Industrial Policy

Industrial policy is government action designed to support and develop specific industries that are vital for economic growth and national security. Unlike a hands-off free market approach, the U.S. government uses tools such as subsidies, tax credits, and targeted investments to strengthen domestic manufacturing and critical supply chains. This shift reflects a growing focus on rebuilding American industry and reducing reliance on foreign sources, particularly in technology and clean energy sectors. Learn how government policy shapes what we build and buy.

Key Industrial Policy Laws

Recent legislation like the Infrastructure Investment and Jobs Act, Inflation Reduction Act, and CHIPS and Science Act mark the largest U.S. industrial policy push in decades. These laws offer tax incentives and direct funding to revitalize industries such as semiconductors, clean energy, and advanced manufacturing. Their goal is to rebuild supply chains, create jobs, and enhance competitiveness. Explore the details of how Japan is funding a $550 billion U.S. manufacturing push.

National Security and Supply Chain Resilience

Protecting critical industries is also a national security priority. Industrial policy helps “de-risk” supply chains for essential goods like semiconductors and batteries to guard against geopolitical disruptions. This approach includes strategic partnerships and trade considerations, as outlined in free trade agreements pros and cons for America.

Government Investment and Ownership

Government support raises questions about public involvement in private companies. Discussions continue on when taxpayers should own shares in American companies and whether the U.S. government can own American companies. Beyond ownership, programs like NIST’s Manufacturing Extension Partnership (MEP) provide technical support to smaller manufacturers boosting competitiveness.