27th Parliamentary-Intelligence Security Forum – Economic Security/Trade
Hon. Gilbert Kaplan opened by thanking the organizers and highlighting the centrality of economics and trade to both national well-being and security. He focused on U.S. manufacturing, stressing its critical role in productivity, job creation, and community stability. Drawing on his experience meeting international leaders, he noted the global emphasis on strong manufacturing sectors, particularly to provide employment for growing populations.
He traced the decline of U.S. manufacturing, noting that by 2015, the country had lost 7 million manufacturing jobs, closed 80,000 factories, and faced a $745 billion trade deficit in manufactured goods. To address this, he and colleagues established the Manufacturing Policy Initiative at Indiana University in 2015, identifying ten major areas affecting manufacturing policy, with international trade and investment being the most crucial.
He contrasted the approaches of Presidents Trump and Biden. Trump prioritized trade policy, tackling issues like China’s intellectual property theft through Section 301, renegotiating NAFTA into USMCA, imposing high steel tariffs, and negotiating a Phase One trade deal with China. However, he invested less directly in U.S. manufacturing. Conversely, Biden focused on government investment, committing over $1 trillion through the Infrastructure Act, the CHIPS and Science Act, and the Inflation Reduction Act. Kaplan argued that combining trade and investment policies from both administrations provides a robust framework for manufacturing policy.
Highlighting the results, he noted a net increase of over 500,000 U.S. manufacturing jobs since 2016 and a surge in construction spending on manufacturing plants from $80 billion to over $200 billion per year, signaling a factory-building boom.
Hon. Kaplan then addressed tariffs, including proposals for high tariffs on imports from China, Mexico, Canada, and potentially BRICS countries. He emphasized that tariffs can incentivize U.S. production, especially when paired with substantial domestic investment, and that the inflationary impact of earlier Trump-era tariffs was limited to under 0.5%. He advocated for selective use of tariffs to protect industries from dumping, subsidies, or unfair trade practices while cautioning that broad, high tariffs could complicate manufacturing supply chains and provoke retaliation from trading partners.
He concluded by framing tariffs as a useful but not standalone tool, highlighting the need for careful, targeted implementation in the context of broader investment strategies.
