Broad tariffs might jeopardize the recovery of US manufacturing.
The US has demonstrated great ingenuity in inventing new technologies but has struggled with manufacturing them effectively. However, there is a growing hope that this trend is shifting as the nation strengthens its manufacturing capabilities. The urgency around this issue is becoming increasingly clear, with the importance of domestic production of strategic goods and their supply chains—such as biomedicine, critical minerals, and advanced semiconductors—recognized by both policymakers and economists. To convert today’s scientific innovations in energy, semiconductors, pharmaceuticals, and crucial military technologies like drones into tangible products, the US must reclaim its status as a manufacturing leader.
Limited tariffs might assist in this endeavor. As noted by DCVC’s Werner, this approach could particularly benefit strategically vital sectors that have a history of unfair trade practices. Rare-earth magnets, which are essential components in devices ranging from electric motors to drones, serve as a prime example. “Decades ago, China flooded the US market with low-cost magnets,” she explains. “As a result, virtually all of our domestic magnet manufacturers went out of business.”
Werner points out that tariffs could provide essential short-term protection to US companies that are developing advanced manufacturing techniques for these products, enabling them to compete against low-cost alternatives produced in China. “You’re not going to rely on tariffs forever, but it illustrates the critical role that they can play,” she states. Even Harvard’s Shih, who has referred to the expansive Trump-era tariffs as “crazy,” acknowledges that more narrowly defined tariffs could serve as a useful tool under certain conditions to afford temporary market protection to domestic manufacturers working on crucial early-stage technologies. However, he emphasizes that such tariffs must be “very targeted” and should be phased out quickly.
For tariffs to be effective, Shih asserts, it is essential to have a comprehensive understanding of global trade and supply chains. “And trust me, there is no evidence that these individuals truly grasp how it operates.” The broader consequence of the country’s reindustrialization discussions centers on the future pipeline of emerging technologies. The array of innovations arising from universities and startups in fields such as energy production and storage, materials science, computing, and biomedicine has arguably never been more promising. Additionally, advancements in AI and robotics are poised to transform our ability to manufacture these technologies and products. The risk lies in implementing outdated policies that could hinder this progressive trajectory.
