As the United States confronts a series of challenges—the COVID-19 pandemic, global supply chain instability, climate change, and the rise of China foremost among them—there is renewed debate about the role of industrial policy, or government support for particular industries that are deemed strategically important.
To its supporters, a new U.S. industrial policy is essential to respond to China’s state-led development, secure a supply of critical materials and products, and develop technologies that could preserve the planet. They point to the use of industrial policy not only in China, but also in countries such as Germany, Japan, and South Korea, as well as its historical use in the United States. To critics, such a policy inevitably distorts the free market and rewards companies not for the quality of their products and services but for their skill at lobbying lawmakers. President Donald Trump upended the Republican Party’s traditional stance on trade and economic policy, while President Joe Biden has overseen the passage of major industrial policy legislation, including the CHIPS and Science Act and the Inflation Reduction Act.
Why the U.S. Government’s Role in the Economy Could Grow (cfr.org)
