If some of his views Donald Trump were really unorthodox—because he tended to be a constant Republican fan of tax cuts and benefits—these were the ones that focused on warming up the manufacturing sector. At least that was the reason for the trade war he declared on China in 2018.

Trump failed to raise production, but the funny thing is that this happened under his successor. Investment in production has risen sharply. What Trump’s trade policy failed to achieve, his industrial policy did. President Biden.

And there is nothing to raise questions about the reasons for this success. This is due to two legislative initiatives: the so-called Biden package, the essence of which is to subsidize green energy, and the microprocessor bill, which provides for incentives for the production of microprocessors within the United States, supposedly to protect national security.

The ultimate impact of this policy will almost certainly be large, as planning and commissioning of new refineries takes time. This means that there will likely be much more spending than has been recorded so far. Moreover, only construction sites have been recorded so far, i.e. construction of factories. Equipping these buildings with engineering infrastructure and investing in research and development to achieve maximum production potential is likely to add hundreds of billions of dollars in costs.

And the question arises: why did Biden’s policies lead to a revival of the manufacturing sector, while Trump’s policies failed? Simply because Trump’s trade policy was inadequate as he raised tariffs on industrial raw materials as well as consumer goods, driving up costs and potentially reducing manufacturing employment.

And besides, because Trump’s tax credits were based on the belief that when the government allows businesses to keep most of their profits, they will invest more money rather than keep it for share buybacks. However, this belief has been refuted.

Instead, Biden’s industrial policy aims to increase demand for American-made products, as has been done, for example, with subsidies in the electric car market. And the criteria by which a business decides to invest is not so much tax rates, as we think, but the demand for what they are going to invest in.