The Pentagon enters the age of military geoeconomics

The unit’s origins trace back to July 2025, when the United States Senate Armed Services Committee called for the creation of an Economic Defense Unit within the Department of War to centralise and coordinate the Pentagon’s economic competition efforts. In November, the Economic Defense Unit appeared briefly in a memorandum by Pete Hegseth as part of a broader overhaul of the Defense Acquisition System. There, it was assigned a supporting role in developing a playbook for deploying capital — through grants, loans, options, purchase commitments, and investments — as part of a broader effort to strengthen the US defence industrial base, expand production capacity, and accelerate the delivery of critical capabilities.

More information was revealed this April, when DefenseScoop accessed the memorandum officially establishing the Economic Defense Unit (EDU), written by Deputy Defense Secretary Steve Feinberg. The unit’s general objective is to counter adversaries’ economic influence while expanding US influence in ways that enhance military advantage, using economic tools and private-sector financial expertise. As reported by Semafor in March, the Pentagon was recruiting roughly a 30-person team of bankers for the EDU that could be involved in investing as much as $200 billion over three years into strategic defence deals aimed at strengthening national security and countering China’s influence.

Ensuring military superiority with economic means

For decades, China was quietly acquiring stakes in sensitive private companies and strategic infrastructure across the West, gaining access to technology, information, and leverage, while tightening its grip on critical rare earth and material supply chains. Against this background, the EDU will focus on securing US access to and control over the materials, capabilities, and assets essential to military superiority, from undersea cables, strategic logistics, mineral extraction and refining to munitions, drones, satellites, and energy generation. Abroad, it will adopt elements of China’s geoeconomic toolkit, seeking to undermine adversaries’ defence industrial and technological bases and their ability to mobilise needed resources.

To this end, the unit will conduct exercises, economic assessments, and planning activities to identify the most effective tools and areas for augmenting US military power in both peacetime and wartime. More broadly, its members will help shape Pentagon contracting and commercial strategies, while coordinating with other agencies in line with Hegseth’s „commercial-first” procurement philosophy. However, entrusting such authority to private investment bankers — over both the allocation of taxpayer money and access to privileged information — has already raised concerns, particularly among Democrats, about conflicts of interest and the risk of misuse for private gain.

From economics to warfighting: the rise of military geoeconomics

Economic statecraft is becoming increasingly defence-oriented and is now seen as a critical enabler of military power by securing independent industrial, technological, and material strength. This evolution must be understood in the broader context of the return of military force as a central instrument of international politics. In such a world, economic competition no longer replaces military competition, as Edward Luttwak once proclaimed, but increasingly complements it. Welcome to a new era of military geoeconomics, where the boundary between the economic and the military increasingly blurs.

The EDU’s establishment fits squarely within the more protectionist and assertive economic policy pursued by this administration, most ostensibly represented by Trump’s tariffs and trade wars. It also inevitably raises the question of whether European countries, often more exposed to Chinese and, in some cases, still Russian economic influence, should develop similar specialised units. Should these be national-based, with strong coordination, or rather take the form of a single centralised unit at the EU level, perhaps within the EDF? Could Europe and the US even work together in this area, given that they remain engaged in a de facto trade war? These questions reflect a new reality of military geoeconomics, in which national security concerns increasingly erode trust in economic cooperation, even among allies.