Does America Still Know How to Spur Innovation?
Innovation depends on good government support.
Photographer: Tomohiro Ohsumi/Getty Images
The US Commerce Department announced two weeks ago that it would allow Nvidia Corp. to sell its H200 chips to approved customers in China, reversing a Biden-era export ban. The next day, President Donald Trump imposed a 25% tariff on those same chips. This policy whiplash illustrates something important: The most consequential ways the government shapes technological innovation often aren’t about R&D grants or tax credits but rather decisions about what the government itself should buy, or ways that it uses its powers to influence markets.
When government shapes demand — through export controls, purchasing decisions, or tariffs —it doesn’t just affect today’s sales. It redirects the way entire industries take shape.