Trump's Pick for Commerce Secretary Wants More Industrial Policy for Chipmakers

On the campaign trail and as recently as last month, Donald Trump and some of his closest allies criticized the Biden administration’s efforts to spur semiconductor manufacturing in the United States with costly industrial policy.

But on Wednesday, Howard Lutnick, the CEO tapped by Trump to be the next commerce secretary, signaled his support for continuing and expanding those Biden-era efforts—while also promising to reassess how the dollars are being spent.

“It is vital for America that we bring semiconductor manufacturing to the United States,” Lutnick said in response to a question from Sen. Amy Klobuchar (D–Minn.) during Wednesday’s confirmation hearing with members of the Senate Committee on Commerce, Science, and Transportation. “The CHIPS Act was an excellent down payment to begin that process.”

Separately, in response to a question from Sen. Maria Cantwell (D–Wash.), Lutnick promised to “review [CHIPS Act subsidies] and get it right.”

The CHIPS and Science Act was passed by Congress in August 2022, and authorized the Biden administration to distribute $53 billion to boost semiconductor manufacturing. Most of that money hasn’t been spent yet, giving the Trump administration a lot of leeway over how it is handled.

On the campaign trail, Trump frequently criticized CHIPS spending. During an interview with podcaster Joe Rogan in October, Trump said “the chip deal is so bad.”

“We put up billions of dollars for rich companies to come in and borrow the money and build chip companies here,” Trump said at the time.

Of course, Trump’s criticism of the CHIPS spending is not rooted in any sort of principled free market perspective. He’s also committed to industrial policy to promote American tech manufacturing, but Trump’s preferred solution—as seems to almost always be the case—involves tariffs. “You tariff it so high that they will come and build their chip companies for nothing,” he told Rogan.

Earlier this week, Trump threatened to impose new tariffs on Taiwan, the source of many semiconductors used in the U.S., apparently in an attempt to attract domestic tech investment.

Lutnick’s comments on Wednesday suggest that his view is more in line with Biden administration officials, including former Commerce Secretary Gina Raimondo, who had started talking about the apparent need for a CHIPS Act 2.0 last year. (Lutnick also voiced his support during the hearing for Trump’s plan to impose high tariffs on nearly all imports.)

Both perspectives ignore the reality of the modern semiconductor supply chain, which is “complex, integrated, and not easy to disentangle,” as the Peterson Institute for International Economics explains. They also ignore the fact that both tariffs and industrial subsidies are wasteful and inefficient.

Still, we may be headed for a scenario in which both are being deployed by the Trump administration in pursuit of Biden’s goal of having 20 percent of the world’s semiconductors produced stateside. That might be a fitting parallel to the Biden administration’s decision to leave Trump’s tariffs in place, after campaigning against them on the campaign trail.

For all the partisan rancor in Washington these days, everyone seems to agree that taxpayers and consumers should be forced to pay for policies that benefit a wildly successful industry making highly in-demand computer chips.

America doesn’t need a “review” of the CHIPS Act to “get it right.” It needs a real opposition to the bipartisan support for industrial policy.

The post Trump’s Pick for Commerce Secretary Wants More Industrial Policy for Chipmakers appeared first on Reason.com.

Source: https://reason.com/2025/01/29/trumps-pick-for-commerce-secretary-wants-more-industrial-policy-for-chipmakers/