With inflation unrelenting and war in Europe shortening worldwide supplies, it has never been more apparent that it is time to spurn American manufacturing back into full gear. The shutdowns from the pandemic have churned the markets into a series of gargantuan demand being met with minuscule supply, causing rising prices to worsen as too much currency is chasing too few goods. 

With flawed federal policies leading to many crying havoc at the dollar emerging as fiat currency, it seems America is on course for a summer of economic turmoil. Despite dominating the world in production computer chips decades prior, America is now utterly at the mercy of other nations. The President stressed the urgency of this crisis abundantly in his State of the Union address: we need to buy American.

Beginning with the onset of the pandemic two years ago, the United States and the rest of the world have been facing a global semiconductor chip shortage due to an overdependence on China, Taiwan, and South Korea for supply. China, in particular, accounts for 60% of global demand if a report from the Congressional Research Office conducted in 2020 is to be believed. With the draconian lockdown restrictions implemented by the Chinese — along with the apparent advantage of preventing supply to their number one geo-political adversary — these shipments have come to an abrupt halt. 

The launch of the new Playstation 5 by Sony was plagued with pent-up demand from gamers across the world due to this, and retailers such as Best Buy, Amazon, and Ebay saw their supply seized by ravenous consumers. Having released in November of 2020, it is still a feat of luck to manage to acquire one of these consoles, as Sony has had to admit the console’s launch will be unsuccessful due to this shortage. 

Additionally, with the rise of ‘working from home’ and a lack of return to the office, the demand for personal computers has shot up to record levels, with major producers, such as Apple, not being able to catch up. The cost of a computer is up 10% from where it was a year ago, and cheap laptops often used by students and workers have had their availability and ease of cost turn into an inverse. The vital computer chip has proven elusive, with fresh supply taking now up to four months to arrive — if fortune is favorable.

Prior to COVID, demands could be met in up to two weeks. In a problem not exclusively for the office desk, we have seen the halt in automobile manufacturing and the lack of chips for the technology inside create a hike in used car prices that has reached up to 40%. With roughly 60% of the population of the United States buying used vehicles every year. The ramifications of this could not have been more disastrous as in a country as large and spread out as America, the necessity of a vehicle could not have been more apparent.

American businesses, who have already suffered under the pandemic, have already suffered the consequences of this as well. Auto Manufacturer Ford suffered a disastrous first quarter sales report, due to the impact of the chip shortage. One of the most commonly sought after used car brands, Volvo, has suffered worse losses totalling at 27%. Consumers will now have to alleviate themselves of common luxuries such as heated seats, which recently General Motors has decided they must waive them from their cars in order to maintain production. 

This strategy has worked — leaving them as one of the few companies to be succeeding in the current climate.

American businesses, who have already suffered enough under the pandemic, have further suffered the consequences of this as well. Auto Manufacturer Ford suffered a disastrous first quarter sales report, due to the impact of the chip shortage. One of the more desired car brands, Volvo, has suffered losses of  27% as the onset of the chip shortage solidifies itself as a crisis for companies. Consumers will now have to alleviate themselves of common luxuries such as heated seats, as General Motors has decided they must waive them from their cars in order to maintain production. This strategy has worked — leaving them as one of the few companies to be succeeding in the current climate.

President Biden stated in his State of the Union address last month “We are going to buy American: buy American products to support American jobs.” Sadly, the President seems to have continued the practice of outsourcing as he bought millions of tests from China rather than manufacturing them domestically. Worse, his proposed budget would raise the corporate tax rate to 27% which would cause countries to flee America for overseas tax havens. 

The People’s Republic of China has a 25% corporate tax rate — obviously we should not have ours higher than that of our competitors. Biden has attempted to justify this as corporations not paying their fair share, which is a moot point. Corporations obviously exist to grow company value, generate revenue, and pay shareholders who contribute taxes on their earnings. Though tax revenue will be lost from the companies themselves, the employment opportunities created by allowing corporations to keep more of their earnings will allow for a broadened tax base and increased revenue.

An imminent switch is about to happen on the hill and the President would be wise to work with the (likely soon) to be Republican Congress. Kevin McCarthy and Mitch McConnell would be very supportive of efforts to deregulate American industry and create a more business-friendly environment as most American manufacturing jobs, which do not require a college degree, directly benefit the Republican’s base constituency. 

President Biden must reach across the aisle like Former President Clinton and in the next year, grant temporary subsidies to production companies such as Intel and work to revitalize the jobs that have been shipped overseas with chip manufacturing allowing for the tax base of the country to expand and leading to more tax contributions individually. While I normally oppose government subsidies, in this circumstance they seem warranted for the sake of national security. 

President Biden’s tenure has been fraught with disasters – yet he has a chance to resurrect himself. The United States used to supply 40% of the world’s chips, and it is necessary for the national security of the United States and the interest of our economic prosperity for us to return to this sheer dominance. Intel has led an expansion, under CEO Patrick Gelsinger, to Arizona totaling about $50 billion at his Ocotillo campus and has been touting a revamp of the Rust Belt in Southern Ohio that could create thousands of jobs.

If the United States is to succeed on this front, then Mr. Biden must not raise the corporate tax rate and should instead make an investment in subsidizing Intel to continue to encourage domestic production and create jobs. The return on this will be provided from the tax contributions of employees, and the American people will be able to afford automobiles and other products again. Otherwise, the American people will go through a prolonged time of tribulation, and the Chinese will eventually enrich themselves by the demand for their exclusive products. With the trade deficit rising it’s apparent that this is the cheaper solution and the political ramifications would be immense for the President. Ironic, if he were the one to ‘Make America Great Again.’