The U.S. manufacturing sector has long relied on government support to strengthen domestic supply chains and improve its competitive positioning globally. The Department of Commerce's International Trade Administration recently explored that support in its Manufacturing Incentives Overview report.
The Biden and Trump administrations had shared goals of strengthening the U.S. manufacturing base, but they emphasized different policy tools to get there, from federal investment, grants and tax incentives under Biden to a greater reliance on tariffs under Trump. The difference raises a broader question: Has the country changed its industrial policy goals, or just changed its methods?
A sector-by-sector approach, with a cut for the taxpayer
Stephen Ezell, executive vice president for Global Innovation Policy at Information Technology Innovation Foundation, has spent years studying how tax credits and innovation policy shape corporate behavior. In the Trump administration, he sees a clear departure from the more uniform industrial policy of the past.
"So the current administration, in terms of stimulating manufacturing, is not really horizontal. It doesn't cut across all sectors with generic policies,” Ezell said. “Rather, it’s an ad hoc, sector-specific interventionist approach.”
He pointed to targeted interventions in sectors such as pharmaceuticals, critical minerals, automobiles, semiconductors and aircraft, paired with the Trump administration’s new willingness to take a direct financial stake in companies’ business decisions and financial outcomes.
Ezell identified three tools in particular that have been used recently: equity shares in companies, such as the roughly 10% stake the government took in Intel; revenue-sharing agreements, like Nvidia's arrangement to give Washington 15% of its revenue from certain chip sales to China; and so-called golden shares, which give the government a say in corporate decisions, such as the deal it reached to approve Nippon Steel’s acquisition of U.S. Steel.
He compared this approach to the 2022 CHIPS and Science Act passed during the Biden administration, which offered chipmakers subsidies, tax credits and grants without taking equity stakes in those companies. Both are considered interventions, but one is more subsidy-based industrial policy, while the other involves direct government ownership.
Ezell said a transactional approach plays a greater role in the current administration’s manufacturing and overall policy strategy, as does the idea that the government should get something back for its investments.
"I think this goes back to the best way to understand Trump and the Trump administration, which is deal making," he says. "The Department of Commerce, [Secretary Howard] Lutnick, and the Trump administration more broadly think that part of their goal is generating revenue for the taxpayers."
He pointed to tariff policies as an extension of the same logic; in theory, the revenue they generate flows back to taxpayers and funds other initiatives.
Entrepreneurship, demand and competition
Alex Krutz, managing director for Patriot Industrial Partners, believes the Trump administration has especially prioritized small businesses and smaller contracts. Krutz was involved in creating the Manufacturing Incentives Overview report as deputy assistant secretary of manufacturing at the Department of Commerce
“There's more money flowing into that, so therefore there's more being applied and awarded across the industrial base," he said.
Larger manufacturers may have a different advantage. Krutz argued that the government's role is less about direct funding and more about shaping demand. This means aggregating it, reinforcing it and signaling that it will still be there years down the road.
That matters, he said, because building a new factory takes years, and companies won't commit to reshoring or expanding capacity unless they trust the market will still exist by the time production ramps up. According to Krutz, a government that is clearly pro-worker and pro-business, and that backs the reshoring of critical technologies and manufacturing, gives companies the confidence to make long-term investments.
He argued there is a philosophical shift toward competitiveness now.
"That balance of decreasing imports in the United States, and the increase of our growth … that difference is what U.S. manufacturers are stepping into. And so that's creating more competitiveness,” said Krutz.
Not everyone sees these shifts as a net positive for manufacturers.
Paul Lavoie, vice president of corporate partnerships and innovation and the executive director of the Elevation Center at the University of New Haven, spent three-and-a-half years as Connecticut's chief manufacturing officer.
In his view, an industrial policy requires the government to provide “catalyst capital” to help companies invest in the machinery, equipment, technology and research needed to expand domestic manufacturing capacity. He pointed to the Biden administration’s implementation of the CHIPS and Science Act and investments in semiconductors as examples of that approach.
By contrast, Lavoie said he does not consider the Trump administration’s tariff-focused approach to be an industrial policy, arguing that tariffs impose costs on manufacturers without directly funding the investments needed to expand capacity.
He also questioned whether tax incentives, as the Trump administration currently structures them, ensure that companies reinvest those gains in the productive capacity and technology needed to strengthen the industrial base.
"Providing tax incentives or tax relief to corporations is like giving good scotch to a drunk,” Lavoie said. “It literally takes money that increases profits, and lets those corporations do with the profits what they choose to do with those profits, and that may or may not be investing in new technology — that just may be in shareholder value.”
Even those more receptive to the Trump administration's manufacturing policy approach concede the results are hard to quantify.
Ezell noted that tariffs have raised costs for industries that depend on global supply chains while other policies support domestic producers.
"What I would say is that the effects of Trump's manufacturing policy are best understood on a sector- or product-specific basis,” he said.
That tension between targeted wins and broader uncertainty may be the clearest theme around how Washington is approaching manufacturing today: Less a unified approach than a series of bets placed industry by industry, each judged on its own merits.
