This April, Deputy Secretary of Defense Stephen Feinberg established a new Economic Defense Unit (EDU) at the Pentagon to coordinate America’s economic competition with China, Russia, Iran, and North Korea. Congress has already appropriated $500 million for this mission through the 2025 reconciliation law and the Department has requested an additional $189 million for FY 2027. But the unit itself has no statutory foundation—the next administration could rescind the memo with a signature.
Congress should codify the EDU in the FY 2027 National Defense Authorization Act (NDAA) by reviving Section 901 of the Senate-passed FY 2026 NDAA. Statutory authorization would lock in the unit’s mission, clarify its interagency authorities, secure congressional oversight, and ensure the EDU survives across administrations.
FDD Action Expert Analysis
“Beijing has spent a decade weaponizing the economic domain against the United States and its allies, and the Pentagon has finally organized itself to fight back. But a memo is not a mandate. Without statutory authorization, the Economic Defense Unit is one signature away from being filed away by the next deputy secretary. Economic competition with China is a generational contest. Congress must give this mission the firm foundation of law before the window closes.”
– Matt Zweig, Managing Director of Policy, FDD Action
What’s at Stake
China treats the economic domain as a primary instrument of state power.
- Coercion is the playbook: When Australia called for an independent inquiry into the origins of COVID-19 in 2020, Beijing imposed comprehensive punitive trade measures on Australian wine, barley, coal, and beef until Australia elected a new government and improved relations. Beijing does not announce coercion, justify it legally, or lift it on a fixed schedule. It treats access to the Chinese market as a discretionary reward for political alignment.
- Industrial policy at scale: “Made in China 2025” sets explicit targets for Chinese dominance in semiconductors, biotechnology, and other strategic sectors, while military-civil fusion channels commercial research directly into military modernization. State investment funds, like the national semiconductor fund, and provincial subsidies funnel billions of dollars into these efforts that no Western firm can match through ordinary market means.
- Critical minerals dominance: Meanwhile, China developed monopolies over rare earths processing for the express purpose of weaponizing them against the West. Beijing now controls 65-90% of the global supply for the metals on which most U.S. defense systems depend. It has readily demonstrated it is not afraid to use this power against America and our allies.
The Pentagon’s April memo is a serious step forward, but a fragile one.
- Vulnerable to reversal: The Economic Defense Unit (EDU) exists today by internal Pentagon directive. The next administration could rescind the memo unilaterally, eliminating the unit and any progress it has made on interagency integration.
- Hampered as an interagency partner: The EDU’s mission depends on coordination with Treasury sanctions policy, Commerce export controls, State diplomatic engagement, and U.S. International Development Finance Corporation investments. An office established by Pentagon memo carries little standing outside the building.
- Limited congressional oversight: Without authorizing language, Congress lacks visibility into the unit’s activities, how it measures success, and where it falls short. Congressional oversight will be critical to ensure there is accountability over a powerful new tool of national power.
Funding without authorization is unstable footing for a multi-decade mission.
- Real money is already flowing: Section 20009 of the 2025 reconciliation law (P.L. 119-21) appropriates $500 million for “development, coordination, and deployment of economic competition effects” within the Department of Defense (DOD) and a further $10 million to expand DOD’s economic competition workforce.
- Appropriators need an authorizing partner: Funding would be more reliable, and at greater scale, if the armed services committees formally blessed the unit’s mission too.
What Congress Can Do: Codify the Economic Defense Unit in the FY 2027 NDAA
Revive Section 901 of the Senate-passed FY 2026 NDAA (S. 2296), which would establish the EDU in statute, define “economic competition activities,” and designate the EDU director as the principal advisor to the Deputy Secretary on economic competition.
The provision defines the Economic Defense Unit’s mission.
- It tasks the EDU with interrupting adversaries’ mobilization efforts and securing America’s supply chains.
- Specifically, the unit would develop requirements for access, basing, and overflight rights; countering adversaries’ defense industrial base activities; and ensuring American access to critical materials and capabilities.
The provision would have mandated annual reporting and regular briefings to the armed services committees.
- It requires the EDU to submit an annual report describing its activities, measurable outcomes in countering foreign economic coercion, and progress against identified defense industrial base chokepoints.
- Additional reporting language could be included to further direct the Department to identify gaps in interagency coordination with Treasury, Commerce, State, and U.S. Trade Representative’s office.
About FDD Action
FDD Action is a 501(c)(4) advocacy organization that works directly with policymakers to advocate for a robust U.S. foreign policy — one that strengthens U.S. national security, does damage to America’s adversaries, and supports allies and partners. FDD Action serves as a trusted resource for congressional offices and executive branch policymakers navigating complex national security challenges, leveraging a team with decades of experience on Capitol Hill and in the policy arena.