America’s Hidden Industrial Policy

On October 7, President Donald Trump proclaimed a “National Manufacturing Day,” recognizing that “the strength of our Republic rests on the strength of our industries and the determination of our workers.” It is his administration’s latest move to support the reindustrialization of the American heartland.

The proclamation caps off numerous successes of the past nine months, which have seen around $5 trillion in new private and foreign investments in America, along with reciprocal tariffs, that are reawakening our manufacturing base. Better still, it highlights the all-too-often unsung hero of President Trump’s Golden Age industrial policy: deregulation.

For decades, smug economists and academics have insisted that America’s transition from an industrial economy to a financialized service-based one was natural, that the hollowing out of the American heartland and the offshoring of jobs were inevitable byproducts of capitalism. I beg to differ.

To the contrary, this transition was actually the result of a hidden industrial policy that is fundamentally anti-industrial. For the past half-century, state and federal governments have been constructing a leviathan of regulations, licensing fees, and permitting delays that have dissuaded manufacturing on American soil, costing our economy trillions annually and destroying countless communities.

However, the president has made phenomenal strides in confronting this beast. His first term’s historic regulatory overhaul cut five rules for every one added, a feat now dwarfed by this administration’s staggering 30-to-one margin, saving Americans five trillion dollars over the next year. While the first Trump Administration worked to protect America’s defense-industrial base, this one added executive orders that are accelerating domestic pharmaceutical and mineral production by reducing barriers. This shows what’s possible when deregulation is prioritized.

But the administration cannot act alone. If a true Golden Age is to be ushered in, then the president’s success in this effort must be a call to action for Republicans nationwide.

When considering regulatory compliance, manufacturing startups, for example, have to navigate a mountain of state and federal regulatory codes. Republicans have long paraded their support for deregulation even though red states are just as—if not more—regulated than blue states.

Texas is the fifth most regulated state in the country, with 274,469 restrictions and 19 million words of regulatory code. Meanwhile, the Republican stronghold of Florida has 170,321 restrictions, making it more regulated than blue states like Colorado and Maryland. And that is all before including federal regulations like the National Environmental Policy Act and the Clean Water Act. As a result, it takes Americans two to three years to build a semiconductor factory, while in Asia it’s done in months. Every line of regulatory code is a competitive disadvantage for Americans in the international manufacturing market.

Regulatory costs must also be taken into account. Small manufacturers face over $50,000 in compliance burdens per worker annually—more than double the load on larger firms—totaling $350 billion for the sector, or 12% of GDP. A 2001 report found that EPA regulations from the Clean Air Act resulted in an average cost of $11,671 per employee per year. Adjusted to 2025, that’s $21,594 per employee annually.

The result of all these compliance fees and licenses is big business consolidation and offshoring. Massive production sectors like logging have become increasingly consolidated. In 1950, there were 50,000 lumber mills in the U.S.—now, just 10 companies control 50% of the market.

Labor and tax policies exacerbate the issue, too. Overly rigid OSHA standards and state-level mandates pile on paperwork, while the tax code penalizes capital investment in domestic plants. A 2021 Senate Finance Committee Report showed that five million manufacturing jobs have been lost in the last two decades. The impact of these America Last policies has been devastating for communities in red states like Indiana and West Virginia, where manufacturing once anchored economic vitality. It is no coincidence that U.S. manufacturing’s GDP share has halved since 1980, a path we’ve chosen through our nation’s shadow industrial policy of deindustrialization.

The only way forward is deregulation at both the federal and state levels. Permitting should be streamlined by cutting National Environmental Policy Act reviews and adopting “one-stop-shop” approvals. Burdensome OSHA and EPA rules that add $50,000+ per worker without proportional benefits should be slashed, as urged by the National Association of Manufacturers. Reforms need to be implemented, such as fully expensing capital investments and expanding apprenticeships, so that we can build a skilled workforce and address the 1.9 million unfilled manufacturing jobs projected by 2034. Most importantly, Republicans need to be bold and open their state markets by following Idaho’s example and slashing 90% of state-level regulations.

It is time for America’s anti-industrial policy to come to an end. Thank you, President Trump, for leading the way.

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