AI, Supply Chains, and the Future of Economic Power

What It Covers

Jacob Helberg, Undersecretary of State for Economic Affairs, outlines the U.S. strategy to win the AI race through three conditions: superior model quality, maximum global market share, and secure supply chains, while connecting tariff policy, reindustrialization, and Middle East AI partnerships to national security imperatives.

Key Questions Answered

• •Three-condition AI victory framework: Helberg identifies three non-negotiable requirements for U.S. AI dominance: qualitatively superior models, maximum global market share (dominant platform adoption, not just technical excellence), and secure supply chains. Market share matters as much as model quality — technically superior products with low adoption are strategically irrelevant, as consumer technology history repeatedly demonstrates.
• •Supply chain vulnerability and the Paxilica initiative: U.S. AI supply chains involve thousands of geographically dispersed vendors, many unknown even to the companies depending on them, creating dangerous information asymmetries. The State Department launched Paxilica to address this through off-take agreements, joint ventures, and co-investments with technologically advanced partner nations, prioritizing visibility and coordination over the current fragmented structure.
• •Tariffs as industrial recalibration, not protectionism: The U.S. ran trade deficits exceeding $1 trillion annually with its top 12 trading partners before Liberation Day. Helberg frames tariffs as correcting 25 years of policy-driven deindustrialization — the U.S. lost 66,000 manufacturing plants and 2 million jobs — with record CapEx investment now flowing in as an early leading indicator before production capacity materializes.
• •AI as an industrial revolution multiplier on GDP growth: Helberg co-authored a White House economic analysis projecting AI could shift U.S. GDP growth from the post-industrial baseline of 1–3% annually toward 3–6%, replicating the compounding growth unlock of the first industrial revolution. Early signals include U.S. growth breaking 5% and productivity growth exceeding 5%, with demand for energy, compute, and minerals outpacing supply.
• •Middle East sovereign AI as a U.S. strategic asset: Gulf states possess cheap energy — a primary cost driver of compute — and are investing heavily in AI infrastructure regardless of U.S. involvement. Helberg's approach treats UAE, Saudi Arabia, and Qatar as expansion markets for U.S. AI companies, with signed bilateral AI deals providing American firms access to low-cost energy and large compute capacity abroad.