Democrats in the U.S. Congress are pushing a major plan to bring back manufacturing to the country’s industrial heartlands, calling it the boldest effort since the second world war. The plan would use revenue collected from tariffs on Chinese imports to fund a new bank dedicated to strengthening domestic manufacturing. The proposed legislation, known as the Industrial Bank for American Manufacturing Act, is backed by key members of Congress, including Rep. Ro Khanna, Rep. Tom Suozzi, and Rep. Debbie Dingell. Khanna, who is a lead sponsor, has described the proposal as a significant step in a long tradition of American industrial development, likening it to the efforts of historical figures like Alexander Hamilton and Franklin D. Roosevelt.
The bill would direct up to half of the money from section 301 tariffs—those placed on goods from China—toward the new fund. The annual funding cap is set at $15 billion, which could be used for grants, loans, and equity investments for domestic manufacturers. This would bypass the general Treasury, with the funds instead going directly to support the manufacturing industry. The legislation would also limit loans to $500 million each year, with any loans over $100 million requiring approval from Congress.
Reviving manufacturing in the American heartland
Khanna and his colleagues have identified specific regions that have been especially hit hard by the loss of manufacturing jobs. These include Johnstown, Pennsylvania, which once thrived as a major steel production center. Lordstown, Ohio, is another example, where General Motors closed a large plant in 2019, leading to widespread job losses and economic instability. The Downriver region of Michigan, part of the Detroit metropolitan area, has also suffered due to the long-term erosion of the auto industry. Lower Bucks County in Pennsylvania, where Khanna grew up, is yet another area that could benefit from the proposed bank, as it reflects the broader challenges faced by many manufacturing-dependent communities.
Khanna argues that these areas are prime candidates for re-industrialization. “This is about creating a modern Marshall Plan for America,” he said, drawing a comparison to the post-war economic recovery programs that helped rebuild parts of Europe. The proposed bank would focus on supporting small and medium-sized manufacturers, many of which are currently unable to compete with cheaper imports. By helping these businesses access the necessary funding, the bill aims to shift production from overseas back to the U.S., thus restoring both jobs and economic vitality to struggling regions.
A history of tariffs and a continuing decline
The current wave of tariffs on Chinese goods began under President Donald Trump, who implemented widespread import duties in 2018, arguing they would protect American manufacturing and reduce the trade deficit. These tariffs were largely maintained by President Joe Biden, and during the second term of Trump, they were even expanded further. Despite the Trump administration’s repeated promises to revive U.S. manufacturing, the sector has continued to shrink. Manufacturing employment peaked in 1979 with around 19.6 million jobs, but by 2026, it had fallen to approximately 12.6 million. The Bureau of Labor Statistics has noted that the sector has continued to lose ground, with a reported decline of 75,000 manufacturing jobs since January 2025.
This long-term trend highlights the need for targeted investment, according to Khanna. He recently traveled through the Midwest on a “heartland tour,” speaking with local manufacturers and workers about the impact of these economic shifts. He shared an example of a small manufacturer near Cleveland, Ohio, that could produce parts domestically but lacked the necessary capital to do so. The company required about $1 million to get started, a figure that many small businesses find difficult to obtain. Khanna argued that the U.S. needs to shift investment away from just tech hubs like New York, Silicon Valley, and Austin, and into regions like the Midwest, Southwest, and South, where the manufacturing base is struggling.
A vision for industrial revival
The proposed legislation seeks to address these issues by creating a dedicated source of funding for domestic manufacturing. Khanna emphasized that the new bank would not just support a few large corporations but would provide real opportunities for small and medium-sized manufacturers to expand and compete. “This is the most patriotic and boldest jobs agenda for industrialization since FDR and Bill Knudsen in the 1940s,” Khanna stated, drawing a direct line from the current proposal to historical efforts to reinvigorate American industry.