Drawing inspiration from East Asian industrial policies, the Trump administration’s economic strategies have been significantly influenced by the successes of nations like China. This raises the question: Can these policies be effectively implemented in the United States?
U.S. Embraces Industrial Policy with National Security in Mind
In a recent speech at the Acropolis in Greece, Secretary of State Marco Rubio emphasized the importance of reclaiming control over critical supply chains and reindustrializing the U.S. economy. “We choose the unapologetic pursuit of national power,” Rubio stated, framing industrial advancement as a key national security objective.
The Trump administration has actively engaged in private sector interventions, investing government funds in critical industries and acquiring stakes in companies. NPR’s Emily Feng highlights that this approach mirrors industrial success stories in Asia.
Historical Roots and Modern Application
President Trump, during his first term in 2018, advocated for government intervention in sectors like steel to boost technological and manufacturing growth. “You need some help from the government to get it started in the right direction,” he noted.
In a move beyond tax breaks and tariffs, the administration has implemented programs akin to state venture capital funds, investing in semiconductors, rare earths, and AI. This year, the government directly supported critical mineral companies, receiving a portion of revenue from semiconductor giants Nvidia and AMD. “I said, so if we’re making it possible to build, we should get a percentage of the things that are taken out,” Trump asserted.
Industrial Policy: From Hamilton to East Asia
While often associated with centralized economic planning post-World War II, industrial policy has American origins, as Joel Dodge from Vanderbilt University points out, tracing back to Alexander Hamilton. However, it gained prominence in East Asia during the 20th century, with countries like China, Taiwan, and South Korea leveraging subsidies and state-run investment banks to great effect.
Mike Schmidt, former director of the CHIPS program, a $39 billion initiative to onshore semiconductor manufacturing in the U.S., observed a shift in U.S. government perspectives starting in Trump’s first term. “I think what changed was the perceptions of our relationship with China,” Schmidt commented.
China’s Influence and U.S. Adaptation
China is a notable example of successful industrial policy, according to Brad Parks of William & Mary. The Trump administration, recognizing the effectiveness of Chinese strategies, adopted similar approaches, particularly in energy and natural resources. “Taking equity stakes in critical mineral assets overseas is like taking a page right out of Beijing’s playbook,” Parks remarked.
Unlike China, where state-owned companies typically manage these stakes, the U.S. government has directly held equity in critical mineral companies. This approach, however, has raised concerns about potential corruption due to its unilateral and personalist nature, as noted by Dodge.
Rubio, in his speech, urged action, stating, “We will either choose to act now or lose the choice to act at all,” framing industrial policy as a battle for “dominance of the technologies and industries of the future.”
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