Reindustrialization is just central planning, MAGA-style 

Why is President Trump so intent on inflicting his unpopular tariffs on the U.S. economy? How did America, always a trading nation bordering two oceans, suddenly become the free world’s glowering bastion of protectionism?

The president’s logic is often fuzzy, but for once he and his economic team have a clear answer: They’re on a mission to reindustrialize America. They call it “economic nationalism,” but it’s really just central planning, MAGA-style.

Trump believes free trade agreements and globalization eviscerated U.S. manufacturing, studding the landscape with shuttered factories — “tombstones” as he put it in his bleak 2017 inaugural address.

In fact, U.S. manufacturing output has grown substantially since 1980. What has declined is factory employment and manufacturing’s share of GDP. That tracks the trend of deindustrialization and rising demand for services in all advanced countries, regardless of trade policies.

Nonetheless, the president is ripping up trade agreements and taxing imports from friends and foes alike, in hopes of generating lots more factory jobs. But building walls around our economy won’t change the fact that automation has severed the old relationship between increased industrial production and blue-collar job growth.

Trump’s factory nostalgia is diverting attention from our country’s true economic imperative: Winning the race with China to master AI, biotech, clean energy and other new technologies reinventing modern economies. That’s the key to raising living standards for all Americans — not just production workers.

In a July speech in Michigan, U.S. Trade Representative Jamieson Greer set three goals for Trump’s reindustrialization push: to decrease our trade deficit in goods, to increase real median income and to boost manufacturing’s share of U.S. GDP. 

As my Progressive Policy Institute colleague Ed Gresser has shown, it is falling short. The share of GDP in manufacturing shrank in the first half of this year, and the U.S. trade deficit in goods rose. (Median income figures won’t be available until late 2026). The manufacturing sector has lost 38,000 jobs so far this year.

Meanwhile, tariffs are pushing prices up for household goods, including food, clothes, coffee, leather, electronics and toys. The same is happening in manufacturing itself, as heavy tariffs on metals, lumber, natural resources and other inputs undercut the competitiveness of U.S. manufacturers who rely on imported parts and materials. 

Non-MAGA Americans are increasingly skeptical of Trump’s protectionism. A recent CBS poll found that 60 percent say Trump is too focused on tariffs, while a whopping 75 percent say he hasn’t focused enough on lowering prices. 

There’s a huge opportunity for Democrats here, but they’re not seizing it because many on the progressive left are still in thrall to the same myth about “neoliberalism” that animates Trump and right-wing populists.  

Under their influence, President Joe Biden put trade on ice and didn’t repeal Trump’s first-term tariffs. Biden also promised a “manufacturing renaissance” powered by heavy government spending on industrial policies intended to spur clean energy, electric cars and chip production. But working-class voters didn’t buy Bidenomics, which they blamed for raising their cost of living.

Of course, America would benefit from more advanced manufacturing, and it’s past time to ramp up our shriveled defense industrial base. But Democrats aren’t going to win the economic policy argument by offering a pale echo of Trump’s bid to assuage today’s populist grievances by bringing back the 1950s.

Instead, they should offer a real alternative to Trumponomics — a forward-looking and hopeful strategy for abundant growth that makes everyday life affordable and cements America’s role as the world’s most innovative post-industrial economy.  

This starts by dismantling Trump’s inflationary tariffs. “The time is right for Democrats to lead on trade again,” says Colorado Gov. Jared Polis (D). He is right. Trade is a potent lever for lowering prices while also injecting more competition and choice into sectors dominated by a few large firms.

“Openness drives growth,” says Philippe Aghion, the Frenchman who just won a Nobel Prize for his work on the innovation-driven improvements in living standards over the past two centuries. 

Democrats should also call out Trump’s idiosyncratic brand of MAGA socialism. For all his fulminations against the “deep state,” the president is wielding federal power aggressively to micromanage the media, law firms and research universities from the White House, stymie the growth of clean energy businesses and give the government a share of ownership or profits from big companies like Intel, Nvidia and Nippon Steel.

The president’s heavy-handed meddling in the private economy gives Democrats a chance to defend America’s economic superpower: The ability to adapt swiftly to economic change and turn the market’s “creative destruction” into new waves of opportunity.

To lift the prospects of non-college Americans, Democrats should propose a new public-private partnership to equip them with better skills to get better jobs, including opportunities to use AI to boost their productivity and pay.

Tariffs and reindustrialization won’t win the economic future. America’s comparative advantage in the epochal rivalry with a totalitarian China lies instead in unleashing the initiative, creativity and entrepreneurship of a free people.

Will Marshall is founder and president of Progressive Policy Institute.