When thinking about current tariffs, the main talking points have mostly focused on manufacturing jobs. But lately, I’ve come across a set of arguments that highlight a different concern: the U.S. lacks sufficient industrial capacity.

This becomes particularly relevant when considering the possibility of conflict. In such a scenario, the ability to produce essential goods rapidly is critical. If a country is dependent on a rival for key supplies, that reliance could become a serious strategic vulnerability.

Here’s some exerpts that gesture at this issue.

Dynomight’s notes on Landmark ruling on the WTO national security exception

… it doesn’t seem crazy to argue that you need to maintain some industrial base for the sake of national security. Recent history unfortunately shows that brutal land wars between rich countries still happen and still require enormous quantities of matériel. According to some sources, Russia is using around 10k shells per day in Ukraine, while after several years of ramping up production, the EU hopes to produce 5.5k shells per day in 2025 and the US 2.5k. In 1995, the US could make 22k shells per day.

In other words: in 2025, the US makes about 1/10 of what it did in 1995.

Samuel Hammond on his NYT essay, Tariffs Won’t Fix Our Trade Imbalance. This Will.. The whole essay is insightful.

Republicans and Democrats now recognize the need to rebuild America’s industrial base, if only for national security reasons. The United States cannot deter Beijing if we are dependent on Chinese supply chains for our military drones. But reindustrialization means more than protecting existing factories behind a tariff wall. It requires building new industries and pushing them to aggressively compete with rivals, scale up production and export their products. Countries don’t get rich by creating expensive substitutes to cheaper imports; they get rich by making things the world wants to buy.

…

Instead of cutbacks and tariffs, what America needs is a full-spectrum industrial strategy: an Industrial Finance Corporation to invest in tradable sectors, an expansion of export credit guarantees and the creation of special economic zones to cluster suppliers and lower input costs.

The Ezra Klein Show episode on Why Trump Could Lose His Trade War With China

… what you see when you’re there is the product of 30 years of being in the fitness gym. It works like this: A new industry comes along. Let’s call it solar panels. Every major city in China decides they need a solar panel factory. The local government subsidizes it — maybe domestically born, maybe in partnership with a foreign one.

And you end up, in a very short period of time with — I’m making the number up, but 75 solar panel companies. They then compete like crazy against each other in the fitness gym, and five of them survive. Those five are so fit that they can then go global at a price and level of innovation that is very hard for a foreign competitor to deal with — which is why China today basically controls the global solar panel market.

But what you also don’t see is that process of winnowing down from a hundred of those solar panel companies to the five produced a massive explosion of supply chains domestically to feed that industry.

The same thing went on with cars. The same thing goes on with robots. So where you end up five years later is with an interlocking set of supply chains that now, if you’re a young Chinese and say: I just got this idea. I want to produce a shirt that has a pink polka dot button that can sing the Chinese national anthem backward — someone will have it for you tomorrow.