Democratic lawmakers propose bank funded by China tariffs to boost US manufacturing

Democrats in the US Congress have laid out plans for what they say would be the “boldest” bid to revitalize the country’s industrial heartlands since the second world war – using revenue raised by tariffs on China.A bill introduced this week would create a new bank to strengthen domestic manufacturing, provided with up to $15bn in funds each year.The bill, led by US representatives Ro Khanna, Tom Suozzi and Debbie Dingell, is entitled the Industrial Bank for American Manufacturing Act.“This is one of the boldest industrialization proposals since FDR’s industrialization efforts, and it’s in the tradition of Hamilton’s efforts,” Khanna claimed in an interview. “This bank would support small and medium-sized manufacturers who are making things that we’re currently importing, and it would help thousands of our manufacturers across America to make things here, instead of importing them.”It would create a new fund to provide grants, loans and equity investments using existing section 301 tariff revenue, directing up to 50% of collected revenue from tariffs on imports from the People’s Republic of China, capped at $15bn annually.Those funds would be directed to rebuild manufacturing in the US, rather than deposited into the US treasury’s general fund.Khanna said the funds would target de-industrialized areas of the US that have been hit hard by the decline of US manufacturing, such as Johnstown, Pennsylvania, a once-booming center of the US steel industry; Lordstown, Ohio, where General Motors shut down a plant in 2019; the Downriver region of Michigan in the Detroit area, where the decline of the auto industry has hit the region particularly hard; and the Lower Bucks county’s Delaware River corridor in Pennsylvania, where Khanna grew up.“It would be an effort to re-industrialize the country,” added Khanna. “We saw this, of course, with FDR during world war two with the war reconstruction board, and we saw it with Hamilton. We need what I call the ‘modern Marshall plan for America’. This is part of my vision for a Marshall plan for America, that this is the most patriotic and boldest jobs agenda for industrialization since FDR and Bill Knudsen in the 1940s.”The bill caps loans at $500m, and requires congressional approval for loans over $100m from the fund.Americans have paid some form of tariffs on imports from China for decades, with Donald Trump enacting large tariffs on China in 2018, which were maintained under Joe Biden, and then increased again by Trump during his second presidential term.Manufacturing in the US has long been in decline, peaking in 1979 at about 19.6m jobs, before falling sharply, to about 12.6m in 2026.This decline has continued despite claims and promises from the Trump administration to revive the industry. According to data from the Bureau of Labor Statistics, US employment in manufacturing has declined by 75,000 jobs since January 2025.The legislation follows a “heartland tour” Khanna recently took across the US midwest about the effects Trump’s tariffs are having on workers, manufacturers and farmers.On the tour, Khanna recounted hearing from a small manufacturer outside of Cleveland, Ohio, who needed capital to be able to make a part in the US, but was relying on imports from Asia in lieu of it.“They could make the part here, but they didn’t have the money. They needed about a million dollars of capital to do it,” he said. “We have a country right now where all the capital is going to build AI, technology apps and financial firms, but we need capital also for our small and medium-sized businesses, for our manufacturers.“We need to be developing not just New York and Silicon Valley and Austin – we need to be developing industry in the midwest, in the south-west, in the south, and I believe an industrial investment bank is a concrete step towards that.”