Trade policy in the new cold war

The CHIPS Act, export controls on AI chips, friend-shoring — we've fundamentally rewritten trade policy around national security. Let's assess whether it's working.

The semiconductor onshoring is happening but it's expensive. TSMC's Arizona fab costs 3-4x what an equivalent fab costs in Taiwan. We're paying a massive premium for security.

The executive authority questions are concerning. Most of these trade restrictions are imposed via executive order and emergency powers, bypassing Congress. That's a lot of economic power concentrated in one branch.

The labor implications are underexamined. Reshoring manufacturing creates jobs but in very specific geographies. The workers displaced by trade disruption are rarely the ones benefiting from reshoring.

The biggest risk is retaliation spirals. Every restriction we impose invites a response. China's rare earth export controls are a direct consequence of our chip controls. We're not the only country that can play this game.

My assessment: the security rationale for chip controls is sound. China having access to cutting-edge AI chips is a genuine national security risk. But the scope creep into broader trade restrictions is dangerous and economically costly.