Building a Future-Focused Industrial Strategy

As Americans return to the leadership of Donald Trump, it’s clear that the United States has reached a pivotal moment in its approach to industrial policy. After six decades of sidelining a coordinated industrial strategy, Washington appears ready to pivot. The last time we saw a robust industrial policy was during the space race in the 1960s, when competition with the Soviet Union fueled a nationwide effort to push the limits of technological and scientific advancement. In many ways, the success of that period continues to shape our national identity as a leader in innovation and frontier technology. However, the U.S. has since shied away from the kind of centralized, top-down industrial policy that typifies other nations, particularly authoritarian economies.

1. Identifying and Securing Strategic Projects: Given the rapid evolution of technologies with potential national security implications—from quantum computing to advanced semiconductors—government agencies need support in identifying and prioritizing initiatives that serve U.S. security interests. Private sector expertise, especially in fields where technological landscapes shift quickly, is essential to staying ahead of global competitors. The recent formation of partnerships in semiconductor production and artificial intelligence research shows promise, but we need a larger ecosystem of companies capable of evaluating and securing projects that will determine the U.S.'s technological future, especially when it comes to critical minerals and energy generation.

2. Catalyzing Early-Stage Risk Capital: Risk-taking is the bedrock of technological innovation, but government agencies such as the US Development Finance Corporation and the Department of Defense’s Office of Strategic Capital mainly have debt to invest in strategic projects, leaving a gap in the early stage risk capital needed for financing projects in which the US, today, is not as price competitive as Chinese production. The Trump Administration can encourage private investors by providing clear signaling of intent to partner and using de-risking mechanisms such as guarantees and offtakes in the case of critical mineral projects.

3. Structuring Investment Vehicles to Unlock Institutional Capital: The U.S. boasts the world’s most robust capital market, an advantage that should not be underestimated. Trillions sit within US pension funds and asset managers--the New York State Common Retirement Fund alone manages over $250 billion with nearly $40 billion allocated to private equity investments. Unlike in China, where capital allocation remains tightly controlled, these investment dollars flow into projects that deliver predictable returns and limit downside risk through portfolio diversification. When choosing partners and structuring programs, the Trump Administration should back financing vehicles that are designed to reach the scale and have the diversification needed to attract pension funds, endowments, and sovereign wealth funds to invest in the industries of the future. In this way, capital markets can become a competitive asset, driving long-term investment in industries that strengthen US national security while delivering sustainable returns such as energy generation, critical material production, advanced manufacturing, and AI.

The NASA-SpaceX partnership stands as a prime example of how public-private collaborations can reinvigorate entire sectors and reestablish the U.S. in the lead on the world stage. On the back of successful post-war industrial policy, U.S. space exploration was defined by the success of Apollo missions. However, by the turn of the century, the government’s role in space had become constrained by budget cuts and limited innovation, resulting in a period of stagnation. SpaceX, a private company willing to take on the financial and technical risks necessary to push boundaries, not only revitalized U.S. space capabilities but redefined the approach to space as a domain of commercial opportunity. By sharing responsibilities and embracing private-sector risk-taking, NASA sparked a new era of American space exploration that is once again inspiring future generations. Today, the United States stands as a leader in commercial spaceflight, and the successes of the partnership have encouraged new businesses, like Blue Origin and Rocket Lab, to enter the fray.

The model provided by NASA and SpaceX is not a one-off—it’s a blueprint for how the U.S. can approach other critical sectors such as critical minerals (including mining the moon and oceans) and large-scale energy production domestically. The Trump Administration should partner with infrastructure developers and investors to accelerate innovation in Opportunity Zones created by Trump in 2017. Opportunity Zones should become innovation hubs that house forthcoming data center investments, energy generation, critical mineral processing, and skill-building centers. Investing in STEM education, vocational training, and digital skills will create a pipeline of talent that can adapt to the rapidly evolving technological landscape, ensuring that the U.S. not only keeps pace with China but leads.

Industrial policy is no longer a relic of the past but an essential tool in navigating a complex global landscape. Ultimately, the task of designing a 21st-century industrial policy for the United States rests on creating partnerships that are agile, responsive, and future-focused. This approach not only positions us for strategic competition with China but allows the U.S. to maintain its identity as a democratic, market-driven economy. It enables us to harness the creativity and entrepreneurial spirit that drive American innovation while aligning these efforts with national priorities. The next chapter of American industry will be written by those who are bold enough to take risks and smart enough to leverage partnerships. Let’s commit to building a future where American ingenuity not only survives but thrives, setting a global standard for democratic, market-driven industrial policy.

Aubrey Hruby is a Senior Fellow at the Atlantic Council and leads a Critical Minerals Task Force for the Africa Center.