Podcast: Play in new window | Download | Embed
Subscribe: Apple Podcasts | Spotify | Amazon Music | Youtube Music | RSS | The Trendaddy
Does America need to make Dodges AND di***s? Trump thinks so. He’s not just targeting strategic industries but ALL industries with tariffs. Why?? I used to think that was dumb. For years, I wrote that the US can’t rely on China for critical technologies (routers, computers, phones), medicines, or food. The pandemic was a dry run for how dangerous that dependency can be. Then I walked by a manhole cover made in India and the the myth of “strategic industries” became clear.
How could it make sense to ship something so heavy and simple to make, all the way from India?
Turns out, India’s steel industry is the second-largest globally, producing 140.0 million tons of crude steel in 2023, but still a fraction of China’s 1,019 tons and more than our 81.4. So comparatively, India is swimming in iron ore and low-cost labor. No wonder it’s still cheaper to import their sewer covers, especially when tariffs are low.
The US doesn’t manufacture enough products that use steel to make its cost per unit cheaper than India’s, even after shipping costs and delays.
[subscribe_to_unlock_form]Trump’s 25% tariff on imported steel, announced on March 12, 2025, caused US steel prices to surge to $912 per metric ton up 23.2% from January to February 28. That might make domestic steel production more competitive domestically but raise costs for manufacturers that use it, including all US home builders. You can’t protect one without hurting the other. Everything is intertwined.
Tariffs could incentivize US companies to invest in local steel production but they’d still be constrained by iron ore deposits or mismatch with the kinds of steel domestic producers need.
The US produces only 4.3% of the world’s steel. But the very strategic defense industry uses only 3% of that amount. That means other industries must soak up the rest of domestic steel production. Luckily, construction is 50% of that volume. Auto and machinery add another 25%. We can get to 100% of steel produced. But what if there are supply or demand shocks? Specialty configurations needed? Or, timing and throughput issues? A union strike at the supplier? With a global supply chain, those can be mitigated. With a US-only supply chain? Get in line.
| Industry | Estimated Steel Used (million metric tons) | Percentage of U.S. Steel | Notes |
| Construction | 40 | 50.00% | Used in buildings, bridges, roads, and infrastructure projects. |
| Automotive | 12 | 15.00% | For vehicle frames, bodies, and components like engines and suspensions. |
| Machinery | 8 | 10.00% | Includes industrial, agricultural, and manufacturing equipment. |
| Energy (Oil & Gas, Renewables) | 6 | 7.50% | Used in pipelines, wind turbines, solar structures, and drilling rigs. |
| Appliances | 4 | 5.00% | For household goods like refrigerators, washers, and ovens. |
| Transportation (Non-Automotive) | 3.2 | 4.00% | Includes railcars, ships, and aerospace components. |
| Defense | 2.4 | 3.00% | For ships, vehicles, weaponry, and military infrastructure. |
| Metal Products Fabrication | 2 | 2.50% | For tools, containers, and structural components. |
| Packaging | 1.6 | 2.00% | Primarily steel cans and containers for food and beverages. |
| Electrical Equipment | 1.2 | 1.50% | For transformers, motors, and heavy wiring systems. |
Now, imagine doing that kind of 1:1 matching for EVERY OTHER COMMODITY. It’s madness!
Defense Dependencies
This problem becomes more stark when starting with a list of essential inputs for the defense industry. Quickly, you see the scope of globalism — and our dependence on China, Russia and Taiwan. And that’s just one industry.
expand to see table of 10 Most Critical Inputs for the U.S. Defense Industry
Table: 10 Most Critical Inputs for the U.S. Defense Industry (2023 Context)
| Input | Description and Importance | Top Sourcing Country and Percentage | Notes on Vulnerability or Strategic Priority |
| Steel | Primary material for ships, vehicles, weapons, and infrastructure. ~2.4M metric tons used annually. | United States, ~70% | High domestic production (~81.5M metric tons), but alloying elements (e.g., titanium) face global supply risks. |
| Microelectronics | Semiconductors power missiles, drones, and command-and-control networks. | Taiwan, ~60% | Global chip shortages; heavy reliance on Taiwan and South Korea. DoD prioritizes domestic production. |
| Rare Earth Elements | Critical for magnets in motors, sensors, and electronics (e.g., F-35 jets). | China, ~70% | China dominates ~90% of global supply. U.S. imports 70% from China; stockpiles down ~90% since Cold War. |
| Aluminum | Lightweight material for aircraft, vehicles, and munitions casings. | Canada, ~50% | Robust North American supply, but energy costs and global volatility affect pricing. |
| Titanium | High-strength metal for aerospace (e.g., fighter jets) and naval systems. | Russia, ~40% | U.S. relies on Russia and China for processed titanium; sanctions disrupt supply. |
| Energetic Materials | Chemicals for explosives, propellants, and munitions (e.g., TNT, RDX). | United States, ~80% | Limited domestic producers; aging facilities and regulations constrain supply. |
| Skilled Workforce | Engineers, machinists, and technicians for complex systems. ~1.1M defense workers. | United States, ~100% | Workforce down 2/3 since 1985; competition with tech sectors for talent. |
| Castings and Forgings | Precision metal components for engines, turbines, and weapon systems. | United States, ~60% | Declining U.S. foundry capacity; long lead times and single-source suppliers increase risks. |
| Batteries/Energy Storage | Lithium-ion batteries for drones, vehicles, and portable systems. | China, ~65% | China controls lithium and cobalt markets; U.S. pushes domestic battery production. |
| Artificial Intelligence (AI) | Software and algorithms for autonomous systems, cybersecurity, and decision-making. | United States, ~90% | Relies on domestic talent and chips; DoD invested $1.8B in AI for 2024. Foreign chip dependency persists. |
Making everything domestically will range from hard to impossible, given China’s near-exclusive control of 12+ rare earth minerals. It’s a problem I wrote about in 2011’s Econovation.
If I knew, the people who could have done something about it, knew more. Yet, they did nothing. So here we are:
So Do We Need Dodges AND D*l*os?
The answer is likely, yes. Even if we had all the raw materials for strategic industries (cars, electronics, military), we need a bunch of other junk manufacturers to drive volumes up and costs down. Only a vibrant domestic ecosystem can ensure there aren’t huge imbalances. But we’re a LOOOONG way from China’s scale to do this. I’m not convinced it’s even possible, but don’t have the data to prove or disprove it. Neither do you. I hope Trump’s team does. Though none of this seems especially data-driven. The approach seems to be, create the incentive and hope everyone acts accordingly. Maybe I’d have more faith if the incentive didn’t change daily, or sometimes, mid-sentence.
Realistically, globalism is irreversible. Most manufacturing is a mess of entanglements, with some of our biggest adversaries. Uprooting and re-routing those dependencies will range from slow to never. In this complex economy with advanced goods and voracious expectations, no one country can makes everything it needs or wants, not even ours.
Sneak Peak of Episode 4: can we bring manufacturing back?
I studied every country that’s a net-exporter. From that, I have an estimate of exactly how much manufacturing we can realistically bring back, from which industries, and what it’s going to take. Follow me on all the socials and via the newsletter to get new episodes, as they post.
[/subscribe_to_unlock_form]