US Industrial Renaissance: It’s a Matter of National Security


  • The massive US trade deficit amid accelerating deglobalization provides a powerful investment theme.
  • US infrastructure needs to be modernized and expanded because the US will likely be forced to regain its economic independence.
  • The market is already rewarding the beneficiaries of this capital reallocation, but we expect years, if not decades, of further performance from this critical investment theme.

Politicians, CEOs, and investors understand the US’s national security risk of being dependent on the rest of the world for semiconductors, but they don’t seem to understand the US’s national security risk of being dependent on the rest of the world for virtually everything.

The reindustrialization of America, the American industrial renaissance, the rebuilding of the American capital stock, reshoring, near-shoring, friend-shoring, or infrastructure are all synonymous names for what might be THE most important secular investment theme.

Deglobalization is becoming a powerful secular global economic force, and in order for the US economy to persevere, let alone thrive, through such an environment, it will require tremendous manufacturing and infrastructure investment.

Deglobalization is accelerating…

The US industrial renaissance is not a new theme for RBA. We first wrote about it in 2012 when we argued that US corporations had moved operations overseas because they were too focused on labor costs, and were ignoring transportation, governmental, geopolitical, and supply chain risks.

Those risks have grown substantially since that original report. The pandemic revealed the fragility of supply chains in many industries and geopolitical and governmental issues seem to be multiplying. Governments’ efforts to limit globalization have increased substantially since we wrote our initial report.

Nationalistic political parties are gaining strength in many countries, and nationalism is the polar opposite of globalization. Whereas world trade expanded as globalization became more popular, nationalism’s goals typically tend to protect domestic production and restrict competitive world trade.

Chart 1, from the World Trade Organization (WTO), shows the increase in restrictive trade regulations using two different measures. Actual import restrictions, such as tariffs, have increased six-fold since we wrote our original report a decade ago. Similarly, the proportion of world imports affected by such actions has quadrupled.