Tariffs Aren’t Enough: Only Automation Can Save American Manufacturing

tariffs might buy time, but only automation can win the war. the future of american industry — and national power — depends on it.

Trae Stephens

Image: Hadrian

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Trae Stephens is a partner at Founders Fund and cofounder of Anduril Industries, a defense technology company building autonomous systems. He is also the co-founder of Sol, a next-generation wearable e-reader, and was an early employee at Palantir Technologies, where he helped scale the company’s work in defense and intelligence.

The Trump administration has pitched its sweeping new tariff plan as a way to jumpstart American manufacturing. During his “Liberation Day” speech unveiling the new rates, the President vowed to win back the “one hundred thousand manufacturing jobs” lost under Biden.¹ On the Sunday shows that followed, Commerce Secretary Howard Lutnick said the tariffs would bring “trillions of dollars into factories” and spark the “greatest resurgence of jobs” for America’s core workforce.²

But tariffs aren’t enough. A concrete equipment construction factory in, say, Youngstown, might see a short-term spike in demand thanks to artificially reduced foreign competition.³ But that factory’s long-term economic competitiveness depends on production-side improvements: it has to turn out products faster and cheaper. And the only way to do that is by leaning hard into automation.

Twenty years ago, the idea that a robot could outperform and undercut foreign labor seemed like science fiction. But rapid innovations in computer vision, hearing, movement, and intelligence have made it hard reality.

As a venture capital investor, I see the power of automation in manufacturing start-ups all the time. Take Hadrian, based in Torrance — they make precision parts for missiles, jets, ships, and rockets. Right now, the defense industry relies on a fragile web of more than 3,000 family-owned machine shops. Hadrian is building something radically different: a single, self-contained, fully automated production line.⁴ It’s incorporated AI at every stage, from scanning physical blueprints and turning them into digital instructions, to running “predictive maintenance” that spots problems before anything breaks.⁵

The result: Hadrian’s production process is 10 times faster and half the cost of the industry average.⁶

You see this competitive edge at scale in more mature companies. Tesla’s Gigafactories, for instance, are 95 percent automated. Vehicle assembly starts with three different body components getting robotically stamped into shape. Then, more than 600 robots weld those parts together with micron-level precision, and the completed frame is hoisted into the paint shop by “Godzilla,” one of the biggest robotic arms in the world.⁷ ⁸

Aggressive automation in manufacturing is typically framed as the death knell of blue collar America. The robots are taking their jobs, right?

The idea that tech innovation leaves people permanently unemployable has never been true. Innovation has always created more jobs than it’s destroyed. And these new positions are skilled enough to sustain a middle class income, but accessible enough that displaced workers can be reskilled to fill them. At Hadrian, for example, people who used to work at Chick-fil-a and Walmart can become skilled machinists building parts for spacecraft after just 30 days of training.⁹ ¹⁰

Automation isn’t just a guaranteed economic boon, it’s also a foreign policy imperative.

We can see why in the shoe industry.

In 2016, Adidas announced two new “speed-factories,” nearly fully automated shoe assembly plants based in Ansbach, Germany, near the company’s headquarters, and Atlanta.¹¹ The speed-factories were the living vision of what American manufacturing ought to look like: AI generated digital mockups of shoes; a 3D printing robot replaced manual stitching and gluing; robotic arms injected particle foam into molds, then steam-heated them hard; optical sensors precisely guided midsole alignment;¹² a laser-equipped robot cut out the iconic Adidas “upper” from knit fabric.¹³

The speed-factories delivered fast: they cut production time for a single shoe from three months to just one day.¹⁴ Staffed with just 160 people, each site could turn out half a million shoes a year.¹⁵

Other shoe companies looking for a competitive edge are building with automation from day one. One of Founders Fund’s portfolio companies, Zellerfeld, founded by an impossibly named German prodigy named Cornelius Schmitt who now lives in Austin, has a fully automated production line. Its factories use 3D printers to make custom shoes: customers scan their feet with a smartphone, upload the data through an app, and Zellerfield prints a new shoe out of thermoplastic polyurethane — a tough, flexible plastic — in about 20 hours.

Zellerfeld is one of the hottest companies in the space. But Adidas’s automation experiment took a surprising turn: after just three years, it shut down both speed factories. Most press coverage called them “failures.”

But Adidas isn’t abandoning automation, it’s just moving the speed factories to China. As the company said in its press release, the savings from China’s cheaper labor and advanced tech more than make up for the higher shipping costs. And there’s the deeper reason for embracing automation: if we don’t, China will supplant America as the globe’s hegemonic superpower.

China is rapidly automating its manufacturing base, and not just for shoes, smartphones, joggers, and Nerf guns. It’s also weapons of war. The country already runs a fully automated missile plant that can churn out a thousand new units a day.¹⁶ A significant chunk of its half-trillion-dollar annual defense budget is going toward automating weapons production. Meanwhile, as Defense Secretary Pete Hegseth has pointed out, if a hot war does break out with China, America would run out of munitions in a week.

Patriotism demands we go all-in on robots and AI in manufacturing. More than any treaty or tariff, automation is what will keep us ahead of the world’s foremost authoritarian menace. Fighting automation isn’t just bad economics — it’s a surefire way to ensure America loses the battle for the 21st Century.

— Trae Stephens

Founders Fund is an investor in Anduril, Hadrian, and Zellerfeld.

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