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Comment by sebmellen | Hacker News Reader

You’re right about all you say. But the US has struggled to implement even the simplest forms of industrial policy because other countries are so extremely price-competitive, and our markets so unbridled, that our “elites” have eroded our industrial base to drive shareholder returns.

If not through tariffs, how else do you force reindustrialization? Industrial policy will always fail if it’s driven by a chimeric political system where both sides are incentivized to grow “The Economy” by eroding domestic capacity.

The CHIPS Act is too little, too late (when you’re competing with a fast-accelerating rival that is simultaneously your largest debt-holder and main industrial base).

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US manufacturing is at an all time high in terms of output. Less people are needed in that sector because it's an area where automation is highest. I agree that there is a national security reason to have tariffs to protect some manufacturing, but that should be a precision targeted tariff if anything.

Your level of paranoia and aggression will vary depending on how hawkish you are. If you’re more hawkish you’ll be more aggressive and make your move as early as possible, and you’ll also tolerate a lot more pain to achieve your goal. Bessent seems pretty determined.

I do think it’s clear that our industrial capacities have eroded. Look at our infrastructure compared to China. We lag on every metric: transportation initiatives, building projects, solar production, new energy plants, and so on. Manufacturing is just 1/10th of the “full stack”.

I’m not making any political commentary as to whether tariffs are the right move or not, I’m only explaining the line of reasoning.

but america doesnt want solar production, building projects, or transportation initiatives.

new roads and oil only.

Well, I’ve never said I agree with how the current administration is going about their business. But it’s instructive to understand their perspective.

The problem is that the tariffs can be undone by the next president. I think that would discourage any investment in industry here. Even if this works, I feel like there is now a political commitment to undoing the tariffs.

This is a big problem with the strategy.

Of course, if you manage to dismantle checks and balances, manipulate elections, and stay in for a third term, you fix the problem…

You do introduce a lot of other problems, in the line of "Nice factory you have there, it would be a shame if you happened to fall out of a window."

They can, yes. But this is likely harder than you think. Suppose Trump puts a bunch of tariffs on cheap Chinese tires so that American tires are price competitive again (no idea if this happened, this is a hypothetical). If the next president removes those tariffs it would look like fucking over the tire manufacturers in whichever swing state they live in.

That's only if American tire companies choose to invest as if the tariffs will stick around for longer than Trump does.

This isn't the first time Trump imposed tariffs. Did Biden remove them during his term?

Biden did remove some of them.

Ya I just have a suspicion that for some industries maybe easily done but for others, four years isn't long enough to embed yourself in an economy to the point where you have political support. It's not a bad idea to onshore some manufacturing. Like targeting the semiconductor and medicine industries should be a higher priority than autos I think. But what could happen is the companies put on a show of onshoring but nothing is really done because they know four years isn't long enough. For those two industries I suspect it's not.

> Industrial policy will always fail if it’s driven by a chimeric political system

I think you're begging the question here that a chimeric political system can craft an effective, long-term tariff policy if it can't craft a long-term industrial policy.

In both cases, the operative phrase is long-term. IF they're to be effective, either set of policies needs to look a decade ahead, and an industrial policy still wins compared to shotgun tariffs.

The Miran paper envisions long-term investment in US industry, e.g. see recent TSMC-Intel partnership and $100B investment in US manufacturing, brokered by the current administration.

Didn't Biden make a huge agreement with TSMC, already?

This more than doubles the previous investment, https://techcrunch.com/2025/03/03/tsmc-pledges-to-spend-100b...

  TSMC previously pledged to pour $65 billion into U.S.-based fabrication plants and has received up to $6.6 billion in grants from the CHIPS Act, a major Biden administration-era law that sought to boost domestic semiconductor production. The new investment brings TSMC’s total investments in the U.S. chip industry to around $165 billion, Trump said in prepared remarks.

Why is it important to force reindustrialization?

Let’s axiomatically presume that vertical integration (of your supply chain, manufacturing, software development, labor force, etc.) is the key to “innovation” in the abstract. You can see this starting to happen with BYD, the Chinese electric car company, for example.

With the above in mind, let’s say your goal as a country is to develop your industries so you can achieve broad vertical integration.

Soft economic assets (financial markets, legal structures, software, pharma, IP, etc.) are easier to bootstrap once you have hard economic assets assets (commodities, energy, manufacturing, transportation, logistics, etc.). If you lose your hard economic assets and only have soft ones, you are at a strategic disadvantage because your opponent (in this case China), can bootstrap their soft assets relatively quickly. By comparison, it will take you much longer to get your hard assets back (through the mythical process of “reshoring/reindustrialization”).

More in my comment here: https://news.ycombinator.com/item?id=43589566.

What makes you think the United States has lost hard economic assets? Also, have you considered that there are different types of innovations, that are affected by the structure of an economy and its research institutions?

The US has dominated radical innovations, China has excelled in incremental innovations. We're potentially throwing away our advantage in the former by decimating our research capacity (something conspicuously absent in your concept of what drives innovation), and there is no clear plan to take the necessary steps to rebuild our capacity in the latter.

I’ve never said I agree with how the current administration is going about their business. But it’s instructive to understand their perspective.

My comments in this thread are mostly informed by everything I read about Bessent.

The Pandemic exposed the reasons why pretty clearly. Having e.g. critical medicines manufactured by a geopolitical and military adversary is a very bad idea.

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