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Description: While we often hear that free trade means cheaper goods, is it really that simple? What is the true cost of that? How can we measure the long-term decline of America’s manufacturing and industrial base and its impact on America?

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[RUSH TRANSCRIPT BELOW] While we often hear that free trade means cheaper goods, is it really that simple? What is the true cost of that? How can we measure the long-term decline of America’s manufacturing and industrial base and its impact on America?

John Gardner is the author of “Manufacture Local: How to Make America the Manufacturing Superpower of the World.”

“America has a lot of questions to ask itself about the morality of what we’ve done to our own citizens, but also the morality of chasing sweatshop labor in other nations,” he says.

Why is having a robust industrial base so important? And if so, how do we turn things around? Are tariffs really the answer? Is an External Revenue Service a good idea?

Views expressed in this video are opinions of the host and the guest, and do not necessarily reflect the views of NTD.   

RUSH TRANSCRIPT
Jan Jekielek:

John Gardner, such a pleasure to have you on American Thought Leaders.

Thank you, Jan. Thanks for having me. It’s a big honor to be here. I’ve been a big fan of The Epoch Times and your work for quite a long time.

Thank you so much. I absolutely enjoyed reading your book. One thing that I didn’t expect to find in there was a particular insight that you made. You mentioned that in these free trade models that the U.S. has applied over the last several decades, the concept of great power competition was not included. Indeed, that mistake or error—or we could discuss what actually happened—is what ended up making China the lone great manufacturing superpower in the world. So let’s start there.

Yes, I think that with unilateral free trade, and the concepts that have really shifted our society so far, I don’t even believe that we teach the benefits of tariffs for revenue, for protection of industry, or to reach agreements with different countries. I don’t know if we teach that in college anymore. It’s just like free trade, free trade, free trade is the only way.

I think that post-World War II, we wanted to create a world that was more intertwined and dependent on each other so there would be less likelihood of another great war. I think that has created a dynamic where businesses have sought forced labor and slave labor conditions, and entities that have human rights violations because they’re cheap have moved overseas. And there are much cheaper minerals overseas because they don’t follow the strict environmental guidelines that American companies have to follow. So I think that our dollar and the loss of our American industry have built up another great power in opposition to us.

The decline of American manufacturing wasn’t factored into the theory of free trade because the people who wrote the theory of free trade, mostly Milton Friedman and other academics around him, like Thomas Sowell, I don’t think they understood the importance of manufacturing a product—how important that is for a nation, for national security—when your strategic adversary makes a significant number of goods that go into your defense industrial base. I think that was a colossal blunder, and we have now funded the rise of an entity that wants to take us on. I see that as very dangerous for America.

I agree with you wholly that there was this purpose in creating a trade-intertwined world. That was actually a strategic purpose. That was a national security purpose in itself. But it’s like in the process, you kind of forgot that the other countries might be thinking that way too. Does that make sense? That was the insight that I got from reading your book, which is really more focused on re-empowering local manufacturing, your own journey, and the possibilities that exist here.

A big portion of what I wanted to happen in the world through my book is to change the dialogue on the benefits of free trade to a nation and start to look at what it costs a nation. We’ve lost 60,000 to 70,000 factories. You take a city like Pittsburgh, just one city. We’ve seen the decline of many cities that used to be meccas of manufacturing.

Let’s look at Pittsburgh. From 1980 to 1983, they lost 150,000 steel mill jobs. Years later, half the population of Pittsburgh had left. Now, Pittsburgh has rebuilt itself into a kind of tech hub, with Carnegie Mellon and a medical area. They’re doing very well now. But the cost of all that economy that was lost, when you spread it out to Baltimore, Detroit, Chicago, St. Louis, New York, and Philadelphia, they used to be manufacturing titans.

This embrace of free trade, no matter what, has cost our cities—our magnificent American cities—their culture because there is a heritage there. I write in my book about how blacks were drawn from the Jim Crow South to the North to get manufacturing jobs because Henry Ford was one of the first people to offer equal pay for equal work, no matter your skin color. They were drawn up to the North into these great cities, and there is a heritage there that has now been shifted overseas.

I think that America has a lot of questions to ask itself about the morality of what we’ve done to our own citizens, but also the morality of chasing sweatshop labor in other nations. We fought a civil war to end slavery here in America, and yet it seems our moral boundaries stop at our borders in the name of free trade. To me, that is a question that motivates me to push for more questioning of unilateral free trade theory.

I was reading Patrick McGee’s book, Apple in China. I’m actually going to read a passage—a kind of lengthy passage from here—because I found it almost hard to fathom. The passage is indeed about this. So he writes this, early on: internal documents obtained for this book revealed that Apple’s investments in China reached $55 billion per year by 2015. Okay, and that doesn’t even include the costs of components in Apple hardware, the so-called bill of materials, right? Which would more than double that figure. I mean, unbelievable.

Compare that to the CHIPS and Science Act, which Secretary Gina Raimondo called a once-in-a-generation investment, one that would usher in a new era of American leadership in advanced semiconductors. He goes on to say that Apple’s investments in China every year for the past decade are at least quadruple the amount the U.S. Commerce Secretary considered a once-in-a-generation investment. This also speaks to the fact that this idea of industrial policy in the U.S. was kind of an anathema—something you couldn’t even really talk about, right, for a long time.

America needed a grand industrial vision. I believe that’s what President Trump brought about. I still remember—I wasn’t paying any attention in 2016—all of a sudden I heard someone say, let’s make America the manufacturing superpower of the world. I was blown out of the water. I was like, wow, I like the way that sounds.

What you referenced there is heartbreaking for America—the amount of investment that has gone overseas. I’m in the manufacturing industry and have been for 20 years. Seventy-five percent of manufacturing companies in America employ 20 employees or less; 90 percent employ 75 employees or less. So manufacturing is the majority of smaller businesses.

We hear all the talk about bringing semiconductor factories and building big factories, but we should grow the ones we have. They’re already ready to grow. What they need is the volume, which is the lifeblood. You look at the amount of investment that you’ve read off there, and I hear other government numbers, like the Navy putting in $350 million into making torpedoes.

But these are pennies compared to what we’ve invested in other countries and given away in aid, but also what our businesses are investing in communist China and offshoring our industry. I’m grateful that we have a president who has a grand industrial policy in mind, in a direction that he’s steering the country in. I believe that he’s taking us steps closer to more investment in industry.

You know, the thing that strikes me about this $55 billion per year number, I think that’s actually greater than the entire Marshall Plan for Europe post-World War II. I mean, this is a huge amount of money per year, right, since 2015. I mean, there was already a lot before that, but for at least a decade.

What’s so infuriating about it is Tim Cook said—I quoted it in my book—that the problem with America is there aren’t enough tool and die people, and that you could fill up the room he was in with the tool and die people in America. But in China, there’d be thousands of football fields filled with tool and die people. But those were trained by Apple’s investment.

You also have Apple, kind of a woke company, investing in DEI initiatives in the inner city, but refusing, as the most valuable company in the world, to invest in training American workers in the inner city. That’s what I find hard to stomach. I know Apple has come around since President Trump came in, but we’ll see.

I expect that this is a similar scenario with other companies as well, which is, again, also kind of a mind-boggling reality of investment outside. It just became the norm.

The cost of that to the American economy, the human capital we lost—our human capital not being trained while China’s is—I don’t think the cost of all that lost to America has been calculated when universities extol the virtues of unilateral free trade. We hear, oh, you get cheaper goods because we’re capitalists, and free trade, you get cheaper goods. But what is the cost of that? What is the numerical value of that?

I think this is a really good example. This anecdote about Apple really highlights the cost to America. What would our economic development be if that $55 billion a year had been here? What would Detroit look like? What would, you know, Baltimore look like? How do you put a value on that? So I think when I talk about the cost of free trade, that really highlights it.

You know, I’m going to pluck another quote, which I prepared because I’ve been reading his book and yours kind of concurrently, and I saw a lot of extra thought that came out of that. But here he has another very powerful one. How can it be, for instance, that demand from China’s 1.4 billion people indirectly supports across all industries between 1 million and 2.6 million jobs in America? That’s the entirety of China.

Whereas, by Tim Cook’s estimate, Apple alone supports 5 million jobs in China, 3 million in app development. So basically, that upside-down contrast boggles the mind. One super corporation has more impact on job creation in China than all of China has on America. So one corporation has more impact, right?

That’s mind-boggling. And I think it proves the point of what we have allowed to happen to our industry and our innovation. And in the name of free trade, in the name of pursuing a doctrine, how has that hurt our nation? People you would expect to question things, like in universities and doctorate of economics, should be asking these questions, and I don’t feel that they are. And so that is a picture-perfect example of the calculations that need to be done now that we’ve seen, we’ve done the experiment for free trade. We’ve done it.

Milton Friedman himself said, policy should be judged on results, not intentions. That’s a direct quote, so let’s judge free trade on the results, which is a massive loss of intellectual property stolen by opening up ourselves to forced technology transfer to communist China. General Keith Alexander in 2015 testified before Congress that the amount of intellectual property stolen from America by communist China is the greatest transfer of wealth in the history of civilization.

In the history of civilization. I mean, more than the sacking of Rome, more than the burning of the Library of Alexandria. The greatest transfer of wealth in the history of civilization. I don’t believe that economists are accounting for that when they talk about free trade and you get a cheaper widget from Amazon. So I think that these are the questions America needs to start asking ourselves if we’re really going to get serious about having an industrial policy.

Right. And build that into the culture, which you compellingly argue, and manufacture locally. So let’s start with you. Kind of an unexpected story in a way.

An unexpected story. Sounds like a title to a movie. I grew up in a house without a TV or a phone, a very religious house. I spent a lot of time at the library because I liked stories. As a kid, I was really bored a lot. So most of my life was filled with stories about the frontier and heading west, along with American Manifest Destiny, Daniel Boone, Davy Crockett, Jack London, and Tom Sawyer, all that kind of stuff.

When I was 14, I got hit by a car and was in a coma for a week and was in the hospital. I loved it because I had a TV, so I got to watch movies whenever I wanted. I got to watch The Last of the Mohicans and Dances with Wolves. The stories I read about would come to life in front of me, thanks to Hollywood.

I was like, wow, that’s what I want to do. I want to be involved in storytelling like that. After I got out of the hospital, my head was kind of messed up, and this was the ’90s, and they didn’t really know too much about traumatic brain injury back then. School was very hard for me, and just things weren’t working right.

Long story short, I ended up leaving home at 18 with a bag of books and a bag of clothes and just hopped in my car. I dropped out of high school and said, I’m going to go to Hollywood and try to get involved. I showed up and didn’t know a single person and lived in a garage. I met some very great people who looked out for me, and I was very touched by the people I’ve met along the journey.

I got out there and I was bussing tables up on Sunset Boulevard. I’d work till two in the morning, then I’d go over to Paramount lot and pick up a script. My audition would be at 9 am in the morning. I’d be an extra on a TV show. Then I got my SAG [Screen Actors Guild] card, and got a couple years into it. But I realized I didn’t really like it. It’s hard work, and I didn’t like standing around a lot. I’m more of an action guy.

I was visiting a friend in Oklahoma, and I visited the dad of this friend. He pointed to a machine, a CNC [computer numerical control] machine he was working on. He said, if I had a tool that could do this, cut this way, it could make my life so much easier.

I remembered my dad was a tool designer and a mechanical engineer, and I had worked in a business he started. I said, hey, dad, can you design a tool that does this? So I decided to start a cutting tool company for use in the manufacturing industry out of my apartment when I was 25. That’s why I am where I’m at now.

The propaganda, I guess, has been that you just can’t do manufacturing in America. It’s not cost-efficient. They can do it, you know, better, faster, a lot cheaper outside. Why did you pick this area, which seems to be kind of fraught with everybody kind of outsourcing and heading overseas?

I didn’t think about it. I had a feeling I was getting ready to walk out of my restaurant job, and I’m age 25, and I felt like a failure because I’m like, I didn’t do what I set out to do, and that really makes me mad in life. When I set out to do something and I don’t do it, and even though I didn’t like it, I’m like, what am I going to do?

I had this—I don’t want to say vision, but this image in my mind of machines working and the vibrant energy that I felt in Pittsburgh when I would drive through and all the activity and all the energy around that, and that kind of feeling moved me in that direction. I didn’t think, nobody does it here anymore. I just jumped in.

So what happened?

Well, it took years to be able to quit the restaurant industry. A magazine called Modern Machine Shop wrote an article about the cutting tools’ performance at a very big manufacturing facility. So I got my first 30 or 40 clients. But what I learned was the reason the manufacturing industry has shrunk on the vine and is anemic is that we don’t get the volume of jobs. The volume of goods to be made is the lifeblood of manufacturing. I would have people—and this is true—they would say, hey, I got these electric motor shafts from China and I need to repair the keyway putting them in, and I need your tool to repair it.

We would have conversations: why don’t they just make the whole part here? Oh, you know, everything’s made in China these days, it’s just an accepted fact. So it was cheaper to make the whole thing in China, ship it here to have the flaws in it repaired than it was to manufacture the whole thing here. And I remember, 2007, 2008, 2009, just being like, why? I would ask clients, why is it cheaper? Dozens and dozens of clients would say that it was because labor and raw material inputs are so much cheaper over there. And that bothered me.

But what’s interesting is around 2018, 2019, the repair thing—this is 20 years of experience, tens of thousands of conversations with machine shops in America. So this is not just a couple of conversations informing this. That started to stop. China has gotten better at manufacturing. They’ve gotten more advanced, way more advanced.

So one of the other things that would upset me is, as a manufacturer, someone trying to make a manufacturing company in America, is, you know, we got a thousand parts from China. We need to make 20 to fill because we got 20 bad ones coming in. So you get 20 parts to make. Like, for example, like this is a part—this is a bevel gear. So you get 20 of these to make instead of a thousand.

Well, volume in the manufacturing industry is what justifies investment into upgrading your machinery, you know, automating, buying new CNC machines, getting robotics involved. The manufacturers in America today in 2025, 90 percent of them are 50 employees or less. They’re not going to invest in automation and robotics until they know they’re going to have 20,000 parts to make, rather than 20.

So what is it that allowed you to become profitable when, you know, we know that a lot of businesses, small businesses that are attempted fail? I mean especially in this area which has been hollowed out quite a bit.

I have a niche product that is innovative and it allows automation. So my product allows a company to go from, basically, to say to make a part, a widget—not this one, but say anyone—you have to do all these operations like drilling, reaming, boring, grooving, splining, turning. And so those operations used to be done in the old days on different machines. And so you’d move 10,000 of these around the shop and they have to be set up to very intricate tolerances and square for each one. And that would take a lot of time.

Now the manufacturing industry is done on CNC machines where you’ll have tools come in and do the drilling, reaming, boring, grooving, all in one machine. So your part comes off the machine complete, which is what you want. Then you’re not moving stuff around the shop numerous times. It saves time.

The operation that my cutting tool does was still one of the last ones that was still done offline, off the CNCs on its own machine. My product allows the automation of this process with the rest of them. Thanks to my dad and his experience in the industry, and opening the doors for me with his design, I got lucky.

But also, I learned early on that I was the only made-in-America option for my product and my competitors would be enormous worldwide tooling corporations—Warren Buffett owns one of them, ISCAR—they take eight to twelve weeks to deliver my stuff that was on the shelf, so I realized the need for speed in the manufacturing industry. I also found that I got lucky at the advent of the internet explosion; a lot of people would find me online, so I didn’t have to pay for marketing, and that is still going on today.

I average about five to ten new clients a week. Again, these are smaller orders because cutting tools last a long time. For example, in a period of time over 30 days in May, which, by the way, my business has grown since the tariffs have come in. We have a record six months, thanks to President Trump’s tariffs.

In a period of 30 days, we had a U.S. Naval Puget Sound Shipyard, the U.S. Army Anniston Army Depot, NASA’s Langley Research Center, Northrop Grumman, SpaceX, and Blue Origin all order from me. You would think I’d be a gazillionaire, but I’m not. They are smaller orders, but nobody else can do them, so they come to me. It’s funny, though, that even though the defense industrial base wants my tooling, I am treated no differently than any other business, even a Taco Bell.

In 2020, when the pandemic hit, I got a letter from the undersecretary of the Navy saying, your work for the U.S. Naval Nuclear Propulsion Program, which I didn’t even know I did, is essential, and you can’t shut down. So you have to fill these orders. And so my wife lost her business forever, thanks to Gavin Newsom. So our family lost that.

Then my sales dropped 40 to 60 percent during that period of time; the whole world kind of seized up. So I went to the bank with this letter, thinking that would make a difference. And a real quote was, we’d prefer to lend to a normal business like a Taco Bell, not a manufacturing industry. And I found that bankers don’t understand the manufacturing industry. The manufacturing industry needs to be treated in an entirely different category than every other business.

Let me riff off of that a little bit. Whatever business you’re in, many people would come in and say, well, my industry needs to be treated specially, right? Why would you say that manufacturing, you know, from the most objective way possible, why do you think manufacturing needs to be treated particularly uniquely? Or is it purely because it’s been gutted in the past?

That’s a really good question. So does it need to be treated differently because it’s been gutted? Or does it need to be treated differently all the time? And I think it needs to be treated differently all the time. And here’s why: 80 percent of global trade is based on goods—a product, something physical, something tangible, something real. Only 20 percent is based on services.

When we decided to steer America into a post-industrial economy and embrace a service economy and a knowledge economy, we didn’t realize that services are based on something tangible. A realtor selling a house is something tangible. A barista making her coffee, the machine they make it on is something tangible. And that’s where the real value in the economy is, is taking something—a hunk of steel—and doing all these processes to add value to it. That will always be bigger than the service economy.

A 2022 Defense Department study found that for every dollar spent in the manufacturing industry, $2.79 was added to the economy, giving it the highest multiplier effect of any sector of the economy. Our Defense Department says if we invest in this sector, it adds way more than Silicon Valley, way more than Wall Street. That’s why I think if you can give it a multiplier effect more than any other sector, why would you not invest? Why would you not treat the manufacturing industry differently?

Additionally, more R&D investment and development and innovation come out of the manufacturing industry than any other sector. I think like 70 percent of all patents filed come out of the manufacturing industry. Additionally, for every job in the manufacturing industry, they create, you know, the numbers differ depending on what, but like three to seven more reliant jobs. They create jobs that rely on this manufacturing position.

So great powers have been built around manufacturing. You can look at the rise of China. You can look at Germany and Japan. Germany is roughly the size of Wisconsin. Japan was roughly the size of California. Their industrial sector was destroyed after World War II. They built up to be top five world economies by what? Embracing a service sector? No, by embracing manufacturing.

You can look at Taiwan, a small island nation that embraces manufacturing and is one of the most important land masses on the planet right now with their semiconductor manufacturing. South Korea is a small area, and they’re a top six or seven economy based on manufacturing. The answer is, it’s worth the investment all the time.

Well, something very interesting is that Communist China acknowledges Taiwan’s contribution to its manufacturing, to the growth of its manufacturing center—basically this reality, which was charted with respect to Apple and Apple in China. And so we basically have this industrial policy, this, you know, sort of, you could call it extreme industrial policy on the side of Communist China. I would also argue its military strategy, as long as its national security strategy—something beyond or, you know, part of the factor of why this industrial policy was so ever-present, I guess, using American dollars to do it, right? And at the same time, we’ve got the American manufacturing sectors. I want to reiterate how shocking and bizarre that is, right?

Yes. I think from 2022 to 2024, it was like $68 billion of American public pension funds that were invested in communist China by some entities that were on our watch. I don’t think policemen and firemen want their dollars invested in communist China, a nation that is building up to rival us and potentially rival us. A note on Taiwan: one of the arguments Milton Friedman makes is it doesn’t matter where something’s made.

I would point to Taiwan as a counterpoint. It matters geographically where the semiconductors are made, because China may take that island and cut us off from access. Geography matters. The manufacturing industry right now is distributed, decentralized. I think that can be a good thing. The manufacturing industry in the ’40s and ’50s was centered around big factories and the big cities. I think decentralization is good for national security.

When it comes to a business like yours, right, you mentioned that volume is critical. It’s interesting because as I was reading you describing how this works, it’s very similar to publishing a newspaper, right? To actually print one newspaper is the same cost as printing 2,000 newspapers.

Yes, that’s a very good comparison. You’ve got to lay out all the print.

But then once you get up to 10,000, 20,000, 30,000, it’s just economies of scale.

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