Industrial policy and state capitalism

January 2026

In recent years, the US has seen two different presidential administrations take extraordinary actions intended to support certain domestic industries and America’s geopolitical interests.

For example, the Biden administration pursued industrial policy through substantial federal investments and targeted initiatives, such as providing subsidies for semiconductor manufacturing and clean energy industries. The second Trump administration has used a variety of policy tools to attract foreign and domestic investment in strategic sectors. These policy tools, while not entirely unprecedented, have expanded far beyond the traditional tools of industrial policy such as tax incentives, subsidies, and regulatory measures.