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Resilience is a good thing. We have learned that over the past two decades, pandemics, wars, commercial decoupling and climate -related disasters have made the risks of excessive production capacity in a single apparent place.
This is why I always thought it was a good thing to have more regional knots for making critical products in the world. This is not an ideology. It's just about keeping all your eggs in a single basket.
But to create resilience, you have to play both the offensive and the defense. The Trump administration is trying to do the latter with prices in an incoherent way, at best. But even if its pricing strategy was surgical (at the moment, we have general prices on parts of great and low value of the economy, and proposals that move day by day), it would fail without a home game which includes an industrial policy to strengthen the really strategic industries. Only countries with both and clearly connects can succeed in stimulating national manufacturing.
During the Biden administration, the United States used a combination of commercial, capital and technological restrictions, as well as internal industrial policy in the form of tax alternatives, subsidies, subsidies and workers' training programs, to bring crucial industries such as the production of semiconductors to America.
No one said that it was going to replace as if by magic all the factory jobs lost against China in the past 20 years, but there was a clear message that the United States should be able to produce at least some of the components that were the vital element of the digital economy on its own soil. Quite wisely, the EU has followed suit.
The fact that resilience in a complex critical industry as the chips can be restored in just over two years should have been a case study for the Trump administration to follow in key fields, from critical minerals to pharmaceutical products. But what we obtain is the policy developed in dribs and terpônes, with certain proposals of coverage tariff, certain national security surveys specific to industry in fields such as copper, wood, flea and pharmaceutical products, and domestic support proposals in industries such as shipping, but without real support for subsidies or training commitments.
None of this says about affairs – national or international – which cares about the United States in terms of manufacturing and why. This, in turn, creates an uncertainty which is not conducive to the type of investment that the White House says that it wants to bring to the United States.
Michael Wessel, Commerce expert and former China trade expert, the member of the United States China and Security Commission: “Large public companies are turning to investment measures that are often five years or more. No one knows how long the prices can last either during this administration, or beyond.
“Without the industrial policies in place, markets may not have confidence” to pay money in the United States, especially in fields such as manufacturing or energy, which have even longer deadlines for return on investment.
Even if the Trump administration was clear exactly where it wanted to strengthen the capacity, it should go further on the tariff design to protect itself against things such as “pricing inversion”, when the rights on imported components end up being higher than on finished products, injuring national manufacturers.
Likewise, it should tabulate the risk of a supply chain in a much more sophisticated manner. Donald Trump tells the American public that he can advance production on the move and a half years. But where did electricity and energy to manage it, especially if there are prices on suppliers such as Canada?
The grid system is obsolete and underestimated in many places across America, and electricity production factories (of which the United States is short) take years to build. Meanwhile, no deregulation will make the energy of an inner shale viable if the price of oil continues to drop.
Then there are inventory problems. American companies tend to maintain very little inventory at hand due to production models just in time. This has a lot when there are limits of sudden reprisals on the minerals of rare earths from China, or export prohibitions by places such as the Democratic Republic of Congo – one of the only other countries where the critical mineral cobalt can come. As a risk analyst told me, these types of disturbances can collide to close production in areas such as electric vehicles, medical devices and aerospace materials. I could name 12 other risks downstream of this type, but you have the idea.
Does anyone at the Trump White House develop a 360-degree view of all this? I don't know with certainty, but I suppose no.
I hope that this administration does what I recommended in a column several years ago: to hire an ex-military or logistical expert to be a Tsar of resilience in the White House. The physical and financial risk factors in play are turning their heads, and someone should start to think carefully about how they can collision.
Unfortunately, the White House seems concentrated on the same old conservative prescriptions. The chief of economic advisers, the chief, Stephen Miran, played the risk of prices and said that tax reductions and deregulation would make America more competitive worldwide. It looks less like a resilience plan and more like a reflection on the wishes.
