Author
Mara Rudman
Vital Center Network
Biography
Mara Rudman runs the Vital Center Network, a project to create and sustain a sensible voice and community advancing US economic and national security interests across America and around the world. She previously served in senior national security positions under Presidents Clinton and Obama, and as chief counsel to the U.S. House Foreign Affairs Committee. She also is a practitioner senior fellow at the Center for Asia-Pacific Resilience and Innovation and at the Miller Center at the University of Virginia. She received her BA from Dartmouth College and a law degree from Harvard Law School.
Any country seeking economic and national security needs a smart industrial strategy, defined as the ability to compete effectively on the world stage and increase opportunity and prosperity at home. Yet, in the US and elsewhere, crafting and implementing policies to support such strategic objectives is too often mired in rhetorical silos, dated mindsets, and petty politics. Like-minded free market economies around the world can learn from one another and, working together, leverage relative strengths to deliver at home and wield considerable power globally.
There is no more important time to get this right. Twenty-plus years into a new century, America’s run as a solo superpower has concluded; it is beyond a “Global War on Terror” framing, it operates now in an era where the current White House occupant sees himself as the alpha member of an exclusive men’s club alongside China’s Xi and Russia’s Putin. He does so absent serious regard to the fierce competition (and threats) each poses, and with no affection for or ability to forge lasting alliances with other countries that historically shared US democratic values. It remains unclear who or what will sustain a top power position on the world stage as autocracies and democracies battle it out.
In the US and other free-market economies founded on democratic values and the rule of law, leaders historically have been best positioned to deliver at home when voters appreciate that their own security and their ability to readily access the goods and services they need are enhanced through a competitive economy that connects families, businesses, communities, states, and countries.
Industrial strategies that rest on this framing can provide and implement policies that grow, support, and help sustain open economies, prioritizing what people seek: security for themselves, their families, their communities, and their country. Countries that transparently adopt and adapt to such strategies will be best positioned, in alliance, to dominate the world stage in the decades ahead.
Close attention to US history provides a useful foundation to explore how America, and its historical allies, shape the most effective industrial strategies, and why it is worth doing so.
US history
In the US, industrial strategy consistently has offered a route to growing and strengthening the country and its people. And yet, since the time of America’s founding fathers, it has been a subject of debate. Alexander Hamilton and Thomas Jefferson butted heads about whether manufacturing or farming merited government investment and support. Hamilton’s 1791 “Report on Manufactures” advocated for government support of manufacturing through tariffs, subsidies, and infrastructure investments.[i] Thomas Jefferson and other agrarian leaders opposed such measures. They did not debate whether the government had a role to play; they disagreed on sectors to which the government’s interest ought to be directed.
Throughout the 1800s, the federal government helped finance infrastructure projects, such as canals, roads, and railroads.[ii] Protective tariffs remained a cornerstone of policy, for example, sheltering US steel manufacturers from foreign competition.[iii] This simultaneously harmed farmers because it inflated prices for industrial products needed to farm while decreasing international demand for US agricultural products. This dichotomy increased America’s tensions between northeast urban manufacturing hubs and southern and midwestern rural communities.[iv] During the 1890s–1920s, the federal government increasingly intervened to regulate industry, address monopolistic practices, and protect workers and consumers.[v]
World War I further spurred industrial mobilization, with the government coordinating production, investing in new technologies, and fostering collaboration between industry and the military. With the depression hitting in 1929, President Herbert Hoover initially sought Congressional support for tariffs aimed at protecting US farmers. Protectionists of his own party quickly put agriculture-associated protection aside and focused on industrial tariffs, and, against the advice of eminent economists, passed the Smoot-Hawley Tariff Act of 1930, which Hoover signed into law despite his aversion to it.[vi] The Smoot-Hawley Act sharply raised US tariffs on more than 20,000 imported goods. The high tariffs proved a disaster, as trading partners retaliated, international trade was frozen, and the depression worsened worldwide.[vii] Given the disastrous consequences, which contributed to President Franklin D. Roosevelt’s victory in 1932, the persistent depression of the 1930s prompted a dramatic expansion of federal involvement in the economy. Roosevelt’s New Deal included programs to support industry and infrastructure, initiatives aimed at modernizing the nation’s industrial base and creating jobs.
During World War II, the US government took unprecedented control over industrial production, allocating resources, managing supply chains, and directing manufacturing toward the war effort. The War Production Board exemplified this centralized approach. President Roosvelt established it by executive order and situated it within the Executive Office of the President, “to exercise general direction over the war procurement and production program,”[viii] leading to a surge in industrial output and technological advancement. At the same time, the Roosevelt team drew heavily on the expertise of private-sector leaders, particularly those from the auto industry.[ix] The US emerged from World War II as the global industrial leader. Government supported scientific research and technological innovation, including through the expansion of the defense-industrial complex. In fact, US Cold War leadership, made possible by both its economic and military dominance, rested in part on “its ability to harness computing power more effectively than any other power.”[x]
The 1970s and 1980s brought new challenges: deindustrialization, foreign competition, and economic restructuring. Asian actors’ post-war economies became rising competitors to the US in key industries, the result of significant Asian government investment and strategies.[xi] Japan, for example, initially targeted steel, shipbuilding, and power, followed by automobiles and computers. South Korea focused on cement, fertilizer, steel, petrochemicals, and heavy machinery, often supported by creating large-scale, privately owned national champions. Taiwan used government-led research institutes, including the Electronics Research and Service Organization, to develop key technologies, such as semiconductors, and then transferred the technology to private firms.[xii] Additionally, these countries invested heavily in relevant education and skills training. They also grew disciplined, capable workforces able to absorb and adapt to advanced technologies.
Throughout the late 20th century, US policymakers continued debating the government’s role in reviving US industry. Initiatives such as the Semiconductor Manufacturing Technology consortium in the 1980s reflected targeted partnerships between government and industry to regain technological leadership.[xiii] Bill Clinton’s 1992 false choice campaign discussion[xiv] framed common themes for US presidents all the way to Trump 2.0. US industrial policy has continued to focus on innovation, technology, and global competitiveness, though the current Trump team is executing such focus inconsistently and seemingly at odds with its own objectives.[xv] In fact, until Trump 2.0, the federal government valued investment in research and development, energy, and advanced manufacturing.
The COVID-19 pandemic highlighted vulnerabilities in global supply chains. Addressing the need to develop and then distribute a vaccine, Operation Warp Speed illustrates a savvy and successful public–private partnership during President Trump’s first term.[xvi] In the Biden administration, the lack of resilience in America’s semiconductor supply and development, illuminated starkly during the pandemic, led to the bipartisan CHIPS and Science Act (2022), which aimed to revitalize domestic semiconductor production and reduce reliance on foreign supply chains.[xvii] It included financial incentives for semiconductor industry investment in the US, support for advanced research and development by government and industry, and investment tax credits for US semiconductor facilities.[xviii]
The Trump 2.0 administration has not shied from a heavy government hand with industry, whether through direct investments in certain companies or with significant tariffs that burden business and consumer alike.[xix] This administration has executed mightily on the industrial policy front while displaying little discernible strategic vision.
Why the debate: Industrial strategy as a key policy tool
Despite the tendency to use “industrial policy” as a straw man for rallying against the role of government in business, historical analysis in the US particularly shows its routine application. From the use of the tax code to where and how the government chooses to budget and invest, governmental decision-making impacts industries, private investment, and the nature and type of jobs and goods available in a particular country and on the global stage.
Many countries, including the US, aim to create circumstances that result in good jobs and lower-cost goods, making essentials affordable for individuals, families, and businesses while also ensuring ready access to resources foundational to economic and national security. Smarter trade and investment approaches are linked to implementing wise industrial strategies. The odds of success in maximizing a country’s competitive edge through these approaches increase when the US and others create win-win opportunities for like-minded partners. For example, the US is not alone in reliance on processed critical minerals and rare earths for its economic and defense architectures. Over the last two decades, China has worked to control the market through its relationships internationally to extract these key resources and its intensive development of the refining verticals largely within its own borders. No single country can counter China’s stranglehold unilaterally. But through partnerships and new framework agreements that finance extraction, processing, and refining in regions throughout the world and outside of China, many countries would benefit.
Paraphrasing former US Ambassador to Japan Rahm Emanuel, “debating whether to do industrial policy is over. We’ve had it, we have it, and economic sovereignty requires it. The challenge is to get smarter about when and how we utilize it.”[xx]
What works: Elements of an effective industrial strategy
Successful strategies identify areas where a country holds core economic and national security interests, the private market alone will not mobilize the necessary investment, and the electorate understands the value proposition. Such strategies use public investment and targeted subsidies to spur private investment and innovation (e.g., Project Warp Speed).[xxi] The recently enacted reform and reauthorization of the US International Development Finance Corporation is similarly designed to incentivize investment and mitigate risks in sectors and countries in which the US holds strategic interests.[xxii]
Success also requires consistent government commitment and funding stability over the long term, giving firms the confidence to invest in large-scale projects such as the mining, processing, and refining of minerals, nuclear power, and advanced technologies. It also means accompanying investment in physical infrastructure (transportation, power, broadband), and education that will deliver appropriately skilled workers.
Interventions might include early-stage, high-risk research and development, or creating market mechanisms that can anticipate when, as with minerals and China, a country with a significant stake in the market strategically low-balls key commodities pricing to preclude competing markets’ development.[xxiii] Meanwhile, policy design should include mechanisms that foster fierce competition, such as open tenders for contracts and grants.[xxiv] This ensures that the most efficient and innovative firms receive support, regardless of their political connections.
Emanuel sums this up in his piece, focusing on industrial policies as a tool to fight China’s strategy of forcing US dependence.[xxv] His framework for determining where and how to devise and apply industrial policies in this context includes focusing exclusively on where China would otherwise seek to dominate; never financing an industry in perpetuity; taking workforce issues more seriously;[xxvi] and maintaining, enhancing, and protecting advanced research.
Conclusion Industrial strategy design and implementation should be constructed on historical experience and deliver tangible benefits to a country’s people. It cannot be a strictly domestic undertaking, given the global interconnections of every economy. Instead, countries that partner and create mutually beneficial economic and security partnerships that are perceived as such by those within national borders will wield the greatest strength around the world, while increasing domestic security and popular support.
[i] Gilder Lehrman Institute of American History, “Hamilton’s Report on the Subject of Manufactures, 1791,” History Resources, accessed January 2, 2026, https://www.gilderlehrman.org/history-resources/spotlight-primary-source/hamiltons-report-subject-manufactures-1791.
[ii] The Transcontinental Railroad, History of Railroads and Maps, https://www.loc.gov/collections/railroad-maps-1828-to-1900/articles-and-essays/history-of-railroads-and-maps/the-transcontinental-railroad/; Transportation Policy, Center for the Study of Federalism, 2017, https://federalism.org/encyclopedia/no-topic/transportation-policy/.
[iii] “History of U.S. Tariffs and Why It Matters Today,” Thomson Reuters, May 15, 2025, https://tax.thomsonreuters.com/blog/history-of-u-s-tariffs-and-why-it-matters-today/.
[iv] Doug Irwin, “Tariff Incidence in America’s Gilded Age,” NBER Working Paper No. 12162, April 2006, JEL No. F1, N7, https://www.nber.org/papers/w12162.
[v] Legislation such as the Sherman Antitrust Act (1890) and the Clayton Antitrust Act (1914) reflected a shift toward balancing industrial growth with public interest. See National Archives, “Sherman Anti-Trust Act (1890),” Milestone Documents, accessed January 2, 2026, https://www.archives.gov/milestone-documents/sherman-anti-trust-act ; Legal Information Institute, “Clayton Antitrust Act,” Wex, Cornell Law School, accessed January 2, 2026, https://www.law.cornell.edu/wex/clayton_antitrust_act.
[vi] United States Senate, “The Senate Passes the Smoot-Hawley Tariff,” Senate Historical Office, accessed January 2, 2026, https://www.senate.gov/artandhistory/history/minute/Senate_Passes_Smoot_Hawley_Tariff.htm.
[vii]Stefan Gerlach, “When Protectionism Backfired: Smoot-Hawley Tariff Act of 1930,” EFG, April 4, 2025, at https://www.efginternational.com/us/insights/2025/when_protectionism_backfired_the_smoot-hawley_tariff_act_of_1930.html.
[viii] The American Presidency Project, President Franklin Delano Roosevelt, Executive Order 9024, Establishing the War Production Board and Defining Its Functions and Duties, Jan. 16, 1942, at https://www.presidency.ucsb.edu/documents/executive-order-9024-establishing-the-war-production-board-the-executive-office-the.
[ix] Arthur Herman, Freedom’s Forge: How American Business Produced Victory in WWII, Penguin Random House, July 2013, https://www.penguinrandomhouse.com/books/208564/freedoms-forge-by-arthur-herman/.
[x] Chris Miller, Chip War: The Fight for the World’s Most Critical Technology (New York: Scribner, 2022)
[xi] Bryne Hobart, “Lessons from the East Asian Economic Miracle,” Palladium, July 5, 2021.
[xii] Dwight H. Perkins and John P. Yang, “East Asian Industrial Pioneers: Japan, Korea, and Taiwan, Chapter 8” (pp 169-196), in Kevin Hjortshøj O’Rourke and Jeffrey Gale Williamson (ed.), The Spread of Modern Industry to the Periphery since 1871 (Oxford Academic, 2017), https://academic.oup.com/book/7358/chapter/152146196.
[xiii] David Hart, Sematech, a private-public partnership for spurring domestic manufacturing, Bipartisan Policy Center. February 2024. https://bipartisanpolicy.org/wp-content/uploads/2024/02/Sematech-A-public-private-partnership-for-spurring-domestic-manufacturing.pdf.
[xiv] President Bill Clinton in his first presidential campaign captured the “false choice” in suggesting a need to pick between free markets and government intervention. See “False Choices and New Answers,” C-Span, August 1, 1991, https://www.c-span.org/program/campaign-1992/false-choices-and-new-answers/15041#!.
[xv] Steve Corbin, “Trump 2.0 Policies Clash With Business School Fundamentals, Fortune 500 CEOs Warn,”
The Fulcrum, November 21, 2025, https://thefulcrum.us/business-democracy/trump-market-disruption.
[xvi] General Accounting Office, “Operation Warp Speed: Accelerated COVID 19 Vaccine Development Status and Efforts to Address Manufacturing Challenges,” Feb. 11, 2021, https://www.gao.gov/products/gao-21-319.
[xvii] CHIPS and Science Act, Pub. L. No. 117-167, 136 Stat. 1366 (2022), https://www.congress.gov/bill/117th-congress/house-bill/4346/text.
[xviii] “CHIPS and Science Act summary,” The Bipartisan Policy Center, November 14, 2022, https://bipartisanpolicy.org/article/chips-science-act-summary/.
[xix] Ana Swanson, “$10Billion and Counting: Trump Administration Snaps Up Stakes in Private Firms,” The New York Times, November 25, 2025, https://www.nytimes.com/2025/11/25/us/politics/trump-intel-steel-minerals-china.html; Erica York, Alex Dumante, “Trump Tariffs: The Economic Impact of the Trump Trade War,” The Tax Foundation, November 17, 2025 https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/.
[xx] Rahm Emanuel, “Beijing wants America to depend on China, here’s how to fight back,” The Washington Post, July 6, 2025, https://www.washingtonpost.com/opinions/2025/07/06/america-china-beijing-trump-xi-industrial-policy/.
[xxi] Moncef Slaoui and Matthew Hepburn, “Developing Safe and Effective COVID Vaccines, Operation Warp Speed’s Strategy and Approach,” New England Journal of Medicine, August 26, 2020; https://www.nejm.org/doi/full/10.1056/NEJMp2027405.
[xxii] Nisha Biswal and Mara Rudman, “America could lose the critical minerals race,” Notes from the Miller Center [substack], November 19, 2025. https://uvamillercenter.substack.com/p/america-could-lose-the-critical-minerals.
[xxiii] Ernest Scheyder, Pratima Desai, “U.S. House report accuses China of minerals market interference,” Reuters, November 12, 2025, https://www.reuters.com/world/us/us-house-report-accuses-china-minerals-market-interference-2025-11-12/.
[xxiv]Tracy Allaway, Joe Weisenthal, “What the Pentagon Rare Earths Deal Gets Right and Wrong, Odd Lot,” Bloomberg, September 10, 2025, bloomberg.com/news/newsletters/2025-09-10/what-the-pentagon-s-rare-earths-deal-gets-right-and-wrong?.
[xxv] Emanuel, “Beijing Wants America.”
[xxvi] Becca Wasser and Mara Rudman, “It’s time for a true industrial strategy for American national security,” Breaking Defense, October 21, 2024, https://breakingdefense.com/2024/10/its-time-for-a-true-industrial-strategy-for-american-national-security/.
Global Innovation Reimagined
Global Innovation Reimagined showcases reflections and research on innovation in its many forms across Asia, North America, and Europe. The perspectives offered herein draw from discussions during the trilateral Reimagining Entrepreneurship and Innovation conference, hosted by CAPRI, CAPRI USA, the University of Virginia, and Copenhagen Business School from July 22 to 25, 2025.
Exploring and Embracing the Centuries-old Industrial Strategy Straw Man
Author
Mara Rudman
Vital Center Network
Biography
Mara Rudman runs the Vital Center Network, a project to create and sustain a sensible voice and community advancing US economic and national security interests across America and around the world. She previously served in senior national security positions under Presidents Clinton and Obama, and as chief counsel to the U.S. House Foreign Affairs Committee. She also is a practitioner senior fellow at the Center for Asia-Pacific Resilience and Innovation and at the Miller Center at the University of Virginia. She received her BA from Dartmouth College and a law degree from Harvard Law School.
Any country seeking economic and national security needs a smart industrial strategy, defined as the ability to compete effectively on the world stage and increase opportunity and prosperity at home. Yet, in the US and elsewhere, crafting and implementing policies to support such strategic objectives is too often mired in rhetorical silos, dated mindsets, and petty politics. Like-minded free market economies around the world can learn from one another and, working together, leverage relative strengths to deliver at home and wield considerable power globally.
There is no more important time to get this right. Twenty-plus years into a new century, America’s run as a solo superpower has concluded; it is beyond a “Global War on Terror” framing, it operates now in an era where the current White House occupant sees himself as the alpha member of an exclusive men’s club alongside China’s Xi and Russia’s Putin. He does so absent serious regard to the fierce competition (and threats) each poses, and with no affection for or ability to forge lasting alliances with other countries that historically shared US democratic values. It remains unclear who or what will sustain a top power position on the world stage as autocracies and democracies battle it out.
In the US and other free-market economies founded on democratic values and the rule of law, leaders historically have been best positioned to deliver at home when voters appreciate that their own security and their ability to readily access the goods and services they need are enhanced through a competitive economy that connects families, businesses, communities, states, and countries.
Industrial strategies that rest on this framing can provide and implement policies that grow, support, and help sustain open economies, prioritizing what people seek: security for themselves, their families, their communities, and their country. Countries that transparently adopt and adapt to such strategies will be best positioned, in alliance, to dominate the world stage in the decades ahead.
Close attention to US history provides a useful foundation to explore how America, and its historical allies, shape the most effective industrial strategies, and why it is worth doing so.
US history
In the US, industrial strategy consistently has offered a route to growing and strengthening the country and its people. And yet, since the time of America’s founding fathers, it has been a subject of debate. Alexander Hamilton and Thomas Jefferson butted heads about whether manufacturing or farming merited government investment and support. Hamilton’s 1791 “Report on Manufactures” advocated for government support of manufacturing through tariffs, subsidies, and infrastructure investments.[i] Thomas Jefferson and other agrarian leaders opposed such measures. They did not debate whether the government had a role to play; they disagreed on sectors to which the government’s interest ought to be directed.
Throughout the 1800s, the federal government helped finance infrastructure projects, such as canals, roads, and railroads.[ii] Protective tariffs remained a cornerstone of policy, for example, sheltering US steel manufacturers from foreign competition.[iii] This simultaneously harmed farmers because it inflated prices for industrial products needed to farm while decreasing international demand for US agricultural products. This dichotomy increased America’s tensions between northeast urban manufacturing hubs and southern and midwestern rural communities.[iv] During the 1890s–1920s, the federal government increasingly intervened to regulate industry, address monopolistic practices, and protect workers and consumers.[v]
World War I further spurred industrial mobilization, with the government coordinating production, investing in new technologies, and fostering collaboration between industry and the military. With the depression hitting in 1929, President Herbert Hoover initially sought Congressional support for tariffs aimed at protecting US farmers. Protectionists of his own party quickly put agriculture-associated protection aside and focused on industrial tariffs, and, against the advice of eminent economists, passed the Smoot-Hawley Tariff Act of 1930, which Hoover signed into law despite his aversion to it.[vi] The Smoot-Hawley Act sharply raised US tariffs on more than 20,000 imported goods. The high tariffs proved a disaster, as trading partners retaliated, international trade was frozen, and the depression worsened worldwide.[vii] Given the disastrous consequences, which contributed to President Franklin D. Roosevelt’s victory in 1932, the persistent depression of the 1930s prompted a dramatic expansion of federal involvement in the economy. Roosevelt’s New Deal included programs to support industry and infrastructure, initiatives aimed at modernizing the nation’s industrial base and creating jobs.
During World War II, the US government took unprecedented control over industrial production, allocating resources, managing supply chains, and directing manufacturing toward the war effort. The War Production Board exemplified this centralized approach. President Roosvelt established it by executive order and situated it within the Executive Office of the President, “to exercise general direction over the war procurement and production program,”[viii] leading to a surge in industrial output and technological advancement. At the same time, the Roosevelt team drew heavily on the expertise of private-sector leaders, particularly those from the auto industry.[ix] The US emerged from World War II as the global industrial leader. Government supported scientific research and technological innovation, including through the expansion of the defense-industrial complex. In fact, US Cold War leadership, made possible by both its economic and military dominance, rested in part on “its ability to harness computing power more effectively than any other power.”[x]
The 1970s and 1980s brought new challenges: deindustrialization, foreign competition, and economic restructuring. Asian actors’ post-war economies became rising competitors to the US in key industries, the result of significant Asian government investment and strategies.[xi] Japan, for example, initially targeted steel, shipbuilding, and power, followed by automobiles and computers. South Korea focused on cement, fertilizer, steel, petrochemicals, and heavy machinery, often supported by creating large-scale, privately owned national champions. Taiwan used government-led research institutes, including the Electronics Research and Service Organization, to develop key technologies, such as semiconductors, and then transferred the technology to private firms.[xii] Additionally, these countries invested heavily in relevant education and skills training. They also grew disciplined, capable workforces able to absorb and adapt to advanced technologies.
Throughout the late 20th century, US policymakers continued debating the government’s role in reviving US industry. Initiatives such as the Semiconductor Manufacturing Technology consortium in the 1980s reflected targeted partnerships between government and industry to regain technological leadership.[xiii] Bill Clinton’s 1992 false choice campaign discussion[xiv] framed common themes for US presidents all the way to Trump 2.0. US industrial policy has continued to focus on innovation, technology, and global competitiveness, though the current Trump team is executing such focus inconsistently and seemingly at odds with its own objectives.[xv] In fact, until Trump 2.0, the federal government valued investment in research and development, energy, and advanced manufacturing.
The COVID-19 pandemic highlighted vulnerabilities in global supply chains. Addressing the need to develop and then distribute a vaccine, Operation Warp Speed illustrates a savvy and successful public–private partnership during President Trump’s first term.[xvi] In the Biden administration, the lack of resilience in America’s semiconductor supply and development, illuminated starkly during the pandemic, led to the bipartisan CHIPS and Science Act (2022), which aimed to revitalize domestic semiconductor production and reduce reliance on foreign supply chains.[xvii] It included financial incentives for semiconductor industry investment in the US, support for advanced research and development by government and industry, and investment tax credits for US semiconductor facilities.[xviii]
The Trump 2.0 administration has not shied from a heavy government hand with industry, whether through direct investments in certain companies or with significant tariffs that burden business and consumer alike.[xix] This administration has executed mightily on the industrial policy front while displaying little discernible strategic vision.
Why the debate: Industrial strategy as a key policy tool
Despite the tendency to use “industrial policy” as a straw man for rallying against the role of government in business, historical analysis in the US particularly shows its routine application. From the use of the tax code to where and how the government chooses to budget and invest, governmental decision-making impacts industries, private investment, and the nature and type of jobs and goods available in a particular country and on the global stage.
Many countries, including the US, aim to create circumstances that result in good jobs and lower-cost goods, making essentials affordable for individuals, families, and businesses while also ensuring ready access to resources foundational to economic and national security. Smarter trade and investment approaches are linked to implementing wise industrial strategies. The odds of success in maximizing a country’s competitive edge through these approaches increase when the US and others create win-win opportunities for like-minded partners. For example, the US is not alone in reliance on processed critical minerals and rare earths for its economic and defense architectures. Over the last two decades, China has worked to control the market through its relationships internationally to extract these key resources and its intensive development of the refining verticals largely within its own borders. No single country can counter China’s stranglehold unilaterally. But through partnerships and new framework agreements that finance extraction, processing, and refining in regions throughout the world and outside of China, many countries would benefit.
Paraphrasing former US Ambassador to Japan Rahm Emanuel, “debating whether to do industrial policy is over. We’ve had it, we have it, and economic sovereignty requires it. The challenge is to get smarter about when and how we utilize it.”[xx]
What works: Elements of an effective industrial strategy
Successful strategies identify areas where a country holds core economic and national security interests, the private market alone will not mobilize the necessary investment, and the electorate understands the value proposition. Such strategies use public investment and targeted subsidies to spur private investment and innovation (e.g., Project Warp Speed).[xxi] The recently enacted reform and reauthorization of the US International Development Finance Corporation is similarly designed to incentivize investment and mitigate risks in sectors and countries in which the US holds strategic interests.[xxii]
Success also requires consistent government commitment and funding stability over the long term, giving firms the confidence to invest in large-scale projects such as the mining, processing, and refining of minerals, nuclear power, and advanced technologies. It also means accompanying investment in physical infrastructure (transportation, power, broadband), and education that will deliver appropriately skilled workers.
Interventions might include early-stage, high-risk research and development, or creating market mechanisms that can anticipate when, as with minerals and China, a country with a significant stake in the market strategically low-balls key commodities pricing to preclude competing markets’ development.[xxiii] Meanwhile, policy design should include mechanisms that foster fierce competition, such as open tenders for contracts and grants.[xxiv] This ensures that the most efficient and innovative firms receive support, regardless of their political connections.
Emanuel sums this up in his piece, focusing on industrial policies as a tool to fight China’s strategy of forcing US dependence.[xxv] His framework for determining where and how to devise and apply industrial policies in this context includes focusing exclusively on where China would otherwise seek to dominate; never financing an industry in perpetuity; taking workforce issues more seriously;[xxvi] and maintaining, enhancing, and protecting advanced research.
Conclusion Industrial strategy design and implementation should be constructed on historical experience and deliver tangible benefits to a country’s people. It cannot be a strictly domestic undertaking, given the global interconnections of every economy. Instead, countries that partner and create mutually beneficial economic and security partnerships that are perceived as such by those within national borders will wield the greatest strength around the world, while increasing domestic security and popular support.
[i] Gilder Lehrman Institute of American History, “Hamilton’s Report on the Subject of Manufactures, 1791,” History Resources, accessed January 2, 2026, https://www.gilderlehrman.org/history-resources/spotlight-primary-source/hamiltons-report-subject-manufactures-1791.
[ii] The Transcontinental Railroad, History of Railroads and Maps, https://www.loc.gov/collections/railroad-maps-1828-to-1900/articles-and-essays/history-of-railroads-and-maps/the-transcontinental-railroad/; Transportation Policy, Center for the Study of Federalism, 2017, https://federalism.org/encyclopedia/no-topic/transportation-policy/.
[iii] “History of U.S. Tariffs and Why It Matters Today,” Thomson Reuters, May 15, 2025, https://tax.thomsonreuters.com/blog/history-of-u-s-tariffs-and-why-it-matters-today/.
[iv] Doug Irwin, “Tariff Incidence in America’s Gilded Age,” NBER Working Paper No. 12162, April 2006, JEL No. F1, N7, https://www.nber.org/papers/w12162.
[v] Legislation such as the Sherman Antitrust Act (1890) and the Clayton Antitrust Act (1914) reflected a shift toward balancing industrial growth with public interest. See National Archives, “Sherman Anti-Trust Act (1890),” Milestone Documents, accessed January 2, 2026, https://www.archives.gov/milestone-documents/sherman-anti-trust-act ; Legal Information Institute, “Clayton Antitrust Act,” Wex, Cornell Law School, accessed January 2, 2026, https://www.law.cornell.edu/wex/clayton_antitrust_act.
[vi] United States Senate, “The Senate Passes the Smoot-Hawley Tariff,” Senate Historical Office, accessed January 2, 2026, https://www.senate.gov/artandhistory/history/minute/Senate_Passes_Smoot_Hawley_Tariff.htm.
[vii]Stefan Gerlach, “When Protectionism Backfired: Smoot-Hawley Tariff Act of 1930,” EFG, April 4, 2025, at https://www.efginternational.com/us/insights/2025/when_protectionism_backfired_the_smoot-hawley_tariff_act_of_1930.html.
[viii] The American Presidency Project, President Franklin Delano Roosevelt, Executive Order 9024, Establishing the War Production Board and Defining Its Functions and Duties, Jan. 16, 1942, at https://www.presidency.ucsb.edu/documents/executive-order-9024-establishing-the-war-production-board-the-executive-office-the.
[ix] Arthur Herman, Freedom’s Forge: How American Business Produced Victory in WWII, Penguin Random House, July 2013, https://www.penguinrandomhouse.com/books/208564/freedoms-forge-by-arthur-herman/.
[x] Chris Miller, Chip War: The Fight for the World’s Most Critical Technology (New York: Scribner, 2022)
[xi] Bryne Hobart, “Lessons from the East Asian Economic Miracle,” Palladium, July 5, 2021.
[xii] Dwight H. Perkins and John P. Yang, “East Asian Industrial Pioneers: Japan, Korea, and Taiwan, Chapter 8” (pp 169-196), in Kevin Hjortshøj O’Rourke and Jeffrey Gale Williamson (ed.), The Spread of Modern Industry to the Periphery since 1871 (Oxford Academic, 2017), https://academic.oup.com/book/7358/chapter/152146196.
[xiii] David Hart, Sematech, a private-public partnership for spurring domestic manufacturing, Bipartisan Policy Center. February 2024. https://bipartisanpolicy.org/wp-content/uploads/2024/02/Sematech-A-public-private-partnership-for-spurring-domestic-manufacturing.pdf.
[xiv] President Bill Clinton in his first presidential campaign captured the “false choice” in suggesting a need to pick between free markets and government intervention. See “False Choices and New Answers,” C-Span, August 1, 1991, https://www.c-span.org/program/campaign-1992/false-choices-and-new-answers/15041#!.
[xv] Steve Corbin, “Trump 2.0 Policies Clash With Business School Fundamentals, Fortune 500 CEOs Warn,”
The Fulcrum, November 21, 2025, https://thefulcrum.us/business-democracy/trump-market-disruption.
[xvi] General Accounting Office, “Operation Warp Speed: Accelerated COVID 19 Vaccine Development Status and Efforts to Address Manufacturing Challenges,” Feb. 11, 2021, https://www.gao.gov/products/gao-21-319.
[xvii] CHIPS and Science Act, Pub. L. No. 117-167, 136 Stat. 1366 (2022), https://www.congress.gov/bill/117th-congress/house-bill/4346/text.
[xviii] “CHIPS and Science Act summary,” The Bipartisan Policy Center, November 14, 2022, https://bipartisanpolicy.org/article/chips-science-act-summary/.
[xix] Ana Swanson, “$10Billion and Counting: Trump Administration Snaps Up Stakes in Private Firms,” The New York Times, November 25, 2025, https://www.nytimes.com/2025/11/25/us/politics/trump-intel-steel-minerals-china.html; Erica York, Alex Dumante, “Trump Tariffs: The Economic Impact of the Trump Trade War,” The Tax Foundation, November 17, 2025 https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/.
[xx] Rahm Emanuel, “Beijing wants America to depend on China, here’s how to fight back,” The Washington Post, July 6, 2025, https://www.washingtonpost.com/opinions/2025/07/06/america-china-beijing-trump-xi-industrial-policy/.
[xxi] Moncef Slaoui and Matthew Hepburn, “Developing Safe and Effective COVID Vaccines, Operation Warp Speed’s Strategy and Approach,” New England Journal of Medicine, August 26, 2020; https://www.nejm.org/doi/full/10.1056/NEJMp2027405.
[xxii] Nisha Biswal and Mara Rudman, “America could lose the critical minerals race,” Notes from the Miller Center [substack], November 19, 2025. https://uvamillercenter.substack.com/p/america-could-lose-the-critical-minerals.
[xxiii] Ernest Scheyder, Pratima Desai, “U.S. House report accuses China of minerals market interference,” Reuters, November 12, 2025, https://www.reuters.com/world/us/us-house-report-accuses-china-minerals-market-interference-2025-11-12/.
[xxiv]Tracy Allaway, Joe Weisenthal, “What the Pentagon Rare Earths Deal Gets Right and Wrong, Odd Lot,” Bloomberg, September 10, 2025, bloomberg.com/news/newsletters/2025-09-10/what-the-pentagon-s-rare-earths-deal-gets-right-and-wrong?.
[xxv] Emanuel, “Beijing Wants America.”
[xxvi] Becca Wasser and Mara Rudman, “It’s time for a true industrial strategy for American national security,” Breaking Defense, October 21, 2024, https://breakingdefense.com/2024/10/its-time-for-a-true-industrial-strategy-for-american-national-security/.
Global Innovation Reimagined
Global Innovation Reimagined showcases reflections and research on innovation in its many forms across Asia, North America, and Europe. The perspectives offered herein draw from discussions during the trilateral Reimagining Entrepreneurship and Innovation conference, hosted by CAPRI, CAPRI USA, the University of Virginia, and Copenhagen Business School from July 22 to 25, 2025.
About the Author
Mara Rudman
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