America completes its embrace of industrial policy

3/4/2025

The second Trump administration just launched the President’s 2025 Trade Policy Agenda a sweeping industrial strategy aimed at restoring American manufacturing by force of law, regulation, and sheer economic muscle. The text links slumping factory employment—down nearly 5m jobs since the early 1990s—to what it calls “globalist elites” who opened the domestic market without getting reciprocal advantages abroad.

The Office of the United States Trade Representative (USTR) will investigate whether foreign partners are exploiting America’s consumer base while dodging fair-trade obligations. Tariffs, licenses, and targeted barriers are all on the table. The administration has signaled it may revise China’s Permanent Normal Trade Relations status, blaming Beijing’s “non-market” policies for siphoning away factory jobs and critical technology.

The President’s 2025 Trade Policy Agenda rejects decades of laissez-faire economics in favor of an unapologetic push for more factory jobs, higher wages, and what officials call a stronger defense industrial base. Beijing looms large. China’s Phase One Agreement from the previous term now faces renewed scrutiny, with USTR citing agricultural shortfalls and a wave of alleged intellectual property theft as evidence that Beijing never truly respected the deal.

National security arguments color every chapter. The administration warns that America’s ability to project power overseas has been undermined by dependence on foreign supply chains for everything from advanced microchips to cheap produce. Domestic growers are described as strategic assets, not just farmers trying to stay afloat. That logic extends to electronics, automobiles, and even consumer goods. The policy claims wage growth from 2016 to 2019 validated this approach, arguing that tariffs and strict enforcement brought about rising household incomes.

Will these measures achieve their promise of an “industrial renaissance?” The policy is likely to achieve some success. America has been engaged in a decade-long repositioning of its trade policy from optimizing for globalist efficiency to one that prioritizes national resilience, self-sufficiency and industrial capacity. The mere intention of putting those goals unapologetically at the forefront will induce reshoring, both through direct policies like tariffs and indirect effects as manufacturers get the message.

The policy’s detractors opponents overstate the negative economic effects of this shift. American companies overindexed on outsourcing based on bad advice from strategy consultants in the 2000s that overestimated the efficiency benefits of such moves. The fact that virtually all manufacturing supply chains run through China is not a reflection of some perfect economic equilibrium. If anything, Trump’s moves could help move the global trading order closer to what national factor endowments might dictate in a truly free global market.

Still, the policy has unresolved flaws and contradictions. Retaliatory tariffs on America’s own exports are coming, as are supply chain disruptions if foreign metals, chemicals, or components suddenly become scarce. Washington shows little patience for such caveats. Officials dismiss them as short-term bumps on the path to stronger communities and an ironclad defense footing. Time will tell if the American electorate agrees.

Every sign suggests this new direction is not a half-measure. The White House will impose barriers wherever it sees the chance to favor domestic producers. Allies and rivals alike will have to adapt—or face the consequences of a newly assertive America that sees the global trading system as an arena to defend and expand its own industrial might. For now, the momentum is behind direct intervention. The President’s 2025 Trade Policy Agenda declares that America has already given away too much leverage—and it’s time to take it back.