice within RAND Social and Economic Well-Being.
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