To be sure, the United States is experiencing a genuine boom in AI investment. The hyperscalers accelerated their R&D and capital investment 50-fold over the past two decades to $750 billion in 2025 compared to $15 billion in 2005. By the end of 2026, total investment by these hyperscalers could approach $1 trillion.
This disconnect matters because productive investment is a leading indicator of competitiveness and of where production, jobs, and growth will occur. While the United States has outperformed most advanced economies on investment since the global financial crisis, China is adding roughly $4.4 trillion in net productive assets annually, roughly four times the equivalent amount in the United States.
One clear challenge to sparking a U.S. industrial renaissance: it’s expensive to make in America. Across most steps of the production process—construction, labor, materials, equipment, and time to market—the United States is a costly place to invest. Excluding any subsidies, the all-in costs to build products like semiconductors and pharmaceuticals are roughly 40% and 60% higher, respectively, than in the most competitive locations, while the cost of developing a new antibody medicine is 2.7 times as expensive compared to China. Two factors constitute the bulk of the cost gap. The first is more costly and slower capex delivery. U.S. construction costs are about double what they are in Asia, and construction times can be twice as long: recent nuclear projects have taken up to a decade to complete compared to six years in China. Second, labor costs are two to five times more than in China or Taiwan, a difference that used to be offset by productivity differences. But in like-for-like industrial settings, productivity differences have all but vanished. In advanced fabs, for instance, Taiwanese engineers produce about a quarter more per worker than in the United States, where wages are more than 2.7 times as high.
Where cost competitiveness isn’t possible, companies can compete on service quality, brand, customer proximity, and innovation. Complex drug therapies, for example, command premium margins and a decade or more of effective commercial exclusivity. Performance and trust can sustain premium prices. Increasingly, unrestricted access to the U.S. market also matters.
The U.S. technology boom shows the country can mobilize capital at breathtaking speed. Kicking off an industrial renaissance raises a harder question: Is the United States willing to change how it builds industry and absorb higher costs when doing so isn’t enough?
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