Trump Moves to Combat Declining Defense-Industrial Capacity

President Donald Trump will end the administration’s “Made in America” week Friday by signing an executive order commanding a comprehensive review of America’s defense-industrial capacity.

Peter Navarro, director of trade and industrial policy at the White House, told reporters Friday that the executive order would be the “capstone” to a week focusing on trade and manufacturing, and an appropriate prelude to Saturday’s dedication of a new aircraft carrier in Newport News, Virginia.

Navarro promised it would be one of the most significant and comprehensive, “whole-of-government” assessments of military-industrial policy since Dwight Eisenhower was president. Pointing to the loss of 60,000 factories and 5 million manufacturing jobs since 2001, Navarro said the review will involve many government agencies and will touch on defense, intelligence and trade policy.

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“What’s revolutionary and historic about this president is he sees the connection not only between the need to have a strong manufacturing base for economic prosperity but also for national defense,” he said.

The review will take 270 days, after which the president will receive an unclassified report — plus a classified appendage — along with recommendations. Navarro was reticent to offer examples of what those recommendations might be until the review is complete.

Alan Tonelson, an economic policy analyst who long has advocated for an “America First” trade policy, applauded the administration’s efforts. But he warned that Navarro likely will face resistance from elements of the government.

“There’s likely to be major pushback from the bureaucracy and even the leadership of major Cabinet agencies,” he told LifeZette.

Tonelson, who blogs about the economy at RealityChek, said the Defense Department long has experienced a “classic triumph of short-termism” as senior officials prioritized the desire to obtain the best equipment at the lowest prices over the need to make sure America maintains its defense manufacturing capabilities.

“DOD has drunk the globalization Kool-Aid,” he said.

“It’s therefore absolutely critical that the United States maintain a manufacturing, a defense-industrial base, and supply chain capable of manufacturing or supplying those items domestically.”

Tonelson said the Commerce Department’s Bureau of Industry and Security has the legal authority to force private companies to answer its surveys and for years has published reports on the issue. But he said the work largely has been ignored.

“The amount of follow-through has been absolutely minimal,” he said.

Navarro said the United States has the world’s most powerful military but added that its status is threatened by a dwindling manufacturing capacity. He said there is only one American company, for instance, that is capable of repairing propellers for submarines. The country also has only one mine that extracts rare earth metals but no domestic companies capable of processing those metals, which are critical in a number of defense systems.

Navarro also said America does not have any manufacturers that produce flat-panel displays used in military aircraft. He said that in addition to manufacturing capacity, the study also would focus on skills gaps in the domestic workforce.

Alex Gray, the deputy director of trade and industrial policy, said modern supply chains often are long and far-flung. Defense contractors buy parts and equipment from companies all over the world, including many firms that are not directly related to defense.

“It’s therefore absolutely critical that the United States maintain a manufacturing, a defense-industrial base, and supply chain capable of manufacturing or supplying those items domestically,” he said. “Supporting a robust domestic manufacturing capability, a vibrant defense-industrial base, and resilient supply chains is a significant national priority.”

Navarro, who developed a reputation as a firm critic of U.S. trade policy when he served as an economics professor at University of California, Irvine, called the review “groundbreaking” and argued that it “shouldn’t be underestimated.”

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He added that the study would identify areas of vulnerability and “extinct capabilities” that “can be brought back to life.” But he said the goal is not to ensure that every defense component is made in the United States.

“All we’re doing here is chess players looking ahead and trying to anticipate what our needs are going to be in the future as part of a broader buildup in our military that is long overdue,” he said.

Tonelson, the economic policy analyst, said even modest progress by Navarro likely would be revolutionary by historic comparisons.

“There’s nowhere to go but up,” he said.