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

[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 The Epoch Times.   

RUSH TRANSCRIPT

Jan Jekielek:

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

John Gardner:

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.

Mr. Jekielek:

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. 

Mr. Gardner:

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.

Mr. Jekielek:

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.

Mr. Gardner:

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.

Mr. Jekielek:

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.

Mr. Gardner:

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.

Mr. Jekielek:

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. 

Mr. Gardner:

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.

Mr. Jekielek:

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.

Mr. Gardner:

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.

Mr. Jekielek:

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?

Mr. Gardner:

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.

Mr. Jekielek:

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.

Mr. Gardner:

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. 

Mr. Jekielek:

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?

Mr. Gardner:

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. 

Mr. Jekielek:

So what happened?

Mr. Gardner:

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. 

Mr. Jekielek:

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.

Mr. Gardner:

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.

Mr. Jekielek:

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?

Mr. Gardner:

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.

Mr. Jekielek:

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?

Mr. Gardner:

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.

Mr. Jekielek:

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. 

Mr. Gardner:

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

Mr. Jekielek:

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

Mr. Gardner:

Economy of scale. Yes, 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, what is that going to cost us for national security? What has that cost us? That loss? I don’t think that’s been properly valued—the loss of the economy, the scale of the manufacturing industry. 

There’s a lot of talk about bringing the big factories back to America, and that’s fantastic. I support it 100 percent. 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 percent of the industry. So we need stronger tariffs to fuel the volume and force the volume back here. 

A very critical point I hear a lot is that America only wants advanced manufacturing—the semiconductors, aerospace, all that Dollar General store stuff or the small manufacturing, it’s fine if that’s overseas. I want to push back hard against that because the 25 to 50-man shops, which make up 90 percent of the industry—I’m going to say that until everybody’s sick of it. It’s the majority of the American manufacturing industry. They need those smaller jobs to fill in gaps. 

I know companies that get a job for 200 parts from Boeing. That’s not going to pay your bills. It’s not going to allow you to employ 50 people. It’s 200 parts. You 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, my engineering manager used to work for a big manufacturing outfit that did Polaris 4x4s and snowmobiles. And when the snow wouldn’t fall, 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? 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 think that would be fine to be manufactured overseas. It paid someone’s bills and kept that job there. I don’t think we can ever consider any manufacturing thing negligible. It fills in the gaps from the big jobs. 

Mr. Jekielek:

Explain to me what people don’t understand. about advanced manufacturing. 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.

Mr. Gardner:

Those 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 grand. To automate that, to make it automated and have a robotic pallet changer 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 costs 600 grand. It costs more to automate the machine and get the robotics for it than it costs for the machine itself, all the fixturing to automate it and make it all run smoothly. 

People outside the manufacturing industry don’t really understand this because you’ll read some, you know, economists writing, oh, the manufacturing 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 ramp up and automate, we can hire more people. I know you’ve heard the opposite. 

I talked to the guy I bought my machines from, and he works in Phoenix, which is rapidly growing. He said, the companies I’m selling to 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. 

They have more parts shipped out, then more economic activity happens. Free traders argue more economic activity happens when you have foreign businesses enter your market without a toll. I counter that more economic activity can happen when you have economy of scale in your nation’s manufacturing industry, and you have competition within.

Mr. Jekielek:

You know, I just want to highlight something that you said, and it might be obvious to everyone, it 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?

Mr. Gardner:

That is 100 percent correct. Thank you for saying that so much better than I did. For example, I have clients, they’ll still have machines that are run 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, if that machine’s down because Boeing had a crash and they’re not making any parts, or the DoD is not spending money, they’ll come over here and make parts, and 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.

Mr. Jekielek:

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.

Mr. Gardner:

When I was writing the book in March, April 2024, I was researching the history of tariffs in America and was kind of gobsmacked at the fact that tariffs paid our bills and there was no income tax. From 1786 to the mid-1930’s, even when income tax came in in 1913, they were one to six percent. I never learned that in U.S. history class, and that 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 vs. the system we’re living in today. The 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. 

And I ask the audience and economists and academics, what is a more free system for American citizens? What is more free: that you could be put in jail for not categorizing your expenditure deduction right, paying a 30 to 40 percent 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 Suriname market or Panama. They’re lining up to get into America because we can spend money on high-end goods. 

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 toll because you want access to that market. You can set your stall up out in Sherwood Forest, but you might get robbed. Nobody’s coming by there to buy stuff. So to get into the first-class market, you pay a toll. And that’s what tariffs are. 

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. 

Mr. Jekielek:

One of the challenges that exists with bringing back manufacturing, reinvigorating manufacturing, is that the trades are not considered something that’s a noble profession or something like that. It’s something that’s almost looked down on a little bit still.

And of course, there are people who are trying to change that, like Mike Rowe, prominently, with the scholarships that he gives and so forth. The issue is that there’s, 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. 

Mr. Gardner:

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 a trillion dollars. 

Mr. Jekielek:

And that’s even at the trajectory of not reinvigorating manufacturing. 

Mr. Gardner:

Of no Trumponomics. 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, are Germany and Japan devastated post-World War II? 

They were 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. 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. 

There should be an economic study where if you get involved in the manufacturing industry, I know 18 to 19-year-old guys making 50 to 60 grand in the manufacturing industry, running half a million dollar machines, making another 10 or 20 grand a year doing overtime, no college debt. How do these lives look different in 30 years as opposed to getting a communications degree and working as an intern? It’s really interesting, 50 percent of Americans with a college degree enter the workforce at a high school labor level.

I find that the degreed class is oversaturated. There are too many cooks, chefs, head chefs. Everybody wants to be Gordon Ramsay. Too many Gordon Ramsays in the kitchen and not enough sous chefs, line cooks, and dishwashers. We need to start to build the manufacturing industry up in our culture, and I think it’ll help create a stronger middle class. 

One of the studies I found most fascinating when I did my research in this book was that the census in 2015 showed for the first time on record that 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 path to the middle class. 

I had a friend say, I looked at that study and the upper middle class grew. I said, that’s exactly the problem. The rungs of the economic ladder, the lower middle class and the middle middle class have been kicked out. And that pathway has been, you know, now upper middle class and elites and then the lower class. The manufacturing industry used to bridge those gaps.

We need to get back into the high schools that lost shop classes. We need to teach in high school how important it is to make a product and how it adds value, and that you can make really good money in the manufacturing industry. It’s really going to explode as President Trump brings the nation’s attention to how important it is.

Mr. Jekielek:

You know, indeed, I’ve read a number of very compelling arguments about how having a robust middle class is actually very important to have a robust, successful democracy, whether it’s a republican democracy like here in America, or in other places.

Mr. Gardner:

An interesting point on that is that 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 can replace a lot of military spending. 

If you look at right up leading to World War II, from 1941 to 1942, they call it the miracle of 1942. In 1942, we produced 24,000 tanks and 3,000 bombers. By the end of 1942, America was producing more than all of the Axis powers combined. How did we do that? It was because we had massive civil manufacturing might to turn to the military in times of need. We don’t have that right now. We can’t even produce enough ammunition to send to Ukraine. 

Civil manufacturing might turn to military use in times of need should be turned back to civil. Look at the Lionel Toy Train Company. They manufactured compasses, nautical equipment, and navigational equipment for warships. They switched to military use. 

The Mattatuck Upholstery Company produced upholstery nails. They switched to making the clips for the M1 carbine that would spring out, you know, the M1 carbine, the movies, bing, and the clip would fall out. The clickers that were made famous by the parachuters on D-Day, where you click, click, click in the night so you know if it was a German or if it was someone on your side in the Allies. A toy company made those. 

Again, to the point of having smaller lot jobs than you would think, why do we need this here in America? Send it overseas. You can turn that civil manufacturing to military in times of need. I think that’s really what saved America in World War II and the free world. We can lower defense spending if we know our civil manufacturing power is here. But the Pentagon probably doesn’t want that to happen.

Mr. Jekielek:

Well, another thing that you mention in your book, which I find really an interesting observation, is that the sort of shift towards more service-type oriented jobs is not kind of practical, maybe apprenticeship-oriented jobs where you actually have to kind of get your hands dirty. Working with engineers for people who are actually doing the actual implementation of design can be quite challenging. You document a few examples. I thought that was a really interesting observation.

Mr. Gardner:

Culturally, kids in high school need to know this life path is there; they should be brought into the factories of today. Most of America still thinks manufacturing is dirty and smoke billowing out of the factories and it’s all dirty and yucky. You can go to a manufacturing facility now, and I brought my wife to some of them, she’s like, wow this is really cool, it’s clean. 

There are clean rooms, there’s air conditioning, you’re working on machines, and it’s almost hypnotic. You hear the hum of machines, there’s activity, and 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.

Mr. Jekielek:

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. Because they lack some of the, you know, kind of understanding of how the actual manufacturing process works.

Mr. Gardner:

There’s a chapter called, Make America’s Engineers Great Again. So it goes back to the degreed 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. Design 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 in 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. 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 to, well, I think we need to do a lot more to 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 keyway. 

So imagine a key slot, right? And a key has to fit into it, right? And I tell this to big companies, 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 inserts are oversized by two thousandths, two hundred fifty-two thousandths of an inch, quarter inch is two hundred fifty thousandths. 

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 with degrees that do calculus. They don’t understand. And they’re like, well, that’s a special. 

But they designed 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. American manufacturing costs more money. Engineers don’t design for common sense stuff. And I’m just giving you one small example of how common sense has gone. 

Mr. Jekielek:

Because the unspoken thing here is that you need… 

Mr. Gardner:

Experience. You need experience.

Mr. Jekielek:

Yes, 100 percent. But in order for this to fit there has to be that hair’s width separation. 

Mr. Gardner:

It’s a 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 they’ve never learned how to make it, it drives the costs of manufacturing up a lot, an unknown amount.

Mr. Jekielek:

You’re advocating for what for the future in terms of reinvigorating now these small to medium-sized manufacturing businesses and having them grow and flourish. Give me a bit of a picture of what people will find. 

Mr. Gardner:

The average tariff rate from 1824 to 1934 was 40 to 50 percent. 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 tariffs 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 percent or 25 employees or less. And I think those are overlooked because people are like, ah, 20 employees, who cares? 

Do you know how much one employee can do in the manufacturing industry with automation and machines? They can do so much more. Like 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, and I’m talking about the whole world, is labor and raw materials, roughly. The cost of labor input into a product is dramatically shrinking because of the beauty of robotics and automation, and how much more work someone can do. So 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 is seven to ten years. In other environmentally friendly countries like Canada and Australia, it’s two years. In China, who knows what they’re doing environmentally? But the reason why companies want to get their raw materials overseas and near China is that it’s cheaper. There’s more of it. 

So I want massive mining and refining, massive energy production. Energy is a big input into manufacturing. And that’s what I’m advocating for. 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. There are so many other more informed people, like Peter Navarro, with the whole list of non-tariff barriers. So I say 40 to 50 percent, and that will start to turn the volume to our guys.

Mr. Jekielek:

And there’s this other dimension. I’m just going to stress this because I think this is kind of the biggest lesson that I gleaned from reading your book—that the rising tide lifts all ships. As more manufacturing comes in, there’s more need for manufacturing, then there are 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.

Mr. Gardner:

It’s a snowball rolling and gathering on itself. An example of that is, you can 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? Have you ever looked at a car recently? You don’t have a metal key anymore. You have plastic this, plastic that, everything’s plastic. So if you get those Dollar General store plastic doodad jobs, the plastic injection molding companies here in America, and we do have a strong plastic injection molding industry, it 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 hear corporations talking all the time about brand value, the brand Nike, oh, the brand. The American-made brand has enormous value. It used to mean a quality good that you’re patriotic. Now everybody associates American-made with too expensive, too expensive, too expensive.

Let’s address that and make it American-made. And to falsely claim to be made in America, we have to put some criminal penalties on 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 is not lackadaisical. It’s more on competitors to sue you civilly if you’re falsely claiming to be made in America, just so you know.

Mr. Jekielek:

This has been an absolutely fascinating conversation for me. Perhaps a final thought as we finish?

Mr. Gardner:

I want President Trump to tell every American to read my book because I wrote my book as a propaganda tool to counter Milton Friedman’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. 

Mr. Jekielek:

John Gardner, it’s such a pleasure to have you on the show. 

Mr. Gardner:

Thanks so much for having me, Jan. 

 

This interview was partially edited for clarity and brevity.