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Former Secretary of Commerce Gina M. Raimondo ’93 criticized the federal government for allowing foreign countries to surpass the United States in cutting-edge industries, like semiconductor manufacturing and biotechnology, at an Institute of Politics forum on Tuesday night.

Raimondo said that hesitance to intervene in markets has allowed the U.S. to become too reliant on Asian manufacturing — citing the example of Taiwanese semiconductor company TSMC, which produces the chips used by industry giants like Nvidia and AMD to build the graphics processing units for artificial intelligence systems.

“The market said pursue profit, pursue fatter margins, pursue efficiency at all costs,” said Raimondo, who served as commerce secretary for four years under President Joe Biden and previously spent six years as Rhode Island governor. “So that’s what happened. And as a result, we woke up a few years ago realizing that 100 percent of every AI chip is made in Taiwan. It’s utterly frightening,”

During Tuesday’s discussion, which was moderated by former Harvard President Lawrence H. Summers, Raimondo defended the CHIPS and Science Act against pushback from some conservative senators, who she said argued that government subsidies would put a “thumb on the scale” in favor of specific projects. Passed in 2022, the act allocated $52 billion in funding for domestic chip manufacturing.

Raimondo said she rarely intervenes in free trade and markets except when necessary.

“I generally think the market gets it right, and politicians, when allowed to muck with the market, get it wrong,” she said. “Lots of unintended consequences, harder to do than you would think.”

But critical industries like pharmaceuticals, food, and the supply chain for AI can be vulnerable to market failures, Raimondo said, when markets do not adequately account for long-term social benefits like national security.

With the CHIPS Act subsidies, “the return you get is an improvement in national security. It's not a deal to make money for the government,” Raimondo said. “It’s an investment because the market didn’t make the investment.”

Raimondo was sharply critical of the Trump administration’s blanket tariffs and its use of “golden share” rights to exert significant shareholder control over U.S. Steel.

“The government owning the means of production is not a good thing,” she said. “It is a wacky world in which we live, when the Democrat is saying, ‘Less government intervention is better,’ and these folks are saying, ‘Make everything in America, shut down free trade and own golden shares in steel companies and chip companies.’”

Raimondo also criticized the Trump administration’s barrage of cuts to federal grants and contracts for research, saying the cuts jeopardized scientific progress at a time when federal funding is necessary to support key fields.

“We need more basic research,” Raimondo said. “I have a long list of criticisms of this administration, but it’s in the top 20.”

Reduced government investment in research could lead the U.S. to fall further behind in fields including quantum computing and biotechnology, Raimondo said — especially since private investment in those fields can be risky.

“Either we need to have more incentive for private capital to create these biotech companies to do this research and development, or the government has to do a lot more of it,” she said. “But right now, we’re just really becoming more and more dependent on China for medicine.”

“They’re really innovative in biotech, in quantum because the government is pouring money into it like crazy,” she added.

Raimondo said the Trump administration’s bombastically protectionist approach to trade policy could leave America isolated.

“Also on my list of top 20 things that I would be critical of this administration for is pissing off all of our allies,” Raimondo said. “America first is one thing. America alone is a disastrous policy.”