I entered July 2025 convinced that US manufacturing was riding a wave of reshoring, but by month’s end, a more powerful story had emerged—one of global realignment, strategic diplomacy, and fiscal transformation. From a landmark EU trade compact, to unfolding talks with China, to a dramatic volte-face on AI chip exports, a new industrial ecosystem is taking shape, powered by capital, policy, and geopolitics.

From Uncertainty to Agreement

It’s hard to identify a specific turning point on trade, but developments with Europe came late in July, when President Trump and European Commission President Ursula von der Leyen struck what Trump called “the biggest deal ever made.” The new framework imposes a 15% import tariff on most EU goods, down from a threatened 30%, while the EU will purchase $750 billion in US energy products and invest $600 billion in US industry by 2028.

European industries got hit—especially autos and steel—but the US framed it as a major win for manufacturers. In Trump’s words, the deal gives US exporters access to European markets, while applying a uniform tariff rate that avoids the unpredictability of retaliatory tariffs. The 15% tariff cap may force companies to rethink their global supply chains.

This accord pushed the average US tariff on EU imports up from around 1% to 17.5%, according to Capital Economics per a CBS news article here. This significantly reshapes competitive economics across industrial sectors. Analysts warn, however, that while short‑term shock to markets has been moderate, structural distortions—especially for input-heavy segments—may surface later.

Echoes of Japan—and New Trade Leverage with China

While Europe was a breakthrough, Asia remained central to the broader reshoring story. A $550 billion trade-and-investment framework with Japan empowers Japanese banks and governmental agencies to finance chip firms building fabs in the US.

These developments amplify the momentum already ignited by the CHIPS & Science Act, which prompted TSMC to expand its US investment from $65 billion in Arizona by another $100 billion, Samsung to commit $17 billion in Texas ($47 billion in total), and Texas Instruments to pursue major new capacity in Utah and Ohio.

Meanwhile, over in Stockholm, US and Chinese officials met to extend the tariff truce that’s due to expire August 12. Neither side finalized the deal, but both agreed to negotiations and a possible 90-day extension of current rates: 30% on Chinese imports and 10% on US exports. The tone was constructive, and both parties signaled potential willingness to take the dialogue forward—possibly culminating in a Trump-Xi summit later this year.

Chip Diplomacy: Nvidia, TSMC & the H20 Pivot

Just days later came another jolt—President Trump reversed course and allowed Nvidia to resume H20 chip exports to China, dramatically shifting the AI landscape. Nvidia responded with an order for 300,000 additional H-20 chips from TSMC, adding to a stockpile of 600,000-700,000 units already produced, and underscoring immense Chinese demand.

These H20 chips, lower-powered variants of the H100/Blackwell designed for export compliance, quickly became a strategic lever. As Reuters observed:

“Nvidia’s plan to resume sales has set off a scramble at Chinese firms to buy H20 chips… these chips… lack much of the computing power of the versions for sale outside China… but work with Nvidia’s software tools”. Nvidia’s resumption of AI chips to China is part of rare earths talks, says U.S.” Reuters, 16 July 2025, https://www.reuters.com/technology/nvidia-resume-h20-gpu-sales-china-202.... Accessed 29 July 2025.

The production restart could take nine months, making the new order a signal of confidence that the export policy environment is shifting.

Nvidia’s CEO Jensen Huang noted that if demand justified ramping, “production could take nine months to resume”. The move captured global attention, as investors recognized how chip policy, geopolitical negotiations, and China-bound demand can shape profits and capital flows simultaneously. In Nvidia’s previous earnings release, Huang had said the bans represented around a $15B missed opportunity.

The One Big Beautiful Bill Accelerates Investment

The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, reshapes the tax environment for manufacturers and distributors by permanently reinstating 100% bonus depreciation for qualified assets—including machinery, vehicles, and nonresidential improvements—placed in service from January 19 onward. This applies to both new and used property, with no phase-down. The legislation also raises the Section 179 expensing limit to $2.5 million (phased out at $4 million, indexed for inflation), allowing firms to deduct the full cost of equipment, software, and improvements in the year of purchase. A new Qualified Production Property (QPP) deduction offers full expensing for newly built manufacturing-related real property placed in service before 2031. Additionally, the OBBBA preserves Pass-Through Entity Tax (PTET) deductibility for pass-through entities, bypassing SALT caps, reinstates an EBITDA-based interest deduction allowance, and restores immediate expensing for domestic R&D costs, including retroactive catch-up options for smaller businesses.

These provisions offer manufacturing and distribution businesses meaningful flexibility and cash‑flow enhancements. By accelerating deductions and expanding eligible expenditures, companies may optimize tax liability and free up capital for reinvestment. The QPP incentive encourages new facility construction, while preserved PTET benefits aid those in high-tax states. With more generous interest deductions and innovation credits, firms can finance expansions more efficiently. Strategic planning—such as timing projects or re-evaluating entity structures—can maximize these advantages under the new law.

Between the Lines: Fueling Manufacturing Renewal

It’s not just about tariffs or chips—it’s about a realignment of capital and strategy. As EU and Japanese partners commit billions in investment, and incentives under OBBBA slash the cost of new US facilities, manufacturers find the calculus shifting decisively toward domestic build-outs.

That means plant-level decisions backed by immediate tax write-offs, modernized production lines built for digital automation, and logistics engineered to support export-ready supply chains.

Taken together, these policies support:

• Stronger profit potential—through accelerated deductions, export margins, and tax shields on new facilities.
• Productivity improvements—as AI, robotics, and R&D converge in newly built factories.
• Potential GDP uplift—driven by rising capital‑intensity, export flows, and supply chain resilience.

Piper Sandler’s Chief Global Economist, Nancy lazar, has written a lot about the twin themes of capex spending and the OBBB’s provisions that could drive investment and productivity growth. Their (very) preliminary estimate for GDP growth in 2026 is 3% through “trade, reversing the unprecedented 1Q import explosion, (and) frontrunning the tariffs.”

Emerging Risks: Tariff Fragility, Energy, and Labor

Still, the path isn’t without potholes. The steel and aluminum sectors remain mired in tariff contention, with 50% duties unchanged and potential quotas still unsettled under EU coordination.

The legal challenge mounting over Trump’s tariff authority is real: in May, a federal court ruled that the executive branch had overstepped under the International Emergency Economic Powers Act (IEEPA)—though the administration has appealed and secured a stay, with hearings scheduled for July 31.

Clean energy manufacturers, too, are growing uneasy: OBBBA rolled back several Inflation Reduction Act (IRA) subsidies, raising concerns about renewable supply chains tied to solar and wind investments.

Finally, labor shortages persist. Industry surveys (see The Manufacturing Institute) warn of millions of unfilled positions in advanced roles by 2030, underscoring the urgent need for workforce initiatives to support high-skilled jobs.

Conclusion and Investment Implications

By late July 2025, the US environment for manufacturing is potentially transformative. A multilateral arc—comprising the above-mentioned EU accord, Japan-backed capital frameworks, renewed export flexibility toward China, and tax legislation geared toward capex—has begun to pull global investment toward American factories.

Whether this becomes a full-scale renaissance or a temporary rotation, hinges on execution. But with tax incentives in place, trade frameworks offering greater certainty, and Chinese demand channeling through compliant chip exports, the momentum is real.

For investors, policymakers, and corporate strategists alike, the question is no longer “if” US manufacturing rebounds—but “when,” and perhaps more importantly, where in the ecosystem capital should flow next—semiconductor fabrication, industrial automation, logistics, or AI infrastructure. These are all key components driving my investment strategy for clients and how I am positioning their portfolios to benefit.

What’s clear is this moment is less about recovery from deindustrialization and more about the deliberate construction of a new (American) world industrial order.

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