Does Manufacturing Matter?

While 2025 was, in USTR Jameison Greer’s phrasing, “the year of the tariff”, industrial policy served as a strong leitmotif. From the US-China rare earths saga to equity stakes, golden shares and prepurchase agreements, Trump 2.0 has wholly embraced the sort of muscular intervention into private markets that would have made the GOP of just a decade ago cry bloody murder.1 Looking past this administration, JD Vance and Rubio, the two 2028 nominee frontrunners, both have Senate track records filled with bill proposals around industrial banks and domestic manufacturing promotion.

But for all the motion around creative applications of industrial policy in America, it’s been surprising to me how little thought has been applied to the big questions around these swings. Key questions I see unanswered include:

• What should the long term goals of national industrial policy be?

• What does it mean to be an economically secure nation? Where should marginal dollars be spent to promote economic security?

• Just how important is manufacturing relative to services?

• What are the tradeoffs involved in furthering these aims?

To kick us off, Chris Miller, Chip War author and reigning belt holder for most ChinaTalk appearances, published an excellent piece on what the core policy questions are for industrial policy. We’re rerunning this from his exellent new substack below.

Exploring these themes will be a focus of our coverage in 2026. Look out for essay contests coming in the next few weeks on this theme. Leave in the comments your ideas for what our first prompts should be!

The Economist, in a recent survey of Europe’s economic woes, sparked a minor controversy by urging the continent to adjust to intense Chinese competition in manufacturing by reorienting toward services. “De-industrialization,” it argued, “need not be synonymous with decay.”

The argument goes like this: rich economies are rich because of high value-add services. America is the least industrial (measured by manufacturing as % GDP) of all big economies, but also the richest. One reason that Germany and Japan are relatively more industrial is because they never developed much of a software industry. They’re more industrial partly because their manufacturers are relatively more successful (eg, their auto firms retained more market share the US ones over the past few decades) but also partly because they’ve underperformed in high value services.

Here’s auto manufacturing, where the US has dramatically underperformed the trend (data ...