Industrial Bank for American Manufacturing Act of 2026
- Sponsor
- Rep. Khanna, Ro [D-CA-17]
- Committees
- Financial Services Committee (primary)
- Last action
- Jul 23, 2026
Bottom line
This bill aims to bolster domestic manufacturing and critical technology sectors by leveraging tariff revenues and imposing significant labor and training requirements on recipient companies to strengthen U.S. supply chains and create high-quality jobs.
What it actually does
This bill establishes the "Industrial Bank for American Manufacturing" Fund in the Treasury, administered by the Secretary of Commerce. The Fund, capitalized by up to $15 billion annually from Section 301 tariffs on Chinese goods and potential appropriations, provides direct loans, equity investments, or grants to U.S. manufacturers. These funds are intended for expanding, modernizing, or improving operations related to U.S. economic, technological, or national security, industrial capacity, or critical and emerging technologies, with strict eligibility, labor, and training conditions for recipients.
Proponents argue
Supporters argue this bill will reshore critical manufacturing, strengthen U.S. supply chains, enhance national security, and create high-quality, well-paying jobs by investing in domestic industries and ensuring fair labor practices. They emphasize using existing tariff revenues to fund these strategic investments, aligning trade policy with industrial policy goals.
Opponents contend
Opponents might contend that the program creates a large government-controlled fund that could distort markets, pick winners and losers, and impose burdensome labor and training mandates that deter participation or increase costs for businesses. Concerns could also be raised about the long-term sustainability of funding tied to specific tariff revenues and the bypassing of the traditional appropriations process.
The bill is moderately complex but manageable for an informed reader to review within a reasonable timeframe.
Section 2(a), (b)
Fund Establishment and Capitalization
This provision creates a new fund in the Treasury, called the "Industrial Bank for American Manufacturing," to be managed by the Secretary of Commerce. This fund will receive up to $15 billion annually, primarily from 50% of revenues collected from Section 301 tariffs on goods from the People's Republic of China, plus any additional appropriations.
Supporters argue
Supporters argue that dedicating a portion of tariff revenues directly to domestic manufacturing ensures a stable, predictable funding source for strategic industrial investments, aligning trade policy with industrial policy goals and reducing reliance on annual appropriations battles.
Critics contend
Critics might argue that earmarking tariff revenues reduces congressional control over spending and could create a less flexible federal budget, potentially diverting funds from other critical priorities or creating a program insulated from regular oversight.
Tradeoffs
This provision balances the desire for dedicated, long-term funding for industrial policy against the principle of general fund revenues and congressional appropriations control.
Section 2(c), (d), (e), (f)
Program Purpose, Award Types, and Terms
The Secretary of Commerce is authorized to use the Fund to provide direct loans, equity investments, or grants to "covered manufacturers" (U.S.-based manufacturers). These awards are for expanding, modernizing, or improving operations that promote U.S. economic, technological, or national security, industrial capacity, or are in critical supply chain industries. They also support critical and emerging technologies. Individual awards are capped at $500 million, with a 15-day congressional notification for awards over $100 million. Loans have a maximum 25-year term and market-based interest rates. Binding agreements with repayment and compliance terms are required.
Section 3(a), (b)
Manufacturer Eligibility and Award Conditions
To be eligible for assistance, manufacturers must certify no outstanding tax liabilities, pending legal actions, or NLRB disputes. They must not be owned by or partnered with "prohibited foreign entities" or entities from "foreign countries of concern" or "nonmarket economy countries." Recipients must commit for the award duration (or 10 years for grants) not to use funds for dividends/share repurchases (except for small businesses), not to expand operations in foreign countries of concern/nonmarket economies, and not to license assisted technologies outside the U.S. They must also adhere to prevailing wage and apprenticeship requirements, and dedicate 1% of the award to employee training and 0.5% to supportive services.
Section 3(d)
Funding Prioritization and Set-Asides
The Secretary of Commerce must prioritize awards to manufacturers that demonstrate greenhouse gas intensity reductions, efficiency improvements, are located in areas with significant manufacturing job loss (between 2000 and 2023), experienced trade injury, plan unionization neutrality, plan brownfield redevelopment, or plan to source goods/services from the U.S. Additionally, 10% of the total Fund is set aside for small businesses, and another 10% for manufacturers critical to national defense industrial base capabilities.
Section 4
Labor Standards for Funded Projects
For any construction, alteration, or repair work on a facility receiving assistance, laborers and mechanics must be paid prevailing wages as determined by the Secretary of Labor (Davis-Bacon Act standards). Non-compliance incurs penalties: back pay plus $5,000 per worker (or $10,000 for intentional disregard). Additionally, a rising percentage of total labor hours (10% in 2026, 12.5% in 2027, 15% in 2028 and later) must be performed by qualified apprentices, subject to apprentice-to-journeyworker ratios. Employers of 4 or more individuals must employ at least one apprentice. Exceptions exist for good-faith efforts to secure apprentices. Penalties for non-compliance are $50 per hour (or $500 for intentional disregard).
Section 5
Congressional and Public Reporting, Supply Chain Assessments
The Secretary of Commerce must submit biennial reports to Congress on the Fund's effects, including on critical capabilities, supply chain derisking, and local/national economies. A recommendation on extending the Fund's termination date is due 9 years after enactment. The Secretary must also maintain a public, searchable website detailing each award, including recipient name, location, award type/amount, uses of funds, unique identifiers, and jobs created/retained. Additionally, the Secretaries of Commerce, Energy, Defense, and HHS must update and submit sectoral supply chain assessments biennially to the President.
The bill defines "prohibited foreign entity" by referencing section 7701 of the Internal Revenue Code of 1986 (26 U.S.C. 7701(a)(51)(A)) and "foreign country of concern" by referencing section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651). These definitions are critical for determining eligibility and restrictions on fund use.
Section 3(e)(4) and (8)
Why it matters:This is standard legislative practice to avoid reprinting lengthy definitions and ensure consistency with existing law, but it makes the bill less self-contained and harder for a layperson to fully grasp.
Case for: Referencing existing definitions ensures consistency across federal law and leverages established legal frameworks for national security and economic concerns, streamlining legislative drafting.
Case against: Requires external research, making it difficult for a casual reader or even a potential applicant to quickly grasp the full scope of eligibility restrictions without consulting other statutes, potentially creating barriers to understanding.
Estimated impact: Significantly narrows the pool of eligible manufacturers and restricts how funds can be used, impacting potentially numerous companies with international ties deemed problematic for national security.
Requires covered manufacturers to certify a specific plan to follow existing procurement policies with respect to the assistance sought, as implemented by the "core jobs mandate" in section 2(a)(1) of the Export-Import Bank Act of 1945 (12 U.S.C. 635(a)(1)). This mandate generally requires the Export-Import Bank to ensure its activities support U.S. jobs.
Section 3(a)(3)
Why it matters:This is standard legislative practice to incorporate existing policy goals by reference, assuming familiarity with established federal mandates and avoiding redundancy.
Case for: Ensures consistency with existing federal policy aimed at promoting U.S. employment and leveraging federal financial support for job creation, reinforcing the bill's domestic focus.
Case against: The precise requirements of the "core jobs mandate" are not immediately clear from the bill text, potentially creating ambiguity for applicants regarding their commitments and requiring additional legal interpretation.
Estimated impact: Reinforces the bill's focus on domestic job creation and retention for all funded projects, influencing the strategic planning of recipient companies.
Defines "critical and emerging technology" as any technology in a developmental stage or that may be developed in the next 10 years, or any technology included in the Critical and Emerging Technologies List published by the White House's National Science and Technology Council in February 2024, or any successor document.
Section 3(e)(3)
Why it matters:This approach allows the program to remain agile and adapt to technological advancements without requiring legislative updates, but it means the precise scope is external to the bill and subject to administrative discretion.
Case for: Provides flexibility for the program to target the most relevant and strategic technologies as they evolve, without needing constant legislative amendments, ensuring the program remains current.
Case against: The dynamic nature of the definition could create uncertainty for manufacturers about which technologies qualify for support, as the list can change, potentially impacting long-term investment planning.
Estimated impact: Directs significant funding towards a dynamically defined set of advanced technologies deemed crucial for national competitiveness and security, influencing the direction of R&D and manufacturing.