By Fred Bauer, a writer in New England

The reset has been reset. After delivering a shock to the global trade system with “Liberation Day,” the Trump administration has now put many of these newly imposed tariffs on hold, allowing countries to propose trade and other policy changes in exchange for reduced rates. As the White House negotiates these deals, the aftermath of Liberation Day should serve as a reminder that rebalancing the global economic order isn’t just about trade policy. It requires restoring America’s industrial resilience—a long-ignored national priority.

To understand the mechanics of this realignment, it’s important to understand its aims. Contrary to what some critics claim, the goal of industrial resilience is not (and, given the realities of automation, cannot be) returning to the economy of the 1950s, when close to a third of the American workforce labored in factories. Nor should the objective be absolute economic autarky, in which the United States absorbs no imports from abroad. Securing trade routes has been one of the principal aims of U.S. foreign policy since the Founding, and trying to sever the United States from the rest of the world would obliterate American living standards. As many in the Trump administration recognize, a complete withdrawal from the global economy would mean sacrificing many of the economic benefits of scale and could actually undermine American economic independence over the long term by causing the U.S. to be shut out of new technologies.

Instead, industrial resilience requires recognizing that where something is made matters. If the United States offshores its productive infrastructure for whole economic sectors (especially for strategically important ones like medicine), it imperils its own geopolitical position. It could also miss out on future innovations. Resilience demands building, manufacturing, and harvesting more at home. It’s more about positioning for the 2030s than retreating to the 1950s. This expansion would provide jobs for the American people—and there may be an untapped pool of Americans interested in factory work—but a stronger industrial base at home is also a prerequisite for continuing as a great power and honoring American international commitments.

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One prong of this bigger reset should be investing in the industrial backbone of the modern economy. For example, the U.S. shipbuilding infrastructure has radically deteriorated. This is a major economic and national security liability. A shipbuilding expansion could help reinforce the defense industrial base, revitalize maritime communities, and energize related industries. For instance, steel is a major component of modern commercial ships, so an expansion of the shipbuilding industry would increase demand for steel. One policy vehicle for such a maritime renewal, the bipartisan SHIPS for America Act would offer financial incentives (such as tax credits) for building ships at home, establish a Maritime Security Advisor to help coordinate federal efforts, streamline permitting for certain maritime facilities, and provide funds for worker training. President Trump’s announcement of the “Restoring American Maritime Dominance” executive order contains many affinities with the SHIPS proposal, so this could be one targeted area for bipartisan collaboration.

According to a U.S. Geological Survey report from January, the United States imports essentially all of at least a dozen critical minerals, and it remains reliant on imports for dozens of other important minerals. As those minerals are the building blocks of certain chemicals, batteries, and other advanced goods, they represent an essential part of many modern supply chains. The People’s Republic of China (PRC) is a major supplier for many of those minerals, and it uses its dominance of the rare earths market as leverage. As part of its trade brinkmanship with the United States earlier this year, the PRC imposed export restrictions on rare earth elements that are a crucial component for many defense technologies, including fighter jets and Tomahawk missiles. For some heavy rare earths, the PRC has a near monopoly.

Diversifying international sources for these strategic minerals would obviously be an important step toward reducing American dependence upon the PRC. But domestic steps can be taken, too. For instance, Congress could consider expanding the existing mineral supplies in the National Defense Stockpile and also create a stockpile of minerals that have economic applications beyond defense. Assembling these stockpiles could help fortify American domestic supply chains for these resources and also provide a backstop in case of geopolitical disruption. A 2021 White House report projected that the United States could suffer a shortfall in dozens of critical materials—from aluminum to yttrium—during a great-power conflict or major geopolitical disruption. Adding to a national stockpile over time for these materials seems a national-security imperative. That report also observes that the U.S. stockpile is purely intended for defense, which limits the range and quantity of materials included in it. Conversely, the PRC’s stockpile has a wider economic charge, which would allow it to respond more comprehensively in case of a crisis. The United States might need to broaden its own stockpile in light of this.

Other efforts to expand rare earth mining at home could include tax incentives or cutting red tape restricting the development of mining and processing plants. Currently, there is only a single major rare earth mining facility in the United States: Mountain Pass in California. However, there are other potential sites for rare earth mining in Wyoming and elsewhere. Perhaps even more important is creating a processing infrastructure for rare earths. Even when those earths are mined in the United States, the ore then has to be shipped to the PRC to be processed. The Defense Department is starting to try to correct this and is investing in supply chains that would allow for the domestic production of neodymium-iron-boron magnets, which are essential for many electronics. But much more needs to be done.

Semiconductors are at the bleeding edge of the new economy, and they reveal the deeper interconnections between the industrial and the digital. As the shortages of the pandemic showed, a disruption in microchips can echo throughout the economy—from cars to home appliances. The United States still has a viable semiconductor industry, though it faces rising challenges. Taiwan dominates the fabrication of the most advanced chips, and a 2023 working paper by the U.S. International Trade Commission found that, even if there were a major disruption of imports from Taiwan, the U.S. production of high-end logic chips would only go up by about 5%; the underlying manufacturing capacity simply isn’t there right now. Moreover, investing in new chip foundries is enormously expensive (with tremendous upfront capital costs), so it would take significant federal support to help domestic suppliers compete with international producers. A recent American Affairs article by Kenneth Flamm and William B. Bonvillian suggests, for example, expanded federal loan guarantees and tax credits for new semiconductor plants. It also highlights the benefits of grants to research consortia.

Policymakers can enact other measures to foster a pro-manufacturing ecosystem more broadly. Modern manufacturing is highly energy intensive, so minimizing energy costs has major industrial stakes. This means embracing an “all of the above” energy strategy—coal, oil, nuclear, and renewables to expand the capacity of the American power grid. Here, Republicans will have to resist the temptations of austerity. For instance, a proposal to slash the Loan Program Office at the Department of Energy would gut the primary loan mechanism for almost all nuclear reactors that went online in the 21st century, according to policy analysts Thomas Hochman and Pavan Venkatakrishnan. These cuts would devastate the ability of the United States to build more nuclear power plants—a result completely at odds with President Trump’s pledge of a dramatic increase in nuclear power production. Instead, policymakers can focus on increasing production: through drilling, investing in nuclear energy, streamlining the permitting process, and so forth.

Permitting bottlenecks have frustrated elements of both the Left and Right in recent years—and they pose a major hurdle to industrial renewal. The National Environmental Policy Act (NEPA) has erected a maze of paperwork, lawsuits, and regulatory delays for new construction and for infrastructure programs. Because NEPA requires opens up so many avenues for litigation, it can often slow construction to a halt. It can take years to write an environmental impact statement under the law. Possible ways of reforming NEPA include limiting the range of parties who could bring a lawsuit or demanding that these legal challenges be brought more quickly.

Other pro-industrial incentives could include expanding tax benefits for manufacturing (such as restoring the immediate expensing of research and development) or providing federal grants to states to promote vocational training. Investments in capital purchases for vocational education, facilitating apprenticeships, and so forth would help expand the talent pool for hands-on building, mining, and manufacturing. A reindustrialized workforce will require more investment in early training as well as a restructured ladder of opportunity for blue-collar Americans. Likewise, continued investments in cutting-edge research are essential. The United States enjoys a massive advantage as an engine for research in a variety of fields, and it cannot afford to sacrifice that strategic opportunity.

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The deindustrialization triggered by globalization took time. American industry did not close up shop overnight, and it will take a long-term, full-spectrum effort to rebuild industry today. The magnitude of this project indicates why executive-imposed tariffs have limited leverage. Aside from 2008, every presidential election of the twenty-first century has been within a few points, and three (2000, 2016, and 2020) were each decided by under 100,000 votes in tipping-point states. Moreover, the parties are increasingly polarized in their policy agendas. Witness the wrenching shifts from Trump’s first term to Joe Biden’s presidency to the second Trump administration. This combination of neck-and-neck electoral contests and policy polarization means that any executive-led tariff agenda could soon be swept away with the stroke of a future president’s pen.

But even if that doesn’t come to pass, the reliance of the United States on foreign powers for key strategic goods imposes enormous restraints on our ability to renegotiate the terms of trade. Consider the People’s Republic of China. Shortly after announcing and then raising reciprocal tariffs on Beijing, the White House exempted phones, computers, and other high-tech products from those tariffs. The fact that the PRC is such an important source for those devices (supplying about 75% of smartphones, for example) stoked fears that maintaining those tariffs would ravage the U.S. economy. Those exemptions led to an odd dynamic, in which Minecraft action figures faced crushing tariff barriers while essential technological goods slid by at a much lower rate. The chokehold of the PRC on the basics of the digital economy severely limited the utility of tariffs as a negotiating tactic and reindustrialization vehicle. Such a dynamic exists because of our depleted domestic industry.

There are thus political and policy reasons for building out a more comprehensive agenda and securing a broader legislative consensus. Making manufacturing great again would provide a material foundation for democratic self-governance and for power projection on the global stage.

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Make American Manufacturing Great Again