Will Industrial Policy Survive?

In “Can Industrial Policy Still Do Big Things?” (Issues, Winter 2026), Andrew Schrank provides a valuable overview of some of the goals and tools of the Biden administration’s policies, which have been continued in many ways under the Trump administration. Schrank points out important contributions and early successes of the Biden administration’s efforts (even if multiple references to “failure” and “ruins” might suggest otherwise). In particular, Schrank examines the “predistributive” goals of the policies, which aim to reduce economic and structural inequalities at the source by shaping market forces rather than addressing inequality afterward, and which represent significant contributions to the “how” of twenty-first century industrial policymaking.

But he perhaps underplays the broader context in which these policies were embedded, which includes the development of globally competitive industries and firms that both compete with China and support US national and economic security goals. These goals are achieved only through crowding in private-sector investment with, ideally, appropriate guardrails and legal stipulations (economists call them “conditionalities”) to prevent some of the oft-mentioned industrial policy risks. Among the risks are picking winners (“national champions”) and so-called rent seeking aimed at increasing, in this case, corporate wealth by manipulating social or political environments without producing new value. In this area as well, Biden-era policies made important contributions in industrial strategy design and implementation.

For example, in the 2022 CHIPS and Science Act, while predistributive conditionalities were indeed part of the design, equally important was designing a program that was competitive in nature (not choosing a national champion such as Intel) and made tax credits available to any company regardless of size or ownership that invests in domestic production of semiconductors. The country is well on its way to achieving the goals of the CHIPS act in terms of domestic “frontier” production of the most advanced, high-performance semiconductors (though risks faltering at that frontier without intended research-and-development investments that were repurposed by the Trump administration).

In addition, in the case of the Inflation Reduction Act (IRA), despite the Trump administration’s gutting of many of the grants and tax programs particularly around wind, solar, and electric vehicles, several of the most important and broad-based tax credits are still in place through the end of the decade. This is due in part to the fact that the beneficiaries of the IRA tax credits have been largely in red and purple states, which helped mitigate the extent of cuts on the One Big Beautiful Bill Act chopping block. In a recent example, as a direct result of the IRA tax credits, domestic production of batteries and storage has soared and domestic supply will for the first time be able to meet increasing energy storage demand by the end of 2026, creating thousands of good manufacturing jobs in the process.

Schrank is right that we have a dramatically expanded industrial policy tool kit today compared with the beginning of the decade—and that is a good outcome for the country. We also have shared goals across past and present administrations around building more resilient supply chains in priority industries and technologies and rebuilding the country’s industrial capabilities. The challenge is whether key principles of industrial strategy design (competition, guardrails, and conditionalities) will fall to the wayside in the current administration—leaving the country to once again walk away from the long-term benefits that smart industrial policy offers.

Elisabeth B. Reynolds