Polls continually show that American consumers want to buy products made in the United States. In particular, Americans don’t want to buy from China, and they understand that buying “Made in USA” can promote good jobs and economic growth in their country.
Unfortunately, federal government programs often encourage foreign manufacturing. This is because the United States is the only one of the major industrial nations in the world that does not have a coordinated strategy for expanding domestic manufacturing. In fact, the stated goals of many major federal agencies are actually a barrier to the development of new supply chains in the United States.
The United States’ lack of concern for domestic manufacturing
This lack of concern for domestic manufacturing is exemplified by the National Economic Council (NEC), the key White House body responsible for coordinating economic policy. Despite frequent presidential rhetoric, such as President Joe Biden’s “Build It Better” program and former President Donald Trump’s promises to “buy American” and hire from the United States, the NEC has still failed. no mandate to rebuild supply chains in his country.
A glance at various federal agencies reveals few goals for relocating a major production. For example, the Department of Energy’s (DOE) loan program office provides billions of dollars in loans for power generation projects across the country. However, the DOE does not specify where the resulting power grid infrastructure is to be fabricated.
Likewise, the Department of Commerce’s Economic Development Administration (EDA) focuses on “innovation, emerging technologies, intellectual property and data”. This betrays a glaring lack of concern for the production side of digital technologies. The EDA simply aims to “strengthen intellectual property protection” and “advance innovation”. However, the R&D funded by the agency often ends up being manufactured abroad.
There is also the recent CHIPS for America Act, which aims to stimulate national research and development for semiconductors. Unfortunately, the legislation does not sufficiently require chipmakers to locate new production in the United States and this perpetuates America’s long-standing model of inventing breakthrough technologies, like solar panels and chips. computers, then to manufacture them abroad.
More money needs to be spent on products made in the USA
The federal government spends about $ 600 billion a year on procurement. Spending that taxpayer money specifically on products made in the United States rather than imports could give domestic businesses a huge boost. But too often, federal agencies simply buy the cheapest products possible, regardless of where they are made.
Most industrialized countries take a different approach. They use public markets to support their own factories. And they wisely try to sell their products in the United States but avoid buying products made in the United States in return. For example, India maintains a 125% tariff on imports of cars and trucks, a policy it has used to build the world’s fourth largest auto market. Virtually all cars on Indian roads are made in India. In contrast, the United States only imposes a 2.5% tariff on car imports. This allows multinational companies to build new auto factories in low-wage countries like Mexico and then sell cars very profitably to American consumers.
Essentially, when policymakers talk about “boosting exports” they are missing the big picture. In order to rebuild domestic manufacturing, Washington must finally prioritize the US domestic market and help domestic manufacturers sell more products to US consumers.
Rebuilding American Industry Needs Washington’s Leadership
An analysis by the Coalition for a Prosperous America (CPA) found that the US domestic market for manufactures was worth $ 6.8 trillion in 2020. By comparison, exports totaled just $ 1.2 trillion. dollars in 2020. Exports are just plain pale for what US manufacturers might get. recover a greater share of their domestic market.
Since 2002, US factories have lost 7.7 percent of their domestic market. Regaining that slice of the pie could add an estimated $ 500 billion to U.S. manufacturing revenues and create millions of new jobs.
Unfortunately, American manufacturers continue to lose ground at home. Since 2002, US factories have lost 7.7 percent of their domestic market. Regaining that slice of the pie could add an estimated $ 500 billion to U.S. manufacturing revenues and create millions of new jobs.
Addressing this will require a concerted whole-of-government strategy. This means Washington is doubling its domestic purchases and insisting that federal agencies purchase goods from US suppliers whenever possible.
Ensuring that federal agencies work together to rebuild American industry will require leadership from the White House. It is time to establish a national manufacturing policy supervised and coordinated by the executive. In particular, the National Economic Council of the White House should make industrial strategy a key part of its mission.
Other countries are already embarking on electric vehicles and other advanced technologies. American manufacturers deserve a level playing field in their domestic market as they compete in these new industries. However, unless Washington steps in, US manufacturers will continue to lose ground in the one market that matters: their home port.
About the writer
Michael Stumo is CEO of the Coalition for a Prosperous America. He wrote this for InsideSources.com.