I finally understand nationalist industrial policy.
I think I finally understand the operative principle of nationalist industrial policy. It seems to consist largely of creating import barriers for our friends through dubious executive action and using executive discretion to loosen up export controls for our enemies.
Imports Americans want from Canada and Europe? Clearly a threat to national security! Exports of advanced AI chips to communist China? Right this way!
As the enormity of the scandal surrounding Nvidia CEO Jensen Huang is becoming clearer, the New York Times reports that the Commerce Department has been approving sales of advanced H200 chips to Chinese shell companies, including some that don’t even appear to have taken the bother of existing.
Consider New Matrix, approved to assemble H200 chips into AI servers. Its listed Beijing office was empty, the building directory had no record of it, and the property manager had never heard of it. Its listed owners do, however, have ties to Wise Road, a Chinese investment firm blacklisted by the U.S. for helping Beijing smuggle chips.
Or take Maginfra, another approved company whose offices were deserted. It shares employees and IP with another Chinese-state-owned firm blacklisted for supporting the People’s Liberation Army. Yet another, Zhejiang Yindun Cloud Technology, has ties to a cloud-computing company that serves Chinese military contractors. A fourth, Shanghai Jiatang, got Nvidia chips even though it grew out of a state-owned manufacturer that “provides technology to the Chinese military” and whose parent company has developed military cryptography.
What’s remarkable about our current tariff and export-control policies is that both directions of industrial policy folly involve active intervention from the administration. It’s not that they’re simply asleep at the switch or there’s an indifferent legislature to blame. The same people in the White House who actively cook up legally suspect grounds on which to punish our friends (and American consumers) with import restrictions are also using their legitimate discretion to give our enemies more access to U.S. exports and markets.
Maybe it’s all part of Oren Cass’s plan.