Industrial policy is not populist

Despite what some in the media say, this new industrial policy has not emerged out of populist demands. It has come from the strained efforts of politicians and intellectuals to justify business handouts using the language of populism, or simply to hide the reality of industrial policy from the public.

The Biden administration provided a master class in dressing up industrial policy and favors to companies in populist rhetoric. When then-President Joe Biden signed the Inflation Reduction Act in 2022, he claimed that “the American people won and the special interests lost.” In reality, more than half of the almost $400 billion in original estimated environmental spending in the act went to corporate tax credits for favored green companies. The act also authorized hundreds of billions of dollars of loans and loan guarantees to companies.

The Biden White House also justified the CHIPS Act, signed the same year, as a way to support “construction and manufacturing jobs” and “good-paying jobs” for the supposedly disillusioned working class. Yet the vast majority of the over $50 billion in semiconductor incentives in the act were for direct grants to corporations, meaning the government got nothing in return. Intel alone got nearly $8 billion in direct grants — later converted during the Trump administration into an equity stake. No populist was demanding tax credits, loans, and direct grants to favored corporations, and no one pushing these acts trumpeted those companies as the acts’ main beneficiaries.

Much of the rhetoric surrounding the so-called Bipartisan Infrastructure Act focused on popular spending programs, such as roads, and the jobs that would emerge from them. Yet in a departure from typical federal infrastructure bills, the act also snuck in several industrial policy programs. It provided $7 billion to subsidize “clean hydrogen” programs and companies and another $3.5 billion for companies providing direct capture of carbon dioxide. As in the CHIPS Act, most of these were structured as grants to companies with no return for the federal government. There is a reason such programs were not highlighted in discussions of the act: They were neither popular nor populist.

President Donald Trump’s biggest industrial policy has been reviving tariffs to protect certain sectors, which he justifies as a way to bring good-paying jobs back to America. Yet the broad-based tariffs he instituted in his second term did not emerge out of any popular demand. America’s biggest union, the AFL-CIO, did not want the tariffs. In a recent Pew Research Center poll, 6 in 10 people disapprove of them, a rate that has been consistent for some time. Fewer than half of Republicans think the tariffs will benefit the country as a whole, and an even smaller proportion thinks they will benefit their families.

The tariffs did provide a windfall, however, for some companies and their lobbyists. In the first part of 2025, lobbying spending related to trade and tariffs went up by a third and was on course to surpass $1.5 billion for the year. Companies knew they could get special “exemptions” from certain tariffs if they provided enough cash and exercised enough influence or that they could use tariffs to harm their competitors. Studies have shown that donations and lobbying expenditures can increase the likelihood of tariff exemptions. In an age of inflation, populists were not demanding a massive hike in the cost of goods, massive lobbyist increases, and favoritism for select industries, yet that is what they got.

Most recently, the Trump administration has announced a handful of one-off deals with individual companies, such as direct equity investments in miners such as MP Materials and USA Rare Earth. News reports claimed that the Trump administration was finalizing a $500 million bailout of Spirit Airlines, an airline that had gone bankrupt twice in the past two years. There is a reason that on the campaign trail, neither Trump nor the Democrats bragged about investing directly in companies or bailing out failing ones.

Many credulous people in Washington and in the media are convinced that populism and industrial policy emerged together. In reality, they are in obvious opposition. The general public, the working class, and grassroots populists were not screaming for handouts to companies. Even if politicians justified their programs using populist language, the media should have known that rhetoric is not a good guide to actual policy.