Janet Yellen is wrong about US manufacturing — and pretty much everything else 

Former Treasury Secretary Janet Yellen told the crew at CNBC this week that President Trump’s goal of bringing manufacturing back to the United States was a “pipedream.”  

It was an odd remark, given how her former boss, Joe Biden, ran for president on the prospect that he could revive manufacturing in the U.S. — the central pillar of his promise to rebuild the economy “from the bottom up and middle out.” 

Did Yellen not believe Biden’s campaign pitch? Was she not on board with the CHIPS Act, which threw tens of billions of dollars at semiconductor firms to encourage their shifting production to the U.S.? 

Yellen also claims she does not understand the rationale for Trump’s tariff war, which she calls   a “self-inflicted wound.” When Biden ran for president in 2020, he promised to do away with tariffs President Trump had imposed on China. Not only did he keep those tariffs in place, he added to them in 2024, trying to protect America’s industries by putting a 100 percent tariff on imports of Chinese electric vehicles and slapping solar panels with a 50 percent duty, among other assorted products. Did Yellen protest those taxes on imports from China?  

In short, is Yellen pessimistic about U.S. manufacturing and negative on tariffs because it is Trump at the helm or because she has strongly held convictions that the U.S. cannot compete? If the latter is true, she should have gone public instead of insisting that billions of taxpayer dollars be thrown at an impossible cause. 

Ironically, Yellen made her disparaging remarks the same day Nvidia announced that, for the first time ever, it planned to manufacture its AI supercomputers entirely in the U.S. In addition, the powerhouse chip maker announced in a blog post that, “Together with leading manufacturing partners, the company has commissioned more than a million square feet of manufacturing space to build and test NVIDIA Blackwell chips in Arizona and AI supercomputers in Texas.” Overall, the company said it plans, with its partners, to create up to $500 billion of AI infrastructure in the U.S. within the next four years.  

Nvidia is not the only company that has announced new investments in the U.S. since Trump took over the Oval Office again. Just a few of the other firms that have pledged additional investments include: 

• Johnson & Johnson, promising $55 billion in investment over the next four years; 

• Softbank, which announced a $100 billion investment over the next four years; 

• Novartis, which plans to spend $23 billion to build and expand 10 facilities in the U.S.; 

• Lilly, which will more than double its U.S. manufacturing investment by adding four new pharmaceutical manufacturing sites; and  

• Taiwan Semiconductor Manufacturing Company ,which will invest an additional $100 billion into its U.S. production facilities. 

There have been (and will be) others. Trump’s tariffs have created plenty of incentives for companies deciding that the best way to access U.S. consumers, the biggest global market, is to manufacture here at home.  

Bringing manufacturing home to the U.S. is clearly not a “pipedream.” But it will look different than it has in the past.  

The AI and robotics revolution means that labor is shrinking over time. Rising domestic production will still create jobs, but not as many as would have been the case a decade ago. Historically, American firms had a tough time competing as U.S. wages were (and are still) substantially higher than they are in, say, China or Vietnam. But, as fewer workers are needed to produce goods in highly automated factories, the wage disparity shrinks.  

The other big change that improves U.S. competitiveness is the importance of cheap energy. Germany, Europe’s powerhouse manufacturing hub, has endured two years of recession, as the country struggles with, among other things, high energy costs brought about by unrealistic “green” policies. 

In 2024, the average household in Germany paid approximately 40 cents per kilowatt-hour (kWh) for electricity, compared to the U.S. average of about 16 cents per kWh. The price paid by industrial users in Germany has been several times that of the U.S., moving the government to provide subsidies to manufacturers.  

Meanwhile, the U.S. is sitting pretty. We have almost unlimited fossil fuels available, and thanks to Trump’s pro-energy policies, more is on the way. Abundant low-cost power will be an important inducement for foreign countries looking to lower costs. 

Finally, the Trump White House is committed to providing a low tax and light regulatory regime for businesses. This, too, will attract investment. 

Because of these advantages, Yellen will likely be proven wrong. This is not a shock. She remains wrong on a host of issues — including inflation, attributing the decades-high price hikes endured during her time in office to supply chain issues rather than the Biden White House jacking up spending way beyond what the economy could handle.   

She was also dishonest about enforcement of sanctions on Iran when she said in 2023, "We have not in any way relaxed our sanctions on Iranian oil." That was false.  

But her major failing as Treasury secretary was not locking in low interest rates on our soaring national debt by raising money via long-term bonds when she had the chance. Famed investor Stanley Druckenmiller in 2023 called the lapse the “biggest blunder” in the history of America’s Treasury, saying, “When rates were practically zero, every Tom, Dick and Harry in the U.S. refinanced their mortgage … corporations extended [their debt]. ... Unfortunately, we had one entity that did not: the U.S. Treasury.”  

Druckenmiller added about Yellen: “She has no right to still be in that job.” He is correct, and American taxpayers are paying the price.   

Liz Peek is a former partner of major bracket Wall Street firm Wertheim and Company.