This Congress had done more for American manufacturing than any other I can remember. For all the talk about its gridlock and dysfunction, the narrowly divided legislative branch managed to pass three major pieces of industrial legislation in less than a calendar year: The CHIPS Act gave a major booster shot to the semiconductor industry to invite capital investment; the Inflation Reduction Act supplied a clean energy program to incentivize consumer behavior; and last fall's $1.2 trillion infrastructure program, the Bipartisan Infrastructure Law, created a huge demand for manufactured goods from steel and iron to fiberoptic cable.
All three accomplishments are governed by rules and domestic procurement policies like the Build America, Buy America Act (BABAA), which requires all federal agencies embarking on infrastructure projects to guarantee that "all of the iron, steel, manufactured products, and construction materials used in the project are produced in the United States." This will effectively ensure that these investments spur new jobs in America, not overseas.
Moreover, all three pieces of legislation are the part of a larger industrial policy—an idea suddenly no longer taboo in Washington after a few years of pandemic-induced supply chain shortages.
Still, despite all these wins for domestic industry, there's much more to do. These three milestones don't represent all the pieces needed for a complete industrial policy; they merely laid the foundation for one. What we need to complete this vision is a commitment from policymakers as well as regular maintenance so that it is indeed domestic industry that benefits from the programs this new industrial policy establishes and the markets it creates.
So how do we get there? We need more programs that incentivize domestic investment. Semiconductors aren't the only industry we should be concerned with. The Biden administration's supply chain review for chips also included examinations of electric vehicle batteries, mineral production, and pharmaceuticals, and has identified other sectors in which U.S. manufacturing has only a paucity of global market share. Simply put, we can't stop after the CHIPS Act because semiconductors aren't the end of the critical manufacturing economy.
But just as important is maintenance, which means trade enforcement. We have to ensure all these investments aren't siphoned away from their intended recipients.
Our economy is deeply integrated into the world's economy, and the goal here isn't to remove ourselves from it. But while our industrial policy should invite foreign investment, state-owned enterprises from economic rivals like China should not be allowed, nor should our industrial policy allow for subsidized or dumped imports.
We should improve our efforts to fight unfair trade practices across the board, passing commonsense reforms like a streamlining of trade remedy investigations, as the Leveling the Playing Field Act 2.0 would do. Congress should close loopholes like the de minimis threshold that allows multi-billion dollar companies to skirt import fees, as the Import Security and Fairness Act proposed. Both of those were cut from the successful semiconductor bill at the 11th hour; this Congress should revisit them again before the end of its term.
Maintenance also extends to the improvement and care of the domestic workforce. Workers negatively affected by trade shouldn't be denied appropriate assistance just because the Biden administration isn't currently negotiating a new market access agreement. Congress should immediately reinstate funding for the Trade Adjustment Assistance program that for 50 years helped thousands of workers displaced by import competition gain new skills – until partisan politics ended its funding this summer.
This, in sum, is what a comprehensive industrial policy would look like: It's dynamic. We should be guarding it as it develops and simultaneously pushing it forward, which means the next Congress must be expected to work for more public investment, more tax incentives, and more purchasing preferences for firms that choose to locate their production here and hire American workers.
In the recent past, deindustrialization was the consequence of trade and tax policies that encouraged capital flight and outsourcing. Congress is now writing laws that promote an inverse outcome, and they are having much more desirable results. Our federal lawmakers are coming around to a long overdue industrial policy, and we should keep pressing them for more of it.
Scott Paul is president of the Alliance for American Manufacturing.
The views expressed in this article are the writer's own.
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