[Trump's Return and the American Series] III. The Future of the Democratic Party Through the 2024 Presidential Election

“We have sent them a consistent message.

We will pursue an industrial strategy without apology at home,

but we are firmly committed to not excluding our partners.

We want our partners to join us in our industrial strategy.

In fact, we believe our partners must join us for our industrial strategy to succeed.”

Jake Sullivan, National Security Advisor to the Biden Administration,

excerpt from a speech at the Brookings Institution (Sullivan 2023)

"Biden has pursued industrial policy more actively than his Democratic predecessors.

However, evidence suggests he remains captive to the lobbying efforts of Wall Street, Beijing, and environmental groups.

The challenge for conservatives is to set a new direction.

But to set a new direction without simply ceding leadership to China,

we must never abandon industrial policy.

Rather, we must strengthen industrial policy with genuine conservative insight."

Marco Rubio, Senator from Florida (Designated Secretary of State for a potential second Trump administration),

excerpt from an op-ed in The Washington Post (Rubio 2024a)

I. Introduction: The Emergence of Industrial Policy in the 21st Century United States?

In the United States, often regarded as a model of free-market capitalism, the term "industrial policy" remains a contentious expression in American politics. In April 2023, Jake Sullivan, National Security Advisor to the Biden administration, used the term himself, characterizing the policies adopted by the Biden administration as "a modern industrial policy" (Sullivan 2024). While acknowledging the possibility that Sullivan might have used a somewhat exaggerated expression to emphasize the Biden administration's policy legacy ahead of the upcoming presidential election and to bolster Kamala Harris, who is poised to succeed Biden as the party's nominee, this rhetorical shift, from the Democratic Party's traditional stance favoring a larger government primarily focused on social policy, hints at the changes that have occurred in the American political landscape over the past decade.

The phrase "American industrial policy" might sound unfamiliar even to educated individuals who are not specialists in American politics. This is because the United States is widely known to the public as a nation that has accumulated wealth through market-oriented economic policies. Indeed, since World War II, the U.S. has poured substantial resources into building and maintaining the free trade order. It is well-known that international organizations that have led globalization, such as the World Trade Organization (WTO) and the International Monetary Fund (IMF), could not have existed without the strong will and leadership of the United States. Particularly after President Bill Clinton's election in 1992 under the slogan "It's the economy, stupid," both Democrats and Republicans appeared to adopt a national policy of financial liberalization through deregulation and support for cutting-edge industries under the umbrella of free trade policy at the federal level.

However, this trend did not last forever. More than twenty years after President Clinton (1993-2000) transformed the Democratic Party into a party of free trade during his eight-year term, the Trump administration emerged. It implemented unprecedented restrictions on immigrants entering from Central and South America, treating them as potential criminals, and pursued policies such as building a large wall on the border with Mexico, which previous administrations had not attempted. The Trump administration also differed in its trade policy. President Trump, relying primarily on executive orders rather than congressional action, boldly pursued various protectionist policies that would have been unthinkable under the previous free trade doctrine, arguing for the protection of American businesses and workers. In the high-tech sector, it also imposed strong regulations to prevent Chinese-owned companies like TikTok from easily collecting and using Americans' personal information through their social media platforms.

Both within and outside the United States, debates arose regarding whether these changes stemmed from President Trump's personal political inclinations and policy preferences, or if they reflected a shift in the collective policy preferences of the public amidst structural changes within American society. Amidst various interpretations, a point of consensus among the majority of the public and political experts was that the policy package presented by the Trump administration held significant persuasive power for the American public after 2016, which is reflected in the consistently high approval ratings of those who have inherited Trumpism in midterm and presidential elections.

However, the 2020 election resulted in the Democratic Party regaining the White House, as the public, dissatisfied with the Trump administration's inadequate response to COVID-19, chose Biden, the Democratic candidate. Having experienced the unprecedented disruptions of Trump's first term, allies who had relied on American liberal order and alliances might have expected a return to the old order. Biden, a seasoned politician who had skillfully navigated differences among various Democratic factions and served as Vice President under President Obama, was seen as a stable choice by Democrats who feared a repeat of the 2016 election loss.

As is well known, the Biden administration has largely maintained, rather than abandoned, many of the protectionist policies implemented during the first Trump administration (Lighthizer 2023, Introduction). Perhaps Joe Biden closely studied how the political novice Donald Trump, from outside the Republican establishment, captured the party's core and ultimately reached the pinnacle of American politics. Trump embraced the core tenets of the Tea Party movement, such as limited government and fiscal balance, but went further by advocating white nationalism intertwined with populism. He offered simple yet clear diagnoses for various American societal problems, including the long-term decline of manufacturing in the Rust Belt, concentrated economic hardship in specific regions, and drug issues.

The cause of almost all the problems identified by Trump was attributed not to "us" but to "them" who had exploited our goodwill, and this strategy proved to be a highly effective tool for persuading the public in elections. For Trump's supporters, it was questionable who, other than an outsider like Trump, would dare to disregard past political practices, use the federal government to halt unfair trade deals previously condoned under the guise of free trade principles, and punish those who had unfairly profited at America's expense. Furthermore, as the wealth gap in American society widened, strengthening public safety and maintaining social order became increasingly urgent tasks for middle-class voters. Trump provided a clear diagnosis and solution: the problems stemmed from welfare dependency that drains limited government resources and undocumented immigrants who illegally settle in American society. Therefore, these individuals should be more rigorously regulated and isolated than permitted by existing legal frameworks.

Ultimately, even after winning the 2020 presidential election, the Democratic Party and the Biden administration likely engaged in serious deliberation on how to respond to Trump's governing principles and electoral strategies, which possessed a clear mobilization effect. The easiest approach was to maintain the policies of the first Trump administration. This is supported by the fact that the Biden administration, in the realm of trade policy, did not abolish but largely continued the protectionist measures introduced during the first Trump administration.

However, the Biden administration did not stop at maintaining or expanding protectionist trade policies. It enacted policies that fall under the category of industrial policy, the main subject of this article. After the 2020 election, the Democratic Party held 222 seats in the House of Representatives, a narrow majority over the Republican Party's 213 seats, enabling legislative cooperation with the Biden administration. In the Senate, the Republican Party held a slim majority with 50 seats. In this context, the Democratic Party utilized its House majority to pass the IRA and ultimately secured the support of two Independent senators who aligned with the Democratic Party, creating a 50-50 deadlock. In such a situation, the Vice President holds the authority to break ties, and ultimately, then-Vice President Harris's support for the Democratic industrial policy agenda allowed the Biden administration to pass the CHIPS and Science Act and the Inflation Reduction Act (IRA) in the summer of 2022, before the midterm elections.[1]

The passage of these two laws provided the Biden administration with the basis to inject unprecedented levels of public funds into the market. Specifically, the Biden administration found justification for market intervention in the urgent need to transition from a fossil fuel-based industrial structure to one utilizing clean energy. Furthermore, amidst the trade war with China that began during the first Trump administration, the legislation was structured to secure a stable supply chain for American manufacturing in advanced technology sectors, including semiconductors and electric vehicles. Under the new investment conditions created by the passage of these laws, companies involved in advanced industries, including major South Korean semiconductor firms, are considering entering the U.S. market to gain price competitiveness and are evaluating compliance with various conditions stipulated in the laws, in exchange for tax benefits from the U.S. federal government.

The Biden administration had already promoted these policies as part of its Green New Deal package during the 2020 presidential election campaign. Biden sought to differentiate his policies from those of the Trump administration by incorporating the goal of environmental protection into industrial policy. Unlike the Trump administration, which focused solely on winning the trade war under the banner of protectionism, Biden focused on the federal government's role in creating new incentive structures to drive the transformation of the American economy towards environmental sustainability. In policy circles, there had long been a negative perception of government-led industrial policy, as many viewed it as an arbitrary policy tool for determining winners and losers. Consequently, the prevailing sentiment in policy circles was that industrial policy was more likely to lead to inefficient resource allocation and failure than success. To overcome this negative perception, Biden framed his argument around the necessity of government intervention to create an environmentally friendly economic structure, rather than emphasizing support for specific companies.

Furthermore, the Biden administration's strategy provided an alibi to deflect criticism from the progressive wing of the party, which argued that President Biden was not sufficiently reformist. The term "Green New Deal" was previously used by progressive lawmakers within the Democratic Party, including Representative Alexandria Ocasio-Cortez (New York). The idea of investing in manufacturing that develops environmentally friendly energy sources provided a rationale that could distance the administration from criticism of providing financial support only to certain segments of the Democratic base.

In summary, after experiencing domestic political variables through the Trump and Biden administrations, American-style industrial policy was legislated and began to take shape through budget allocations starting in the summer of 2022. This process can be evaluated as a complex political undertaking involving the overlap of multiple policy objectives and political intentions.

How, then, can the new political and economic experiments of the Trump-Biden era be assessed within a longer historical perspective? This paper argues that U.S. industrial policy, following the Biden administration, has emerged with various policy agendas and objectives, including protectionism, the trade war with China, and the Green New Deal. It will further examine whether the industrial policies enacted under the Biden administration will be successfully implemented, unilaterally abandoned, or transformed with different policy orientations in the upcoming second Trump administration.

This paper proceeds as follows: Section II will theoretically discuss the possibilities for U.S. industrial policy by examining literature on American policy capacity and state formation. It will also review the debates on industrial policy within academia and politics that have unfolded since the 1980s, and how these were adopted by some Democratic politicians. Section III will explain how Trump's trade war with China and protectionism led to the Biden administration's CHIPS and Science Act and the IRA. Section IV will assess the future direction of U.S. industrial policy after the 2024 election, focusing on Senator Rubio's report.

II. Preliminary Considerations: U.S. Policy Capacity and American-Style Industrial Policy

1. U.S. Policy Capacity

Before delving into a discussion of past and present U.S. industrial policy, it is necessary to address the administrative and policy capacity of the United States as a nation. The U.S. government was formed in a different manner compared to advanced industrial nations in Europe, resulting in different policy choices and distinct characteristics in its policy implementation processes.

There has been extensive academic debate regarding the structure and policy capacity of the U.S. government (Novak 2008). One perspective views the U.S. government as a "weak state" in comparison to the centralized states of Western Europe, attributing this to an incomplete modernization process, as described by scholars like Max Weber. Specifically, Weber posited that during modernization, state bureaucracies would become more developed, civil servants would specialize professionally, and policy-making capacity would be enhanced. According to this view, as all nations experience modernization, differences in policy capacity among states are determined by the extent of their modernization. Applying this standard to the U.S., it can be seen as a weak state that has not yet completed a systematic bureaucracy for policy execution, and whose central government's authority is limited in its division of roles with state governments (Jeong Yeong-woo 2023, 7-9).

However, this perspective theorizes state-building based on a single criterion, thereby hindering empirical exploration of how the U.S. government actually governs. Brian Balogh's research, which highlights that the U.S. government's governance structure is associative, collaborating with the private sector, and thus characterized by being "out of sight" in most policy areas, also points to the limitations of this monolithic view (Balogh 2009).

Robert Lieberman's comparative study of race policies in the United States, the United Kingdom, and France emphasizes a similar point to Balogh's findings (Lieberman 2002). While all three governments shared the common goal of addressing racial discrimination and pursued policy efforts, their outcomes differed. Lieberman argues that the U.S., compared to the other two nations, actively and successfully implemented affirmative action policies after the 1960s, which significantly contributed to resolving widespread structural discrimination. Lieberman suggests that the difference in policy outcomes in the U.S. compared to the other two countries was due to the less centralized structure of the U.S. federal government. However, Lieberman's argument is paradoxical. Scholars who adhere to Max Weber's perspective typically argue that a state's inability to efficiently execute policies stems from a lack of a strongly centralized bureaucracy. Lieberman, conversely, contends that the absence of a strong central administrative apparatus enabled more robust and color-conscious affirmative action policies in the United States. In the absence of a powerful policy execution body, anti-discrimination policies could be implemented through the cooperation of various actors, including civil rights movements, specialized legal groups, investigators from the Equal Employment Opportunity Commission, and federal judges who determined whether discriminatory acts had actually occurred. In this process, these actors empirically established mutually acceptable legal interpretations and their application, leading to the enactment of highly effective and comprehensive anti-discrimination measures from a comparative political perspective.

Nevertheless, many scholars maintain that the U.S. government's policy implementation capacity is inherently that of a "weak state," and that these institutional characteristics lead to various policy failures. This perspective is particularly reflected in approaches that explain differences in policy types and their success or failure based on variations in institutional arrangements between countries. This includes studies exploring why the U.S., despite its high economic development, remains a relatively underdeveloped welfare state (Hacker and Pierson 2002; 2010), or why it has failed to implement effective labor market policies under federal leadership (Weir 1993).

In summary, despite the analytical limitations of a simple strong-state/weak-state framework for assessing the implementation methods and effectiveness of U.S. government policies, it can be argued that the U.S. government is less organized than other developed nations, leading to inefficient policy execution. In other words, the U.S. government's policy implementation practices were shaped by its federal system, where power is divided between the federal and state governments, by a democracy that predated industrialization, resulting in an underdeveloped bureaucracy, and by an environment where it must actively borrow resources from the private sector to implement national policies. Furthermore, this system was consolidated in a "U.S. style" through the practices of political machines in major cities during the Gilded Age, which provided public office and services in exchange for political support, and through the Progressive Era's political reforms aimed at resolving issues arising from these practices by significantly reducing the public sector and intentionally limiting the number of bureaucrats to promote small government.

2. Debates on U.S. Industrial Policy

Industrial policy generally refers to government actions that directly or indirectly intervene in the market to promote the development of specific industries or industrial sectors through various policy tools. This policy is often based on long-term plans for national economic development by government ministries, and the process of implementing these plans involves deciding where to concentrate limited resources. As is well known, nations pursue industrial policies in different ways due to various structural, institutional, and cultural reasons, and they may adopt different industrial strategies in response to changes in the domestic and international environment (Shonfield 1977).

Alexander Hamilton, one of the Founding Fathers of the United States, is known to have advocated for the protection of infant industries to secure the economic independence of the nascent American republic. Hamilton's argument at the time was intertwined with the question of how to structure the central government of the United States, beyond just a strategy for economic development.[2]

Debates surrounding industrial policy in the United States have continued since its founding, but they re-emerged in earnest after the 1970s, a period perceived as an economic crisis for the U.S. In the 1970s, the U.S. experienced economic crises through various events. Following the 1960s, marked by social movements such as urban riots, the Civil Rights Movement, and the anti-war movement, traditional manufacturing regions in the East and Midwest underwent rapid deindustrialization (Sugrue 2005). Traditional blue-collar jobs that once supported entire households rapidly disappeared from the East and Midwest, instilling a profound sense of crisis among Americans. Furthermore, the U.S. experienced external economic crises with the Nixon administration's suspension of gold convertibility and the collapse of the Bretton Woods system in 1971 (Ki and Jeung 2020). The oil shocks of 1973 and 1979 exacerbated domestic and international economic uncertainty, leading to the bankruptcy of many American companies unable to adapt to rapidly fluctuating raw material prices and dollar values.

Following the experiences of the 1970s, arguments emerged in the U.S. for the implementation of an industrial policy tailored to American needs. According to one economist, these arguments were concentrated in academia from 1980 to 1984 and prominently featured in the media (Norton 1986, 4). Among them, Lester Thurow advocated for fiscal policies such as corporate tax reductions, overall austerity measures, and increased consumption taxes to replace personal income taxes, alongside industry-specific support policies, to address the decline in industrial competitiveness that began in the 1970s. His arguments, disseminated through academia and popular media like Business Week, sparked widespread debate on industrial policy (Norton 1986, 33; Thurow 1980; 1981; 1984; Business Week 1982).

According to R. D. Norton, who compiled the arguments of scholars from various fields advocating for industrial policy in the 1980s, the participants in the industrial policy debate at that time can be broadly divided into two groups. One group, the so-called "modernizers," argued for the need to restore America's declining industrial competitiveness. The other group, the "preservationists," advocated for preventing or mitigating the impact of manufacturing plant closures on local economies (Norton 1986, 4). Their arguments ultimately connected to the academic challenge of measuring concepts like industrial competitiveness, which are difficult to quantify with a single economic indicator, and analyzing and verifying their changes over time. Furthermore, if the decline in industrial competitiveness were scientifically confirmed, the question arose as to how to implement industrial policy concretely, avoiding side effects such as corruption that can occur when bureaucratic organizations grow and gain resource allocation power, the arbitrariness of bureaucratic discretion, and the political behavior of prioritizing local interests for support (pork-barrel politics). For scholars of that era, both the academic problem and the practical implementation of policy posed difficult challenges.

Robert Reich, who served as Secretary of Labor during the first Clinton administration, emerged amidst these debates and is considered to have influenced the economic policies of Democratic politicians, including Walter Mondale, who served as Vice President under the Jimmy Carter administration and was the Democratic presidential nominee in 1984 (Norton 1986, 34; Reich 1982; 1983; 1984).[3]Reich advocated for the adoption of European-style worker training programs in an American context, arguing that the rigid mass production system that brought material prosperity to the U.S. after World War II was no longer functional. To overcome this, Reich believed that flexible production organizations should be formed around advanced industries, and that human capital to thrive in these organizations should be cultivated through national policy. Reich's proposed industrial policy provoked backlash from organized labor, a key constituency of the Democratic Party. This was primarily because his views challenged the collective bargaining system and work division structures that American labor unions had painstakingly secured after World War II through collective wage agreements and negotiations, deeming them obsolete. Subsequently, Reich's arguments became one option within the economic policy package of the centrist Democrats (Centrist Democrats or New Democrats) who led the party through the Clinton administration, and are presumed to have been integrated into policy agendas in various forms during that era. In that context, in response to the overt protectionist policies of the first Trump administration, the Biden administration enacted two bills containing industrial policy elements.

III. The Political and Economic Legacy of Trump and Biden

1. Trump's Legacy and the Transformation of the Democratic Party

Following their defeat in the 2016 presidential election, the Democratic Party underwent rapid changes. Democratic politicians appeared to focus on criticizing the Trump administration's policies, citing its attempts to control immigrants from Central and South America by building a massive wall on the Mexican border, its demands for increased defense cost-sharing from allies, and its undermining of the authority of international organizations in which the U.S. had been deeply involved since World War II, pursuing a U.S.-centric unilateralism instead of multilateralism, thereby accusing President Trump of eroding American values.

However, the reality was different. Experiencing the 2016 election defeat and the subsequent Trump administration, Democratic politicians seem to have re-evaluated the political utility of Trump's policies. This represents a significant shift from the Democratic Party's previous economic policy preferences. More specifically, prior to the 2016 defeat, the Democratic Party focused on economic free trade and market liberalization, while politically emphasizing identity politics. In fact, since the advent of the Clinton administration, the Democratic Party had, for nearly a decade, argued that the decline of manufacturing jobs was a tolerable pain compared to the benefits of free trade for consumers as a whole, and a necessary cost for maintaining the U.S.-led world order. Simultaneously, the Democratic Party dismissed the anxieties and aggressive reactions of white working-class voters, who felt threatened by the influx of undocumented immigrants competing for low-wage, low-skill jobs, as uneducated and racist responses, and did not permit the expression of such sentiments in public forums. The real issue was that the Democratic Party's policy stance failed to bring about any meaningful change in the lives of economically deteriorating white voters. The low-wage labor market was increasingly filled by low-cost undocumented immigrants, and white workers easily concluded that the influx of undocumented immigrants was the cause of their worsening situation. Thus, the Democratic Party, having neglected the economic and social grievances of the white working class, underwent a significant transformation after the 2016 election defeat (Teixeira and Judis 2023, chapters 2 and 7).

In particular, the Democratic Party appears to have closely benchmarked the political effectiveness and outcomes of the Trump administration's trade policies, which seemed irrational and populist on the surface (Lighthizer 2023, chapter 1). According to Robert Lighthizer, who served as U.S. Trade Representative under the Trump administration, the Trump administration began imposing higher tariffs on foreign products entering the U.S. market and actively regulated unfair practices such as foreign companies, including South Korean home appliance manufacturers, exploiting the U.S. market through dumping or state subsidies (Lighthizer 2023, chapter 1). Lighthizer assesses that these trade policies of the Trump administration helped reduce U.S. economic dependence on foreign countries and significantly decrease the trade deficit (Lighthizer 2023, chapter 4). This also served as a valuable opportunity for President Trump, who was outside the Republican establishment, as it allowed him to check the free trade proponents within the Republican Party while simultaneously presenting new justifications and tools for the U.S. federal government to intervene in the market for national security and interests. Consequently, the Trump administration's trade policies, unafraid of provoking friction with other trading partners, appear to have held strong persuasive power for blue-collar voters employed in manufacturing.

Lighthizer argues that Biden, during his presidential campaign in 2020, took note of the achievements of these Trump policies and largely adopted them (Lighthizer 2023, Introduction). Specifically, the Biden administration was actively using trade policy to revitalize American manufacturing, continuing the tariffs imposed during the Trump administration rather than withdrawing them. While acknowledging the possibility that Lighthizer, who held senior positions in the Trump administration for an extended period, might be exaggerating his achievements to emphasize the continuity of the Trump administration's policy legacy in the subsequent government, this assessment appears largely valid. This is also confirmed by the Biden administration's economic policy direction announced by the Chair of the White House's National Economic Council (NEC) on June 23, 2021.[4] The first agenda item, "Supply Chain Resilience," outlined the U.S. government's plan to re-industrialize U.S. manufacturing, including the semiconductor industry, protect American companies from competition with foreign firms, including Chinese companies, and invest long-term in advanced technologies.

However, contrary to the narrative that Biden benchmarked the Trump administration's trade policies, the specific implementation methods of the policy direction announced by the Biden administration remained uncertain. In fact, the Trump administration, beyond imposing protectionist tariffs, never actively presented an industrial policy. Although a report titled "Strategy for American Leadership in Advanced Manufacturing" was released by the President's Council of Advisors on Science and Technology (PCAST) in October 2018, which could be classified as an industrial policy for fostering advanced industries, this report was never presented as a policy with government budget allocations (NSTC 2022). Furthermore, during the 2020 election campaign, then-President Trump never proposed industrial policy targeting the U.S. manufacturing sector as a campaign promise.[5]The task of determining what kind of industrial policy would be implemented, following Trump's aggressive trade policies, was left entirely to the Biden administration.

2. Biden's Industrial Policy and Political Legacy

One year later, in August 2022, the CHIPS and Science Act and the IRA were passed by the U.S. Congress and became effective upon President Biden's final signature. The Biden administration's policy direction, centered on industrial policy as presented by the National Economic Council, was thus concretized through these two laws.[6]While risking generalization, the implications of these two laws as industrial policy can be summarized as follows: Based on these laws, the U.S. federal government will exert unprecedented regulatory power over advanced manufacturing industries, including the semiconductor, battery, and electric vehicle sectors. Foreign companies seeking access to the U.S. market will be required to establish production facilities and create jobs in the U.S. In the case of using critical minerals or other sensitive materials in production, they must adhere to production guidelines that limit the proportion of raw materials sourced from "Foreign Entities of Concern" (FEOC) as designated by the U.S. government. Failure to comply with these guidelines will result in the forfeiture of incentives such as tax credits from the U.S. government, ultimately leading to a loss of price competitiveness in the U.S. market.

In the lead-up to the November 2024 election, a key question of interest is whether the industrial policies implemented by the Biden administration will yield political benefits. Biden's industrial policies have not immediately translated into a boon for candidate Harris. Primarily, it will take several years for the two laws, which the Biden administration worked hard to pass, to demonstrate effectiveness and receive positive public evaluation. This point is particularly evident when examining the case of the CHIPS and Science Act.

The political impact of the CHIPS and Science Act will likely be judged much later. As of May 2024, approximately 77% of the $39 billion in direct and indirect funding allocated to the semiconductor manufacturing industry under this act has been invested after its intended use was determined, with the remaining 23% of the funds scheduled for phased investment in various projects.[7]Unless funds are injected into U.S. semiconductor manufacturers that already possess infrastructure, thereby creating immediate employment effects, it is difficult to expect this law to broadly influence voter preferences.

Meanwhile, the effects of the IRA can be assessed as minimal or offset by Trump's attacks. Trump and other Republican politicians have long criticized the bill as unfair, arguing that it fuels inflation rather than reducing it. Furthermore, Republican politicians argued that subsidies provided to consumers in the form of tax credits for electric vehicle purchases should be eliminated, as they could infringe upon consumer choice. In an interview with Bloomberg News on July 15, 2024, Trump reiterated these arguments, asserting that the green energy support policies under the IRA were, in reality, increasing the supply price of energy, which is fundamental to industrial development, thereby exacerbating inflation (Bloomberg 2024). It is difficult to ascertain precisely how much these arguments influenced voters' decisions on Election Day, November 5, 2024. However, while voters generally found it difficult to intuitively grasp the effects of the industrial policies of the Biden administration, they reacted sensitively to high interest rates and rapidly rising prices. Consequently, the Trump campaign could lead the election advantageously by simply criticizing the current administration's price management policies, without needing to present new policies distinct from the Biden administration's industrial policies.

A clear illustration of this situation is a Politico article from July 18, 2024, which interviewed workers in the green energy industry, a sector supported by the Biden administration's IRA. According to the article, one interviewed worker stated that although they work in a company that has greatly benefited from the Biden administration's support, the economic indicators they experience are very negative due to high interest rates and inflation, making it difficult to support the current administration. This sentiment, as depicted in the Politico article, might be common among the blue-collar workers who supported Biden four years ago (Bade and Hill 2024).

IV. U.S. Industrial Policy Post-2024

In the 2024 presidential election, the economic message of the Trump-Vance campaign was straightforward, focusing on criticizing the current administration's high interest rate and high inflation policies, which proved highly effective. If a second Trump administration begins, the focus is expected to be on strengthening trade sanctions against China and withdrawing various preferential treatments that the U.S. has unfairly borne towards its allies. However, it is not easy to predict the specific policies that will be used to achieve these goals, as Trump's leadership style is difficult to anticipate.

Nevertheless, the linkage between trade policy and industrial policy, initiated during the Trump administration, is likely to continue significantly into a second Trump administration. In principle, the industrial policies of the Biden administration, institutionalized through legislation passed by both the House and Senate, have a high probability of being maintained due to their continuity. However, the IRA and the CHIPS and Science Act, passed by Congress in 2023, may fail to fulfill their intended roles due to intentional delays by the administration and disruptions in budget allocation. There is a possibility that this situation could unfold complexly, as some regions benefiting from these legislative acts are Republican strongholds.

We can infer how a second Trump administration might inherit the policies of the Biden administration by examining the industrial policy views of Senator Marco Rubio of Florida, who is expected to hold a significant position as the chief diplomat in a second Trump administration. Following his election victory, President-elect Trump soon nominated Senator Rubio for the position of Secretary of State in the next administration. As a senator, Rubio has shown interest in trade wars with China and has consistently promoted the necessity of industrial policy through various means, including the op-ed cited at the beginning of this section. Through the report "The World China Made – ‘Made in China 2025’ Nine Year Later," published on September 9, 2024, by Senator Rubio's office, we can gain insight into the industrial policy direction of the next Republican administration (Rubio 2024b).

This report focuses on critically examining the perspectives prevalent in the Biden administration and Washington's political circles using objective indicators. It is often assumed that growth strategies centered on Chinese manufacturing, deeply involving the state in a communist system, do not pose a threat to the innovative and dynamic capitalist system of the United States. Rubio's report, however, uses objective indicators to demonstrate that this is a complacent assessment of reality. In fact, China has exceeded its stated economic goals in most areas over the past decade, with the exception of the agricultural machinery sector. It is currently leading the world in four industrial sectors: electric vehicles, energy-power, shipbuilding, and high-speed rail. To counter this reality, Rubio argues for the necessity of a "bold industrial policy" and deregulation policies that encourage corporate investment and innovation (Rubio 2024a, 57).

It remains uncertain how Rubio's policy proposals will be implemented in a Trump administration. In other words, it remains to be seen how Rubio's policy proposals, as Secretary of State, can be concretized into policy execution by the relevant industrial ministries, and how the "bold policies" that presuppose strong state market intervention can simultaneously achieve the goal of reducing corporate regulations. However, given the ongoing trade war between the U.S. and China, the policy preferences of the political figure appointed as the chief diplomat of a second Trump administration are expected to influence the Trump administration in various ways. If Rubio's policy proposals are fully adopted by a second Trump administration, and a comprehensive industrial policy distinct from the first term is introduced, it is anticipated to expand beyond green energy and semiconductors, which were financially supported under the Biden administration's IRA and CHIPS and Science Act, to encompass manufacturing industries related to national security. However, it is still difficult to predict how these policy objectives can be pursued within the Republican principle of a small government, and how the promise to reduce government regulations on individual companies can be simultaneously fulfilled.

U.S. industrial policy has been undergoing rapid changes through the Trump, Biden, and now a returning Trump administrations. The trade war and the full-scale adoption of economic security agendas initiated by Trump, along with the two bills passed by the Biden administration and the Democratic Congress, and the Green New Deal and industrial policies, have left significant challenges for the returning Trump administration. It remains to be seen how these trends will alter the U.S. political landscape in the medium to long term. One can surmise that in an environment of political polarization, and at a time when economic security has emerged as a crucial variable in U.S. foreign and trade policy, any industrial policy implemented by the U.S. will be attempted in a distinctively 'American' manner, different from other countries. ■

References

Jeong, Young-woo. 2023. “Research Notes for the Study of U.S. Political Development and the U.S. Government.” Global Politics Research 16, 2: 1-21.

Arcuri, Gregory. 2024. “Innovation Lightbulb: What's Left of the CHIPS Act Funds?” Center For Strategic and International Studies Newsletter. May 8. https://www.csis.org/...funds(Accessed: July 24, 2024)

Atkinson, Robert D., Doug Brake, Daniel Castro, Nigel Cory, Stephen Ezell, Caleb Foote, David M. Hart, Joe Kennedy and Robert Rozansky. 2020. “Trump vs. Biden: comparing the Candidates’ Positions on Technology and Innovation.” Information Technology and Innovation Foundation: ITIF. https://www2.itif.org/...biden.pdf(Accessed: July 24, 2024)

Atlantic Council. 2021. “The Biden White House plan for a new US industrial policy.” June 23, https://www.atlanticcouncil.org/...policy/(Accessed: July 24, 2024)

Bade, Gavin, and Meredith Lee Hill. 2024. “Biden has poured billions into Rust Belt economies. His ‘Blue Wall’ is crumbling anyway.” Politico. July 18. https://www.politico.com/...00167994(Accessed: July 24, 2024)

Balogh, Brian. 2009. A Government out of Sight: The Mystery of National Authority in Nineteenth-Century America. New York: Cambridge University Press.

Bloomberg. 2024. “The Donald Trump Interview Transcript.” July 15. https://www.bloomberg.com/...true(Accessed: July 24, 2024)

Business Week. 1982. The Reindustrialization in the United States since 1870. New York: McGraw-Hill.

Hacker, Jacob S., and Paul Pierson. 2002. “Business Power and Social Policy: Employers and the Formation of the American Welfare State.” Politics & Society 30, 2: 277-325.

Hacker, Jacob S., and Paul Pierson. 2010. Winner-Take-All Politics: How Washington Made the Rich Richer-and Turned Its Back on the Middle Class. New York: Simon & Schuster.

Ki, Youn and Yongwoo Jeung. 2020. “Ideas, Interests, and the Transition to a Floating Exchange systern,” Journal of Policy History 32, 2: 151-82. https://doi.org/10.1017/S0898030620000020.

Lieberman, Robert C. 2002. “Weak State, Strong Policy: Paradoxes of Race Policy in the United States, Great Britain, and France.” Studies in American Political Development 16, 2: 138-61. https://doi.org/10.1017/S0898588X0200007X.

Lighthizer, Robert. 2023. No Trade is Free: Changing Course, Taking on China, and Helping America's Workers. New York: HarperCollins.

Subcommittee on Advanced Manufacturing Committee on Technology. 2022. “National Strategy for Advanced Manufacturing.” National Science and Technology Council. https://www.whitehouse.gov/...10072022.pdf (Accessed: July 24, 2024)

Norton, R. D. 1986. “Industrial Policy and American Renewal.” Journal of Economic Literature 24, 1: 1-40.

Novak, William J. 2008. “The Myth of the ‘Weak’ American State.” The American Historical Review 113, 3: 752-772.

Reich, Robert B. 1983. The Next American Frontier. New York: Penguin Books.

Reich, Robert B. 1982. "Industrial Policy: Ten Concrete, Practical Steps to Building a Dynamic, Growing and Fair American Economy." The New Republic. 28-31.

Rubio, Marco. 2024a. “Why I Believe in Industrial Policy – Done Right.” The Washington Post. April 2. https://www.washingtonpost.com/...right/ (Accessed: December 12, 2024)

Rubio, Marco. 2024b. “The World China Made: ‘Made in China 2025’ Nine Years Later.” The Office of Senator Marco Rubio. https://www.rubio.senate.gov/...Made.pdf (Accessed: December 15, 2024)

Shonfield, Andrew. Modern Capitalism. New York: Oxford University Press, 1977.

Thurow, Lester. 1980. The Zero-Sum Society. New York: Basic Books.

Weir, Margaret. 1992. Politics and Jobs: The Boundaries of Employment Policy in the United States. Princeton, N.J.: Princeton University Press.

Sugrue, Thomas J. 2005. The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit-Updated Edition. Kindle edition. Princeton, N.J.: Princeton University Press.

Sullivan, Jake. 2023. “Remarks by National Security Advisor Jake Sullivan on Renewing American Economic Leadership at the Brookings Institution.” The White House. April 27. https://www.whitehouse.gov/...institution/ (Accessed: December 12, 2024)

Teixeira, Ruy, and John B. Judis. 2023. Where Have All the Democrats Gone?: The Soul of the Party in the Age of Extremes. New York: Henry Holt and Company.

[1] Amidst severe political polarization within the U.S. Congress, the 117th U.S. Senate, which convened in January 2021, was divided 50:50 on the passage of the Inflation Reduction Act (IRA). In this context, the vote of Senator Joe Manchin of West Virginia, a member of the Blue Dog Coalition known for its conservative stance and policy objectives of fiscal soundness and conservative values, became crucial for the bill's passage. Manchin had opposed and blocked the previous Democratic bill (Build Back Better Bill) on the grounds that the Democratic administration's government spending policies could lead to inflation. To persuade Senator Manchin, the current bill incorporates numerous elements of industrial policy, while also including provisions to reduce the federal deficit and support the development of fossil fuel technologies.

[2] In the debate over the establishment of the Constitution, anti-Federalists, who had arduously fought for independence from British imperialism, expressed concern that concentrating power in a central government would lead to corruption and the abuse of power, similar to what was seen under British imperialism. The Federalists argued that while these concerns were partially valid, it was imperative to concentrate administrative power to govern the new republic efficiently for its survival. Hamilton, a Founding Father belonging to the latter group, advocated for the protection of infant industries as a medium- to long-term economic strategy to break free from economic dependency and achieve true independence for the United States. This was also a proposal for a state-building approach that would strengthen the policy capacity of the U.S. central government to address the immediate challenges facing the nascent republic. However, the final compromise, the Virginia Plan introduced by James Madison, did not fully incorporate all of Hamilton's arguments.

[3] Democratic politicians who showed interest in industrial policy in the 1980s were dubbed the "Atari Democrats," after the popular video game company of the era. Their policy objectives were to foster high-tech industries and restructure the economy to create jobs through industrial policy. This group included Gary Hart (CO), Al Gore (TN), Dick Gephardt (MO), and Paul Tsongas (MA).

[4] The Biden administration's economic policy agenda consists of the following five areas: 1) Supply Chain Resilience; 2) Targeted Public Investment; 3) Public Procurement; 4) Climate Resilience; 5) Equity. (Atlantic Council 2021-06-23).

[5] This point was also raised in a comparative analysis of the technology policies of the two major party presidential candidates, published in September 2020 by the Information Technology & Innovation Foundation (ITIF), a U.S. non-profit think tank. (ITIF 2020) See especially page 23 of the electronic document.

[6] A detailed analysis of the specific contents of these two bills would go beyond the scope of this article. Furthermore, much has already been published on legal and business consulting regarding the impact of the detailed provisions of these bills on Korean companies. Therefore, this paper will omit a detailed introduction to the two bills.

■ Jeong Young-woo, Professor of Political Science and International Relations, Incheon National University.

■ Editor:Lee So-young, EAI Research Assistant

    Inquiries and Editing: 02 2277 1683 (ext. 205) | sylee@eai.or.kr