The Collapse of U.S. Industrial Policy: A Wake-Up Call from Georgia, Intel, and Tariffs

Industrial policy has consistently failed across America—not merely in Washington but throughout state governments, cities, and federal agencies alike. Officials promise to engineer economic outcomes through targeted market interventions, yet the results reveal a pattern of wasted resources, distorted incentives, and fragile outcomes that collapse when political support shifts or market realities intrude.

The case of Georgia’s film-industry tax credits exemplifies this failure most transparently. Marketed as a catalyst for middle-class jobs and business ecosystems, these subsidies—worth approximately $5.2 billion between 2015 and 2022—were designed to lure blockbuster productions. Instead, they triggered temporary surges followed by abrupt collapses visible in 2023. Unions leveraged the boom to extract concessions, Georgia’s competitiveness eroded, and competitors like New Jersey and the United Kingdom offered more competitive alternatives. Today, the state faces millions of square feet of underused soundstages and stranded infrastructure, with auditors estimating an 80-cent loss per dollar spent. Rather than questioning the model, legislators doubled down, extending incentives for films shot elsewhere but merely edited into the state.

This same pattern repeats in California’s tax-credit programs, which have been justified as “retention” policies rather than genuine industry development. The federal government’s efforts targeting Intel also faltered despite billions in public support. Under both Biden and Trump administrations, Intel was framed as a national champion to anchor semiconductor leadership. Investor enthusiasm surged after the Trump administration took shares in 2025, with stocks rising 120% in five months. Yet operational challenges—cutting capacity on older lines, lack of customers for new products, and unpreparedness for the AI data-center boom—led to a stock crash. Industrial policy cannot override market realities or fix operational deficits.

Tariffs further illustrate the perils of this approach. Framed as industrial policy to reindustrialize America, protect workers, and lower prices, tariffs have instead consumed manufacturing sector profits. Empirical work by the Kiel Institute reveals that foreign exporters absorb only a trivial share of costs—roughly 96% of the burden passes to American households and businesses. The $200 billion in customs revenue collected in 2025 was absorbed primarily by U.S. consumers, while companies reduced shipments to the country rather than cutting prices. This has stalled promised auto-manufacturing growth, with automakers absorbing tariff shocks through smaller profit margins, restrained pricing, and selective job cuts.

These cases share a common flaw: industrial policy assumes political favor can substitute for market incentives, that innovation will thrive without competition, and that shielding firms from rivals strengthens them. Instead, it creates industries dependent on perpetual political support—fragile systems that crumble when the tide turns. The evidence is clear: engineered outcomes fail when they ignore the fundamental processes of markets and competition.