AI is not an immaterial vapor hovering above the economy. The models that will power future change run on a foundation of physical inputs: cables, turbines, chips, and copper. These are bought and sold all over the world. This is why the one area AI is having a measurable effect on trade.
The reason AI’s impact on trade is so wide-reaching is that while a data center might be located in Virginia and use American-designed semiconductors and large language models, it is ultimately a citizen of the world, home to chips fabricated in Taiwan and extreme-ultraviolet lithography machines made in the Netherlands. These are paired with Korean memory chips, which may be packaged or tested in Southeast Asia. Mexican turbines and Chilean copper power it up. In other words, that data center is the end product of the complex workings of global supply chains.
American ingenuity was a genesis for AI, from the invention of the transistor to the development of the transformer, which enables large language models. To this day, U.S.-based firms account for most global semiconductor sales and have leading positions in research, design, and process technology. These capabilities make the United States central to global AI supply chains, not just at the receiving end. The point of strengthening domestic capabilities, then, is not just to make more AI inputs at home. It is to remain an indispensable player throughout.
The U.S. needs trusted partners
This is why the U.S. still needs trading partners it can trust.
For steady, reliable access, the United States needs trusted suppliers. That is leading to a new geometry of globalization. MGI has created a metric, which we call “geopolitical distance,” that defines the extent to which trading partners are aligned on important global issues. Since 2017, geopolitical distance has declined markedly, with China, the European Union, and the United States all reorienting toward closer trading partners.
The importance of trade
It’s not just about goods trade, either. Ultimately, we believe AI leadership will also result in more trade in services. For example, U.S. multinationals may train models that are then hosted in data centers built by American tech giants, serving clients anywhere.
How big will AI be? It’s impossible to say. What can be said is that AI is essential to productivity growth and for the United States to maintain its global economic leadership.
The bottom line: to build a prosperous, AI-driven future, the United States needs a little help from its friends—and good reasons for those friends to keep choosing the United States.
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