Why tariffs are the key to America’s industrial comeback



On April 2, President Trump announced a sweeping policy of reciprocal tariffs aimed at severing America’s economic dependence on China. His goal: to reshore American industry and restore national self-sufficiency.

How can the United States defend its independence while relying on Chinese ships, machinery, and computers? It can’t.

Tariffs aren’t just about economics. They are a matter of national survival.

But time is short. Trump has just four years to prove that tariffs can bring back American manufacturing. The challenge is steep — but not unprecedented. Nations like South Korea and Japan have done it. So has the United States in earlier eras.

We can do it again. Here’s how.

Escaping the altar of globalism

Tariffs were never just about economics. They’re about self-suffiency.

A self-sufficient America doesn’t depend on foreign powers for its prosperity — or its defense. Political independence means nothing without economic independence. America’s founders learned that lesson the hard way: No industry, no nation.

The entire supply chain lives offshore. America doesn’t just import chips — it imports the ability to make them. That’s a massive strategic vulnerability.

During the Revolutionary War, British soldiers weren’t the only threat. British factories were just as dangerous. The colonies relied on British imports for everything from textiles to muskets. Without manufacturing, they had no means to wage war.

Victory only became possible when France began supplying the revolution, sending over 80,000 firearms. That lifeline turned the tide.

After the Revolution, George Washington wrote:

A free people ought not only to be armed, but ... their safety and interest require that they should promote such manufactories as tend to render them independent of others for essential, particularly military, supplies.

Washington’s first major legislative achievement was the Tariff Act of 1789. Two years later, Alexander Hamilton released his “Report on Manufactures,” a foundational blueprint for American industrial strategy. Hamilton didn’t view tariffs as mere taxes — he saw them as the engine for national development.

For nearly two centuries, America followed Hamilton’s lead. Under high tariffs, the nation prospered and industrialized. In fact, the U.S. maintained the highest average tariff rates in the 19th century. By 1870, America produced one-quarter of the world’s manufactured goods. By 1945, it produced half. The United States wasn’t just an economic powerhouse — it was the world’s factory.

That changed in the 1970s. Washington elites embraced globalism. The result?

  

America has run trade deficits every year since 1974. The cumulative total now exceeds $25 trillion in today’s dollars.

Meanwhile, American companies have poured $6.7 trillion into building factories, labs, and infrastructure overseas. And as if outsourcing weren’t bad enough, foreign governments and corporations have stolen nearly $10 trillion worth of American intellectual property and technology.

The consequences have been devastating.

Since the 1980s, more than 60,000 factories have moved overseas — to China, Mexico, and Europe. The result? The United States has lost over 5 million well-paying manufacturing jobs.

  

This industrial exodus didn’t just hollow out factories — it gutted middle-class bargaining power. Once employers gained the ability to offshore production, they no longer had to reward rising productivity with higher wages. That historic link — more output, more pay — was severed.

Today, American workers face a brutal equation: Take the deal on the table, or the job goes to China. The “race to the bottom” isn’t a slogan. It’s an economic policy — and it’s killing the American middle class.

  

Offshoring has crippled American industry, turning the United States into a nation dependent on foreign suppliers.

Technology offers the clearest example. In 2024, the U.S. imported $763 billion in advanced technology products. That includes a massive trade deficit in semiconductors, which power the brains of everything from fighter jets to toasters. If imports stopped, America would grind to a halt.

Worse, America doesn’t even make the machines needed to produce chips. Photolithography systems — critical to chip fabrication — come from the Netherlands. They’re shipped to Taiwan, where the chips are made and then sold back to the U.S.

The entire supply chain lives offshore. America doesn’t just import chips — it imports the ability to make them. That’s not just dependency. That’s a massive strategic vulnerability.

And the problem extends far beyond tech. The U.S. imports its steel, ball bearings, cars, and oceangoing ships. China now builds far more commercial vessels than the United States — by orders of magnitude.

How can America call itself a global power when it can no longer command the seas?

  

What happens if China stops shipping silicon chips to the U.S.? Or if it cuts off something as basic as shoes or light bulbs? No foreign power should hold that kind of leverage over the American people. And while China does, America isn’t truly free. No freer than a newborn clinging to a bottle. Dependence breeds servitude.

Make America self-sufficient again

Trump has precious little time to prove that reindustrializing America isn’t just a slogan — it’s possible. But he won’t get there with half-measures. “Reciprocal” tariffs? That’s a distraction. Pausing tariffs for 90 days to sweet-talk foreign leaders? That delays progress. Spooking the stock market with mixed signals? That sabotages momentum.

To succeed, Trump must start with one urgent move: establish high, stable tariffs — now, not later.

Tariffs must be high enough to make reshoring profitable. If it’s still cheaper to build factories in China or Vietnam and just pay a tariff, then the tariff becomes little more than a tax — raising revenue but doing nothing to bring industry home.

What’s the right rate? Time will tell, but Trump doesn’t have time. He should impose immediate overkill tariffs of 100% on day one to force the issue. Better to overshoot than fall short.

That figure may sound extreme, but consider this: Under the American System, the U.S. maintained average tariffs above 30% — without forklifts, without container ships, and without globalized supply chains. In modern terms, we’d need to go higher just to match that level of protection.

South Korea industrialized with average tariffs near 40%. And the Koreans had key advantages — cheap labor and a weak currency. America has neither. Tariffs must bridge the gap.

Just as important: Tariffs must remain stable. No company will invest trillions to reindustrialize the U.S. if rates shift every two weeks. They’ll ride out the storm, often with help from foreign governments eager to keep their access to American consumers.

President Trump must pick a strong, flat tariff — and stick to it.

This is our last chance

Tariffs must also serve their purpose: reindustrialization. If they don’t advance that goal, they’re useless.

Start with raw materials. Industry needs them cheap. That means zero tariffs on inputs like rare earth minerals, iron, and oil. Energy independence doesn’t come from taxing fuel — it comes from unleashing it.

Next, skip tariffs on goods America can’t produce. We don’t grow coffee or bananas. So taxing them does nothing for American workers or factories. It’s a scam — a cash grab disguised as policy.

Tariff revenue should fund America’s comeback. Imports won’t vanish overnight, which means revenue will flow. Use it wisely.

Cut taxes for domestic manufacturers. Offer low-interest loans for large-scale industrial projects. American industry runs on capital — Washington should help supply it.

A more innovative use of tariff revenue? Help cover the down payments for large-scale industrial projects. American businesses often struggle to raise capital for major builds. This plan fixes that.

Secure the loans against the land, then recoup them with interest when the land sells. It’s a smart way to jump-start American reindustrialization and build capital fast.

But let’s be clear: Tariffs alone won’t save us.

Trump must work with Congress to slash taxes and regulations. America needs a business environment that rewards risk and investment, not one that punishes it.

That means rebuilding crumbling infrastructure — railways, ports, power grids, and fiber networks. It means unlocking cheap energy from coal, hydro, and next-gen nuclear.

This is the final chance to reindustrialize. Another decade of globalism will leave American industry too hollowed out to recover. Great Britain was once the workshop of the world. Now it’s a cautionary tale.

Trump must hold the line. Impose high, stable tariffs. Reshore the factories. And bring the American dream roaring back to life.

China’s chip strategy is ‘Moneyball.’ Ours is ‘Sandlot.’



The “chip war” remains a critical domain in U.S.-China competition. This was clearly the case during the Biden administration, which made semiconductor investment the focus of its marquee legislation. And the emphasis on semiconductors — and competition with China therein — remains under the Trump administration; the field is front and center for the Commerce Department’s newly announced United States Investment Accelerator.

Still, despite this consistent prioritization, Washington risks heading in the wrong direction in the chip war. Washington’s framing of the semiconductor competition misinterprets China’s positioning. In particular, the United States risks ignoring the upstream foundations on which all integrated circuits are built and China’s growing stranglehold over that foundation.

Billy Beane used to say that the Oakland Athletics couldn’t ‘do the same things the Yankees do’ and expect to win. China has taken that advice to heart.

Beijing’s industrial, scientific, and technological policy prioritizes the semiconductor sector. And Beijing operationalizes this prioritization according to a practiced and well-documented playbook. Beijing backs companies with state investment and subsidies, directly funds research and development, and leverages international ties to acquire foreign technology and human capital. This playbook has already allowed China to catch up to international leaders in mature nodes of the semiconductor value chain and in the less high-tech, but nonetheless critical, realms of packaging and testing integrated circuit products.

But while that playbook might be well documented, its specific priorities — and the threat they pose to the United States — are not.

First, the U.S. remains effectively blind to the non-obvious, asymmetric semiconductor sub-sectors where Beijing is doubling down to dominate next-generation capabilities, like wide bandgap semiconductors and photonics.

Second, China has prioritized developing dominance over semiconductor materials and other upstream elements of the value chain and now is vertically integrating on top of a foundation that it controls. Together, these campaigns create an asymmetric strategy that seizes on gaps in U.S. policy and capabilities.

The default U.S. approach to tech competition starts from, and focuses on, protecting crown jewels at the forefront of research and development (for example, increasingly small “nanometer” sizes of chip features and transistor density). But such an approach is akin to assuming that batting average is the only metric that matters for building a baseball roster. And refusing to budge from that assumption even after Billy Beane’s “Moneyball” revolution and the emergence of alternative, asymmetric logics — like caring about how often a player gets on base.

Beijing, by contrast, is taking a “Moneyball” approach to the chip war.

Beane used to say that the Oakland Athletics couldn’t “do the same things the Yankees do” and expect to win. China has taken that advice to heart. China's semiconductor policy prioritizes segments, like wide bandgap semiconductors, and metrics, like market share and vertical integration, that others don’t. And right now, Beijing expects to win.

Take, for example, the strategic value, and corresponding resources, China dedicates to wide bandgap, or third-generation, semiconductors (e.g., those made with silicon carbide, gallium nitride, and indium phosphide). These semiconductors feed into emergent downstream applications including new energy vehicles, telecommunications, and data centers needed to power artificial intelligence applications. And Beijing has recognized that the field is relatively undefended; that its international competitors are not prioritizing wide bandgap semiconductors in any formidable way. Here, then, is an area in which to overtake.

And in this area — as more generally — China is positioning to overtake through vertical integration that starts at the upstream of the value chain. China is the dominant global source of the gallium necessary for gallium nitride third-generation semiconductors. This upstream advantage grants China’s downstream champions cost and process advantages as they develop and scale third-generation semiconductor manufacturing.

Telecom giant Huawei, for instance, has invested through its corporate venture arm in silicon carbide epitaxial wafer company Tianyu Semiconductor. And vertical integration by the likes of Huawei also fuels the leverage China enjoys over foreign companies and countries, which can be exercised through export restrictions like those applied to gallium in December 2024.

The new fault lines that Beijing is creating in the semiconductor war are becoming evident. The U.S. trade representative recently held a public comment hearing as a part of a Section 301 investigation into China’s acts, policies, and practices for targeting dominance in the semiconductor industry.

Participants in that hearing included industry leaders who have felt the unfair competitive pressures of China’s industrial policy up close. Others warned that Beijing is using the same approach in semiconductors that allowed it, a decade ago, to conquer the solar sector. Those testimonies underscored that USTR forging ahead with its full force and authorities is a necessary first step to resetting the competitive dynamics and giving U.S. industry a level playing field against China’s non-market playbook.

However, government defense once China is already on its way to full sector dominance could be “too little, too late.” The United States also needs to position ahead of the curve. The U.S. has to start investing in the semiconductor fields that are going to matter — for the markets, not just for the technological glitz and glam — tomorrow and doing so all across the value chain. And the U.S. also has to start using its market and narrative strengths to start shaping what semiconductor fields, types, and applications will matter tomorrow, in a way that aligns with U.S. strengths.

None of this means mimicking China. Rather, it means being deliberate about the strengths the United States is cultivating and protecting. And it means working now to shape tomorrow’s game.

Editor’s note: This article was originally published by RealClearDefense and made available via RealClearWire.

Taiwan’s chip monopoly puts US security and economy at risk



America has a Big Tech problem. An oligarchy of powerful, trillion-dollar companies wields tremendous control over the digital ecosystem, affecting the information we see, the products we buy, the candidates we vote for, and how we live our daily lives. Behind closed doors, these brand-name entities use their market dominance and deep pockets to protect their interests, not consumers.

Today, the U.S. faces another monopoly threat that involves the hardware that’s in virtually all modern electronics: semiconductors. Policy meant to generate domestic production of these vital components —that is, the CHIPS Act — inadvertently profited foreign suppliers and further entrenched the world’s largest chipmaker, Taiwan Semiconductor Manufacturing Company, which received more than $6 billion in U.S. taxpayer subsidies.

TSMC’s global dominance is so massive — and its US presence is growing — that the only way to check its global monopoly is to level the scales for domestic chipmakers.

President Trump called out the flawed logic of giving taxpayer money intended to promote U.S. production to our biggest foreign competitor. “We put up billions of dollars for rich companies to come in and borrow the money and build chip companies here,” he told Joe Rogan last fall. “These chip companies, they stole. They stole 95% of our business. ... [And now] they want protection.”

TSMC dominates the global semiconductor market, and, to borrow a Trumpism, it is eating America’s lunch. TSMC commands over 60% of the total global semiconductor market and makes more than 90% of the world’s most advanced chips. Meanwhile, Intel — once a national icon and our closest answer to TSMC — has fallen sorrowfully behind and is a “shell of its former self,” despite receiving the largest chunk of CHIPS funding.

The lack of a domestic alternative — or any friendly alternative outside of Taiwan — is a huge risk for the world as China ramps up its rhetoric.

Semiconductors power the devices we use, from smartphones to washing machines, as well as major networks, like banking. More than one trillion semiconductors were shipped worldwide in 2021, and that number has likely grown since. TSMC’s choke hold on this vital industry has earned it the moniker, “The most important company in the world.” It would be more fitting to call it the most dominant monopoly in the world.

TSMC’s playbook is obvious: Secure major deals with America’s largest companies, dominate the market with its chips, and push out U.S. competitors that lack the same scale and resources. Just look at its contracts. Apple inked a deal with TSMC in 2023 to buy all of its three nanometer chips. Amazon’s AWS and AI chips are made exclusively by TSMC. And Nvidia is in talks with TSMC to develop its advanced chips.

We can’t build our own semiconductor industry from ground zero, our workers need the experience to do it. However, policymakers should be wary of any company that exerts such unilateral control over a commodity that touches every aspect of daily life. TSMC’s geography and geopolitics make it especially troublesome.

TSMC is headquartered in Taiwan, where as much as 90% of its production capabilities are located. China has long laid claim to Taiwan and refuses to acknowledge the country’s sovereignty. The Chinese government has conducted military exercises to test its “seizure power.” Just this month, a Chinese vessel cut an undersea fiber optic cable in an apparent act of sabotage, and in a New Year’s Eve speech, Chinese leader Xi Jinping said no one can stop China’s “reunification” with Taiwan.

It’s not a matter of if China acts but when. Whether military action, technological warfare and sabotage, or a combination of both, such aggression would inevitably disrupt, if not sever, the U.S. semiconductor supply chain. As two researchers opined in the New York Times recently, the result could be “a global economic crisis far worse than the shock caused by the COVID-19 pandemic.”

It’s time policymakers get tough and hold TSMC accountable to the geopolitical situation. Fortunately, President Trump has the chops to do it. He has been vocal about using tariffs to stop the flood of foreign-made chips and support U.S.-based manufactures. “You didn’t have to put up 10 cents,” he said on Joe Rogan's podcast. “You tariff [foreign chips] so high that they will come and build their chip companies for nothing.”

President Trump is right. He should encourage antitrust regulators to keep an eye on TSMC’s practices. TSMC’s global dominance is so massive — and its U.S. presence is growing thanks to the CHIPS Act — that the only way to check its global monopoly is to level the scales for domestic chipmakers. President Trump should ensure that TSMC’s practices in Arizona are in good faith. The company should make commitments to train American workers, honor collective bargaining agreements, and commit long-term to investing in facilities and advanced chip development in the United States — not just in Taiwan.

The federal government must also make a concerted effort over the next decade to ensure American companies are up to the challenge. We must invest in an educated engineering workforce and streamlined facilities and encourage capital investment in domestic manufacturing.

TSMC has steadily tightened its grip on the U.S. semiconductor market for decades. It’s time policymakers get serious and hold TSMC to higher standards and work to support our own struggling industries. Otherwise, America could face a supply-chain crisis and economic recession of China’s (or Taiwan’s) doing — which is hardly the time to be asking how to rebuild our domestic semiconductor industry.

Semiconductor panic at North Carolina quartz mine highlights America's fragile supply chain



The ramifications of the federal government's failures in disaster relief showcase a much larger issue than it appears on the surface. A natural disaster could wipe out key resources or, at best, reroute supply lines to sources that could significantly inflate prices for Americans.

Spruce Pine, North Carolina, has been the source of economic panic since it was revealed that a Sibelco North America Inc. facility where ultra-high-purity quartz is mined is in the flood zone of Hurricane Helene.

Quartz is used in semiconductors and to refine wafers, which are used in microchips. Semiconductors themselves are used in nearly all consumer electronics, such as computers, phones, and appliances.

Reports and X threads have popped up sounding the alarm that entire industries could grind to a halt as a result of closures at the North Carolina plant.

An alleged geologist wrote that he is "concerned about the potential future global economic disaster because Spruce Pine is the sole producer of ultra pure Quartz for crucibles that all global semiconductor production relies on."

"All semiconductor production may grind to a halt in six months. The entire world's economy depends on Spruce Pine," he added.

This scare was the driving narrative until contradicting threads were written, revealing that there are other sources of purification as well as other mines and stockpiles. In fact, there is reportedly another mine in South Carolina.

A high-purity quartz mine was acquired by Ferroglobe in 2023.

As X account SemiAnalysis pointed out, the existing inventories and alternative methods can provide a "buffer" if the industry takes a hit due to the recent hurricane.

In conclusion – existing wafer inventory provides a buffer as mining operations restart, major companies are already using synthetic methods to produce semiconductor-grade quartz crucibles, and there are other sources of HPQ. Spruce Pine FUD is exaggerated.
8/8
— SemiAnalysis (@SemiAnalysis_) September 30, 2024
 

This does not mean the industry is in tip-top shape should a disaster like this happen. What it does reveal, however, is that if U.S. strategic infrastructure is not shored up, the consumer will take the hit in the marketplace.

This was glaringly obvious during COVID, when it became apparent that the U.S. was overly reliant on drug manufacturing from China. In fact, this was also an issue during the Trump administration in 2019.

Trump's chief economic adviser, Gary Cohn, wrote at the time that 97% of all antibiotics in the United States came from China.

"If you're the Chinese and you want to really just destroy us, just stop sending us antibiotics," he said, per the Council on Foreign Relations.

For semiconductors, China has the second-highest share of sales in the world. When supply chains in the United States are disrupted, at best, the market turns to the Chinese. If that option is not available, competitors in Europe may be able to pick up the slack, but at nowhere near as low a price.

Nothing is scarier than the situation surrounding microchips from Taiwan; the smaller the chip, the more likely it came from the region. According to Forbes, Taiwan is responsible for 92% of the production of logic semiconductors when components are smaller than 10 nanometers.

As production has shifted overseas since the 1980s — when semiconductor power was within the U.S. and Europe — weak and overly-reliant supply chains could be one disaster or political move from collapse or, at best, an unaffordable state.

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