Much of the Trump administration’s economic policy has been inspired by successful industrial policies successful in East Asia, including those of competitor, China. Will those policies work in the U.S.?
Transcript
JOEL ROSE, HOST:
Did you catch what Secretary of State Marco Rubio said in a speech at the Acropolis in Greece this week? It was striking.
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MARCO RUBIO: We choose the unapologetic pursuit of national power, to take back control of our critical supply chains, to reindustrialize our economy.
ROSE: Basically, industrial advancement, Rubio argues, is a national security goal. The Trump administration has been intervening in private businesses, using government funds to invest in key sectors and even taking out direct stakes in companies. NPR’s Emily Feng reports that this model draws on industrial success stories in Asia.
EMILY FENG, BYLINE: Back in 2018, during his first term in office, President Trump started making the case for more U.S. government intervention in sectors like steel to spark technological and manufacturing growth.
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PRESIDENT DONALD TRUMP: You need some help from the government to get it started in the right direction.
FENG: And in his second term, his administration has moved beyond just tax breaks and tariffs. It’s begun programs inspired by state venture capital funds. They seed semiconductor and rare earths and AI work abroad. This year, the government has invested directly in critical minerals companies. It’s now even taking a portion of revenue from semiconductor companies Nvidia and AMD, something Trump says the U.S. deserves to do.
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TRUMP: I said, so if we’re making it possible to build, we should get a percentage of the things that are taken out.
FENG: Post World War II, industrial policy like this was highly associated with governments with more centralized economic planning, but it actually has American roots.
JOEL DODGE: Industrial policy, in many accounts, got its start with Alexander Hamilton and his report on manufacturers.
FENG: Says Joel Dodge, director of industrial policy and economic security at Vanderbilt University. Though he notes industrial policy really took off in East Asia in the 20th century.
DODGE: China, Taiwan, South Korea, use the tools of industrial policy – whether that’s subsidies or state-run investment banks or geographic clusters and place-based policy – to tremendous effect.
FENG: And now industrial policy has fully boomeranged back to the U.S. That’s evident in the work Mike Schmidt did. He used to direct the CHIPS program, a $39 billion initiative at the Department of Commerce which began under the Biden administration.
MIKE SCHMIDT: It was about onshoring, semiconductor manufacturing, to the United States.
FENG: That happened, and the initiative is still ongoing under the Trump administration. Schmidt says he witnessed a shift in the conversation across the U.S. government starting in Trump’s first term.
SCHMIDT: I think what changed was the perceptions of our relationship with China.
FENG: And global supply chains with China, which before had made goods cheaper and faster to make…
SCHMIDT: Those same supply chains suddenly look very different if that integration is with an adversary or competitor.
FENG: Ironically, China is one of the most prolific and successful cases in using industrial policy. Brad Parks at William & Mary in Virginia has spent years studying how China subsidizes key companies and industries at home and abroad. And since last year, he’s noticed a striking similarity between U.S. industrial policy and that of China.
BRAD PARKS: I think what the Trump administration effectively did was they said, there’s certain aspects of what Beijing is doing that are attractive to us, and we don’t need to reinvent the wheel.
FENG: Particularly when it comes to energy and natural resources.
PARKS: Taking equity stakes in critical mineral assets overseas is like taking a page right out of Beijing’s playbook.
FENG: The Trump administration has taken industrial policy one step farther than China, however, by having the state directly hold equity in critical mineral companies.
PARKS: Whereas, you know, in China, it’s usually state-owned companies that are taking these ownership stakes.
FENG: And some U.S. deals have involved firms and funds with personal connections to the administration.
DODGE: One of the notable developments under the second Trump administration in particular, which is how unilateral and personalist industrial policy has become.
FENG: That’s Dodge at Vanderbilt again, arguing that approach opens up the U.S. to the risk of corruption. Rubio’s speech in Greece, however, made the case the U.S. has no time to lose.
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RUBIO: We will either choose to act now or lose the choice to act at all.
FENG: And Rubio framed industrial policy in militant terms, as a fight for, quote, “dominance of the technologies and industries of the future.” Emily Feng, NPR News, Washington.
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