American Thought Leaders - How Tariffs Once Paid America’s Bills–And Why They Could Again | John Gardner

Episode Date: October 12, 2025

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 The Epoch Times.  

We hear, oh, you get cheaper goods because we're capitalists, free trade, you get cheaper goods. But what is the cost of that? What is the numerical value of that? John Gardner is the author of Manufacture Local, How to Make America the Manufacturing Superpower of the World. Losing shot classes, I think we need to teach in high school how important it is to make a product, how it adds value, and that you can make really good money in the manufacturing industry. How have America's trade policies led to the decline of domestic manufacturing? Why is having a robust industrial base so important? Are tariffs really the answer?

America has a lot of questions to ask itself about 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. This is American Thought Leaders, and I'm Yanya Kellick. 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 Epic Times and your work for quite a long time. Well, thank you so much, and I absolutely enjoyed reading your book. And something that I didn't expect to find in there was a particular insight that you made. And that is, you mentioned that in these free trade models that the U.S. has applied over the last however many decades, The concept of great power competition was not included. And 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. Yeah, I think unilateral free trade and the concepts of that that really has shifted our society so far into, I don't even believe that we teach the benefits of

tariffs and for revenue or 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 kind of 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 business has sought forced labor, slave labor conditions, entities that have human rights violations because they're cheap, have moved overseas. And there's 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 has built up another great power in opposition to us. And 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 O'I, 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 who wants to take us on.

And 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, I kind of forgot that the other countries might be thinking that way too. Does that make sense? That was the insight that I got for meeting your book, which is really about, you know, more focused on reempowering local manufacturing your own journey and the possibilities that exist here. Well, a big portion of what I wanted to have happened in the world from my book is to change the dialogue on the benefits of free trade to a nation and start to look at what is it cost a nation.

We've lost 60,000 factories, 60,000, 70,000 factories. You take a city like Pittsburgh, just one city. We've seen the decline of many cities that used to be mechas of manufacturing. We take Pittsburgh from 1980 to 1983, they lost 150,000 steel mill jobs. Years later, half the population of Pittsburgh had left Pittsburgh. Now, Pittsburgh has rebuilt itself into a kind of a tech hub, you know, Carnegie Mellon, medical area. They're doing very well now. But the cost of all that economy that was lost, and you spread out to Baltimore, Detroit,

Chicago, St. Louis, New York, Philadelphia, these used to be manufacturing titans and this embrace of free trade no matter what, I believe, has cost our cities, our magnificent American cities, has cost them 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 they were, you know, Henry Ford was one of the first people to offer equal pay for equal work, no matter your skin color. And so they were drawn up to the north into these great cities, and there was a heritage there that has now been shifted overseas. And I think that America has a lot of questions to ask itself about the morality of that, 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. And that, to me, is a question that kind of motivates me to push for more questioning of unilateral free trade theory. I was reading Patrick McGee's book, Apple and China. I'm actually going to read a passage,

kind of a lengthy passage from here because I found it almost hard to fathom. And the passage is indeed about this. So he writes this, this is early on. Internal documents obtained for this book revealed that Apple's investments in China reached $55 billion per year by 2015. 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 and advanced semiconductors. So 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-a-one. generation investment. And this also speaks to the fact that this idea of industrial policy in the U.S. was kind of an anathom, not something you could even really talk about, right, for

a long time. We, America needed a grand industrial vision. And 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. And I was blown out of the water. I was like, wow, I like the way that sounds. And so what you referenced there is heartbreaking for America,

the amount of investment that has gone in overseas. And I'm in the manufacturing industry, have been for 20 years. 75% of manufacturing companies in America are 20 employees or less. 90% are 75 employees or less. So manufacturing is the majority. smaller businesses. We hear all the talk about bringing semiconductor factories and building big factories, but grow the ones you have. They're all ready to grow. What they need is the volume, which is the lifeblood. And you look at the amount of investment that you've read off there.

And I hear other government numbers like the Navy put in, you know, $350 million into making torpedoes. Like, these are pennies compared to what we've invested in other countries and given away an aid, but also what our businesses are investing in communist China and in offshoring our industry. And I'm grateful that we have a president that has a grand industrial policy in mind in a direction that he's steering the country in. And I believe that he's taking us steps closer

to more investment in industry. 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 2050. I mean, there's already a lot before that, but for at least a decade. And what's so infuriating about it is Tim Cook was, I quoted it in my book, he was saying how the problem with America is there's not tool and die people

and that you could fill up the room he was in with the tool and die people in America. about in China, there'd be thousands of football fields filled with tool and dye people. But those were trained by Apple's investment. And, you know, you also have Apple a kind of a woke company investing in, you know, 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. And that's what I find hard to stomach a little bit. You know, I know Apple's come around since President Trump came in, but, you know, 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. And it's almost like there's a sort of, 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 extoll 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? And 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 Baltimore look like?

How do you put a value on that? And 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 concurrently, and I saw a lot of extra thought that came out of that. But here he has another very powerful line. 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. Okay, that's the entirety of China.

Whereas by Tim Cook's estimate, Apple alone supports 5 million jobs in China, 3 million in manufacturing, another 1.1 million in app development. So basically, that upside-down contrast boggles the mind. One super corporation has more than an 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 have we allowed to have happened 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 doctor economics should be asking these questions, and I don't feel that they are.

And so that is, I think, you know, a picture-perfect example of the calculations that need to be done now that we've seen. We've done the experiment for Free Tree. We've done it, right? Milton Freeman himself said, you know, 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. Force technology transferred 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 history of civilization, I mean, more than the sacking of Rome, more than a burning of the Library of Alexandria. The greatest transfer of wealth in 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 need 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 local. So let's start with you, kind of an unexpected story in a way. An unexpected story.

Sounds like a title to a movie. So, you know, I grew up in a house without a TV or a phone, a very religious house. And so I spent a lot of time at the library because I like stories and I was really bored a lot as a kid. And so most of my life was filled with stories about the front. and heading west and you know the american manifest destiny and daniel boone and davy crockett and uh you know jacklin and tom sawyer and all that kind of uh so so when i was 14 i got hit by a car and was in a coma for a week and was in the hospital uh and i loved it because i had tv and so i got to watch movies whenever i wanted i got what last the mohicans and dance with wolves and so the

stories i read about would come to life in front of me um thanks to Hollywood and so I was like wow that's what I want to do I want to be involved in storytelling like that and so after I got out of the hospital my head was kind of messed up and this was the 90s and they hadn't really didn't know too much about traumatic brain injury back then and so I did school was very hard for me and it just things weren't working right and so long story short is I ended up leaving home in 18 with a bag of books and a bag of clothes and 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. And I showed up and didn't know a single person and lived in a garage. And met some very great people who looked out for me and made, I was very touched by the people I met along the journey. And so I got out there and I was busing tables up on Sunset Boulevard, and I'd work till two in the morning, and then I'd go over to Paramount Lot and pick up a script.

And then my audition would be at 9 in the morning and, you know, it'd be an extra on a TV show and get my sag card. And I kind of got a couple years into it and I realized I didn't really like it. I think it's very hard work and I didn't like standing around a lot, you know, and I'm more of an action guy. And then I, so I was visiting a friend in Oklahoma and I visited the dad of this friend. and they they he pointed to a machine a CNC machine he was working on he said if i had a tool that could do this cut this way because i could make my life so much easier and i remember my dad was a tool designer uh and a mechanical engineer and i had worked in a business he started and so i said hey dad can you design a tool that does this and i decided to start a you know cutting tool

company uh for use in the manufacturing industry out of my apartment when i was 25 that's why i'm where I'm at now. The propaganda, I guess, has been that you just can't do manufacturing in America. You know, it's not cost efficient. They can do it better, faster, a lot cheaper outside. Why did you pick this area, which seems to be kind of fraught and with everybody kind of outsourcing and heading overseas? You know, I didn't think about it.

I had a feeling. I was getting ready to walk into my restaurant job and I'm 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? And I look, I had this, I don't want to say vision, but this image in my mind of a, of machines working and in 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 about all the, you know, nobody does it here anymore. I just jumped in. And so what happened? Well, it took years to be able to quit the restaurant industry. So a magazine Modern Machine Shop wrote an article about the products, the cutting tools, performance at a very big manufacturing facility. And so I got my first, you know, 30, 40 clients.

But what I learned was the reason the manufacturing industry has shrunk on the vine and is anemic. is because we don't get the volume of jobs. Volume of goods to be made is the lifeblood of manufacturing. And so I would have people, and this is true, they say, hey, I got these electric motor shafts from China, and I need to repair the keyway putting them, and I need your tool to repair it. And we'd have conversations, why don't they just make the whole part here?

Oh, you know, everything's made in China these days as 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, you know, 2007, eight, nine, just be like, why? And I'd ask clients, you know, dozens and dozens of clients would tell me this. Like, why? Why is it cheaper?

And it'd be, you know, labor and raw material inputs are so much cheaper over there. And that bother me. But what's interesting is around 2018-19, the repair thing, this is 20 years of experience, tens of thousands of conversations with machine shops in America. So this is not a couple of conversations informed this. that started to stop. China's gotten better at manufacturing. They've gotten more advanced, way more advanced. And 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 by new CNC machines, getting robotics involved. The manufacturers in America today in 2025, 90% 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. Well, 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 in 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. Saves time. So the operation that my cutting tool does was still one of the last ones that was still done off off the CNC's on its own machine.

So my product allows the automation of this process with the rest of them. And so I think, thanks to my dad and his experience in the industry opening the doors for me with his design, I got lucky, but also I learned early on that I was only made America option for my product, and my competitors would be ginormous worldwide tool incorporations. Huge.

Warren Buffett is one of them. Warren Buffett owns one of them, his car. They take eight to 12 weeks to deliver. My stuff was on the shelf. So I realized the need for speed in the manufacturing industry. And I also found that I got kind of 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 10 new clients a week. So again, these are smaller orders because cutting tools last a long time, you know. 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-month period thanks to President Trump's tariffs. In a period of 30 days, we had U.S. Naval Puget Sound Shipyard, the U.S. Army Anneson Army Depot, NASA's Langley Research Center, Northrop Grumman, SpaceX, Blue Origins, they all orders for me. You think I'd be a gazillionaire. I'm not. 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. So in 2020, I got a, when the pandemic had, I got a letter from the Undersecretary of the Navy saying, you know, you're not, your work for the U.S. Naval Nuclear Propulsion Program, which I didn't even though 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. And then my sales dropped 40% to 60% 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, 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 here ends, 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? Well, that's a really good question. So does it need to be treated differently because it's been gutted or because doesn't 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% of global trade is based on goods, a product, something physical, something tangible, something real, only 20% 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. You know, a realtor selling a house that's something tangible, a barista making your coffee, the machine they make it on something tangible. And that's where the real value in economy is, is taking something, a hunk of steel, and doing all these processes to it to add value to it. that will always be bigger than the service economy.

A 22 Defense Department study said, 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. So 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 in, 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% of all patents filed come out of the manufacturing industry. Additionally, for every job in the manufacturing industry, they create, 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, the rise of China. You look at Germany and Japan, Germany is the size of roughly Wisconsin, Japan was roughly the size of California. Their industrial sector is 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 look at Taiwan, a small island nation who, you know, they embrace manufacturing. and are one of the most important land masses on the planet right now

with their semiconductor manufacturing. The rise of South Korea, South Korea is a small area, and they're very top six, seven economy based on manufacturing. The answer is it's worthy of investment all the time. Well, you know, something very interesting, that communist China acknowledges Taiwan's contribution to its manufacturing, to the growth of its manufacturing, to its innovation,

everything, but strangely, you know, doesn't acknowledge this reality, basically this reality which was charted with respect to Apple and Apple in China at all. And so we basically, you 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 it's military strategy, as long as it's national security strategy, something beyond or, 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, got the American manufacturing sector. It just, it's a, I want to reiterate, like, how shocking and bizarre that is, right?

Yeah, I think it was like $68 billion of American public pension funds over the last, like, I think it was 20, 23, 22, 22, 23, 24. We're invested in communist China with some entities that were on our watch. I mean, I don't think policemen and firemen want their dollars invested in communist China, a nation that is, you know, building up to rival us and potentially rival us. A note on Taiwan, one of the arguments of Milton Friedman makes is it doesn't matter where something's made. And 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 Axis. 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 is centered around big factories and the big cities. I think decentralization is good for national security. When it comes to business like yours,

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? If to actually to print one newspaper is the same cost as printing 2,000 newspapers. Yeah, that's a very good comparison. You've got to lay all the print. But then once you get up to 10,000, 20,000, 30,000, it's just economies of scale. Economy of scale. Yeah.

And I feel that the loss of our nation's manufacturing companies' economy of scale, Their ability to scale up rapidly has been shipped overseas and given to China by large 20,000, 100,000 orders. And I think the, what is that going to cost us for national security? What has that cost? Is that loss? I don't think that's been properly valued the loss of the economy of scale in the manufacturing industry. There's a lot of talk about bringing the big factories back to America, and that's fantastic. I support 100%.

But the people who know how to do this job, the 20-man shops, the 50-man shops, they will grow and become big factories. if they have volume. They have the skill sets, and they make up 90% of the industry. So we need stronger tariffs, I think, to fuel the volume and force the volume back here. A very critical point I hear a lot is that, you know, America only wants the advanced manufacturing, the semiconductors, aerospace, all that, you know, dollar general store stuff or the small manufacturing, it's fine if that's overseas. And I want to push back hard against that because the 25, the 50-man shops, which make up 90,

percent of the industry i'm going to say i told everybody's sick of it it's the majority of the american manufacturing industry they need those smaller jobs to fill in gaps say you know i have i have companies get a job from Boeing 200 parts from Boeing it's not going to pay your bills it's not going to allow you to employ 50 people it's 200 parts may do it for three weeks but you need all the other smaller jobs less advanced jobs to fill in to just to keep that machine running a good point i have it for my engineering manager used to work for a big manufacturing outfit and that did polaris four by fours and snowmobiles and when the snow wouldn't fall uh the company would go around and this is a big known manufacturing company they would go around and say hey why don't you take a

furlough and they'd fire people and give them unemployment because they didn't have work so the company got tired of doing that and the employees got tired of it and so they sought out manufacturing paint spraying equipment you'd think that would be fine to be manufactured overseas it paid someone's bills and kept that job there. You know, so I don't think we can ever be, consider any manufacturing thing negligible. And it fills in the gaps from the big jobs, you know. Explain to me what people don't understand about advanced manufacturer. That's the type of manufacturing that we're looking to grow, even for filling in with these

much more simple manufacturing jobs that can help the business. Sorry, I didn't mean to cut you off. Simple manufacturing jobs can be done and pay bills on the advanced equipment, but you have to first justify the cost to give you an example, say a fantastic five-axis lathe from Germany costs $450,000 to automate that, to make that automated and have robotics, robotic palette changers so you can set that machine up to run for a week and walk away and come back and have, you know, 5,000 DOD parts made or a thousand, whatever it is, cost 600 grand. It costs more to automate the machine and get the robotics for it than it costs for the machine itself, all the fixtures to automate it and make it all run smooth. People outside the manufacturing industry don't really understand this because you'll read some economists writing, oh, the manufacturer industry needs this, it needs to automate, needs to do all these things. What we need is to know we have a volume of goods coming in.

And I don't think that can just be with DOD spending. I think the manufacturing industry, what people need to understand is when we're, we ramp up and automate, we can hire more people. I know you've heard the opposite. I know I talked to the guy I bought my machines from. I bought three machines from this guy. Brian's his name. And he works in Phoenix, which is rapidly growing. He said, he's like, the companies I'm selling to that are buying new machines and automating, they're hiring more people because they're able to quote a cheaper price because they can do more goods with these newer machines, meaning their per price quote drops, meaning they have more economy of scale, and they have

more work, you know, they need more parts inspected, more parts shipped out, more parts, you know, more economic activity happens. You know, free traders argue more economic activity happens when you have foreign businesses, enter your market without a toll. I counter that with more economic activity can happen when you have economy of scale in your nation's manufacturing industry and you have competition within. You know, I just want to highlight something that you said, and I might be obvious to everyone might not, but just this idea that having manufacturing in general, right, around all sorts of different types, this is, I think, what you're saying, actually helps bolster the high-end

manufacturing because it allows the business to survive through some of these lower-end jobs. So you kind of need the whole structure, economic structure around manufacturing to be developed. Is that right? It's 100% right. Thank you for saying that so much better than I did. For example, I have clients, they'll still have machines that are ran by hand or not automated and have no CNC computer numerical controlled abilities. Those are some of the best machines because they're made during World War II and they last literally forever.

You can repair them yourself, they last forever. So they'll buy a brand new automated CNC setup, but they'll keep that old machine because they'll have filler jobs. So the guy working this, you know, if that machine's down because Boeing had a crash and not making any parts or the DOD is not spending money to whatever, they'll come over here and make parts. That pays the bills. That keeps us in business. So this idea that a certain segment of manufacturing is negligible is hurting our industry. And I would like Washington and the current administration to really take that to heart. So the first time I heard the term external revenue

service, it actually came from you. And I find it a very valuable term because it kind of reorients how one might think about tariffs. So tell me a little bit about where that term came from. When I was writing the book in March, April, 2024, I was researching a history of tariffs in America and kind of gobsmacked at the fact that tariffs paid our bills and there was no income tax from 1786 to the mid-30s. Even when income tax came in in 1913, they were like 1 to 6%.

And I never learned that in U.S. history class. And that kind of made me mad. I was trying to describe the dynamic that I saw in the actions of the founding fathers and the legislation they crafted and the tariffs they enacted versus the system we're living in under today. External revenue service was what our founding fathers put in place. The internal revenue service, which targets our citizens, is the system we live in now.

the audience and the economists and academics, what is a more free system for American citizens? What is the more free that you could be put in jail for not categorizing your expenditure deduction right, paying a third, 30, 40% of your wages to the federal government, or a system that requires a toll to enter the greatest consumer market in the world, America. We have two-thirds of our GDP as consumer spending. People aren't lining up to get into the Surinand market or Panama. They're lying up to get in America because we can spend money on high-end goods. And so in medieval times, the city of London would charge a bridge toll to come in and set up your stall and sell your wares. You would pay that tool because you want to access to that market.

You can set your stall up out in Sherwood Forest, but you might get robbed. You might, you know, nobody's coming by there to buy stuff. You know, so to get into the first-class market, you pay a toll. And that's what tariffs are. And that is how every American needs to understand and get behind President Trump on this and stop listening to the business media with their whining and whinging in opposition to this. They need to really focus and see how this was how America functioned for a very long time, the majority of its history.

And that got perverted in some sense slowly. One of the challenges that exists with bringing back manufacturing, we invigoring manufacturing, The trades are not considered something that's the noble profession or something like that. It's something that's almost looked down on a little bit still. And of course, there's people who are trying to change that, like Mike Rowe prominently with the scholarships that he gives and so forth. The issue is that at the same time, there just aren't enough people who know how to do a whole range of things. There's a huge skilled labor shortage, right?

I don't know how much of that fits into manufacturing and how much of that fits into other areas, but it's a major issue we have to deal with, I think. So in 2021, the Leighton Institute of Manufacturing did a study, and they found that there will be 2.1 million unfilled manufacturing jobs by 2030 costing America trillion dollars. And that's even at the trajectory of not reinvigorating manufacturing. Exactly. Of not Trumponomics.

And so let's just say it'll be $5 million, right? Because President Trump's going to explode manufacturing, and we're going to have a lot of unfilled jobs. So, again, what was the cost of free trade? America lost its human capital. And if you want to understand the value of human capital is Germany and Japan, devastated post-World War II, very industrial societies. The Marshall Plan for Germany built their economy up again, because they had the human capital, the knowledge, to rebuild the manufacturing industry there.

You know, if they had a bunch of lawyers and accountants and no manufacturers, they probably wouldn't be a top five world economy after World War II. The cultural perception of the manufacturing industry has to be changed by government marketing. The government marketed for COVID and monkeypox awareness. I think every high schooler in America should read my book.

I wrote it for them. I wrote it to let them know there's another pathway. There's another choice on the menu of life, besides go to college, get 60 grand in debt, don't start earning money for five years after high school, go get a low-paid internship. I think there should be an economic study where if you get involved in manufacturing industry, I know 18, 19-year-old guys making 50, 60 grand in the manufacturing industry, running half-million dollar machines, make another 10 or 20 grand a year doing overtime, no college debt. How does these lives look different in 30 years as opposed to getting a

communications degree and working as an intern? And it's really interesting, 50% of Americans with a college degree enter the workforce at a high school labor level. So I find that the degreed class is oversaturated. There's too many cooks, chefs, head chefs, everyone wants to be Gordon Ramsey. Too many Gordon Ramsey. in the kitchen and not enough sous chefs and line cooks and dishwashers. And we need to start to build the manufacturing industry up in our culture. And I think it will help create a stronger middle class. One of the studies I found most fascinating when I did my researches book was that the

census in 2015 showed for the first time on record that the middle class Americans did not make up the majority of Americans. And that's really the American dream, right? The middle class. And the manufacturing industry has historically been the past to the middle class. I had someone, a friend actually, comment, well, you know, I looked at that study and the upper middle class grew, and I said, that's exactly the problem. The rungs of the economic ladder, the lower middle class, the middle class have been kicked out, and that

pathway has been, you know, now upper middle class and elites, and then the lower class. And the manufacturing industry used to bridge those gaps and how that, I think that we need to get back in the high schools. Losing shop classes, I think we need to teach in high school how important it is to make a product, how it adds value, and that you can make really good money in the manufacturing industry. And it's really going to explode as President Trump brings the nation's attention to how important it is. You know, and indeed, and I've read a number of very compelling arguments about how having a robust middle class is actually very important for to have a robust, successful democracy,

whether it's Republican democracy like here in America or other places. An interesting point on that is a strong manufacturing country acts as a deterrent. Look why we're not completely decoupling from China because they own a lot of our manufacturing. It acts as a deterrent. Also, I believe strong civil manufacturing might can replace a lot of military spending. If you look at right up leading up to World War II, In 1941 to 1942, they call it the miracle of 1942.

In 1942, we produced 24,000 tanks and 3,000 bombers. Massive, by the end of 1942, America was producing more than all the axes combined. How did we do that? It was because we had massive civil manufacturing might to turn to military in times of need. We don't have that right now. We can't even produce enough ammunition to send the Ukraine. Civil manufacturing might turn to military use and time of need, should be turned to military use and time of need, should be turned to military. turn back to civil. The Lionel Toy Train Company, right? They manufactured compasses and nautical

equipment, navigational equipment for warships. Switch to military use. I'm going to pronounce this name wrong. Matatok upholstery company. They produce upholstery nails. They switched to making the clips for the M1 carbon that would spring out, you know, the M1 carbon, the movies, and the clip would fall out. The clickers that were made famous by the parachuters on D-Day, where you click, click, click, click in the night so you know if it was a German or if it was someone on your side on the allies, toy company made those. Again, to the point of having smaller lot jobs that you would think, a toy train company, why do we need this here in America?

Send it overseas. You can turn that civil manufacturing to military in the time of need. And I think that's a really, that's what saved America in World War II and the free world. And I think that we can lower defense spending if we know our civil manufacturing power is here. But Pentagon does probably want, probably doesn't want that to happen. Well, another thing that you mentioned in your book, which I find really an interesting observation, is that the sort of shift towards more service-type oriented jobs or not kind of practical, you know, maybe apprenticeship-oriented jobs where we actually have to kind of get your hands dirty is working with engineers for people that are actually doing the actual implementation of design can be actually quite challenging. You document a few examples. I thought that was a really interesting observation.

Well, I think culturally, the kids in high school, to know this life path is there, should be brought into the factories today. Most of Americans still think manufacturing is dirty and smoke building out of the factories, and it's all dirty and yucky. But you go to a manufacturing facility now. I brought my wife to some of them. She's like, wow, this is really cool. It's clean.

There's clean rooms. There's air conditioning. You're working on machines that it's almost like hypnotic. You hear the hum of machines. There's activity. People are focused on attention to detail. It's very exciting. And so I think introducing the kids to the industry of today is so important to fill that skilled labor gap. And also, all Americans need to be introduced to the industry today. So a really interesting observation that you made in the book is how it's difficult for someone who's working, for example, in the

machine shop to work with the engineer who created the design in the first place. Oh, yes. Because they lack some of the kind of understanding of how the actual manufacturing process works. I understand your question, though. Yeah, it's a chapter called Make America's Engineers Great Again. So it goes back to the degree class. The people in the factory, you learn practicality on a shop floor. You learn you can do this and you can't do that.

In the engineering programs in America, you learn how to design, how to do calculus on the board. You learn to use your imagination and design anything, and you can make it. It's designed it all. But then you don't learn the cost to make that part that you designed could be very prohibitive. And I think that's affecting the brand of American Made. And to give you an example, I have clients tell me, okay, I got an engineering degree, and I only did, like, a semester of machine shop, and I realized when I graduated,

I didn't know how to make anything. I just knew how to design it. So I went and worked at a machine shop for two years, and I started my own company. I had a guy tell me that while I was writing my book. I've heard it all through my career. And so they're not taught in engineering classes how to make anything.

They're only taught how to design it. And I think that to get an engineering degree that should be something almost like a doctor. Now, you know, doctor is a title of respect. An engineer should be a title of respect as well, but I think we need to do a lot more earn it. I think we need to do two years. in a shop on a factory floor.

I think you need to do more education with machines and functions. And to give you an idea of how far gone the engineers are, I deal with this every day. My product cuts a key way. So imagine a key slot, right, and a key has to fit into it, right? And I tell this to big companies and engineers all the time, the young guys. Don't know how to make anything. They'll say, hey, I want to, say this is a quarter inch wide.

I need an insert to do this, but your insert. are oversized by 2,000s, 252,000th of an inch, quarter inch is 250,000th, I'm like, yeah. I'm like, well, why? I need this key slot to be a quarter of an inch. I'm like, well, you would want the slot to be oversized, so the key will fit into it, because the key is a quarter inch as well. They're the same size, no fit. I mean, these are engineers at degrees that do calculus. They don't understand, and they're like, well, that's a special, but I still, they design it aerospec and it's been approved to now be the smaller size. I'm like, okay, well, I can make you this special, but it's just going to cost more money.

By American manufacturing costs more money. Engineers don't design for common sense stuff. And I'm just giving you one small example of how the common sense is gone. Because the unspoken thing here is that you need, you know. Experience. Well, no, no. You need experience. No, 100%.

But in order for this to fit, there has to be that hair width separation. Something, concept as easy as that, they're not being taught in engineering school. And then when they get out and they're allowed to design stuff and I've never learned how to make it, it drives the cost up of manufacturing a lot, a lot, an unknown amount. You're advocating for what for the future in terms of reinvigorating now these small to medium size manufacturing business and having them grow and flourish? Give me a bit of a picture of what people will find. The average tariff rate from 1824 to 1934 was 40 to 50%.

And I'm advocating for our tariff rates to get back to that point. Because by 1918, we were the world's number one manufacturing superpower in the world. And that built the strength of our industry and our middle class to take on the axis in World War II and build this amazing middle class. And then that all got dismantled as a system. So I'm advocating for strong terrorists to drive the mass production and the volume of goods back here to feed the growth in automation and robotics of our already existing manufacturing base. The 252,000 manufacturing companies in America, again, 75% or 25 employees or less. And I think those are overlooked because people are like, oh, 20 employees, who cares? Do you know how much one employee can do in a manufacturing industry with automation and machines?

They can do so much more. Like, you know, I'll have one guy running two machines. He'll set them up and they'll run all night long while he's home sleeping. Nobody will be there. Lights out manufacturing. Before you'd have to have two extra shifts. What does this do? It drives the cost of products down because I don't have to have the labor.

But right now, me, John Gardner, I can't afford to buy a third machine because I don't have the volume of jobs. coming in because they're overseas and beyond just tariffs i'm advocating which president Trump is doing to mine local and refine local on a massive scale because the cost input to a product i'm talking in the whole world our labor and raw materials roughly the cost of labor input into a product is dramatically shrinking because the beauty of robotics and automation how much more work someone can do so that costs The cost of labor is actually going down. The cost of materials is staying the same or growing.

And in America, the average time to get a mining permit seven to ten years in other environmentally friendly countries like Canada and Australia, it's two years. And China, who knows what they're doing environmentally. But the reason why companies want to get their raw materials overseas and in near China is because it's cheaper, you know, there's more of it. So I want massive mining and refining, massive energy production, energy is a mass. a big input into manufacturing and that's what I'm advocating for and all you get all these foundational layers mining refining raw materials energy and then you bring the volume back with

the tariffs and I say 40 to 50 percent because these other countries have so many non-tariff barriers so many I mean there's so many other more informed people about all the Peter Navarro you know the whole list of non-tariff barriers so I say 40 to 50 and that will start to turn the volume to our guys. And there's this other dimension, and I'm just going to stress this because I think this is the kind of the biggest lesson that I gleaned from reading your book is that there's this, the rising tide lifts all ships. As more manufacturing comes in, there's more need for manufacturing than there's more people manufacturing. Each company is going to become more

profitable, have more business. You get this kind of exponential growth effect that should happen. It's a snowball rolling and gathering on itself. And an example of that is, you know, if you make a comment, like, oh, we don't want those Dollar General Store manufacturing jobs. Well, a lot of that Dollar General Store is injection molded plastics, right? You ever looked at a car recently? I mean, you don't have a metal key anymore.

You've got plastic this, plastic that. Everything's plastic. So if you get those Dollar General Store plastic dood jobs, the plastic injection molding companies here in America, which we have a strong plastic injection injection molding will blow up even more and bring down the cost of American-made goods. Because one of the things that I want President Trump to do and put more focus on is the American-made brand, seizing that back in. That used to have immense value.

You know, you hear corporations talking all the time about the brand value, the brand Nike, oh, the brand. American-made brand has enormous value. And it used to mean a quality good that you're patriotic. Now everybody associates American-made with too expensive, too expensive, too expensive, too expensive. Let's address that and make American-made. and to claim made in America needs to be, boy, we have to put some criminal penalties on falsely claiming that. The Federal Trade Commission has a standard. They don't criminally enforce it. I think it should be on par with counterfeiting. The Federal Trade Commission does not, they're lackadaisical.

It's more on competitors to sue you civilly if you're falsely claiming Made in America, just so you know. Well, this has been an absolutely fascinating conversation for me. Perhaps a final thought. as we finish? I want President Trump to tell every American to read my book because I wrote my book as a propaganda tool to counter Milton Freeman's capitalism and trade. And I think seeing the administration stand at the podium and argue with all these reporters, that argument will end if people just understand the industry. And I think my book best opens up the minds of Americans to the importance of a domestic

manufacturing base. And this is survival. Well, John Gardner, it's such a pleasure to have had you on. Thanks, John. Thanks so much for having me. Thank you all for joining John and me on this episode of American Thought Leaders. I'm your host, Janja Kellick.