The Great American Isolation

A new era in U.S economic policy

The U.S. is pulling inward. Immigration restrictions are choking the flow of global talent, while trade barriers are reshaping markets. Together, these policies are creating what I’d call the Great American Isolation. This new policy framework poses a threat to our economy today and undermines our ability to innovate tomorrow.

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Farmers Feel It First

Marketplace Radio recently reported that China has stopped buying American soybeans, cutting U.S. farmers off from one of their largest export markets. Agriculture is often the first domino to fall when trade slows.

In western Kansas, farmers like Vance and Louise Ehmke are living this reality. They grow wheat, corn, and sorghum. Historically, China bought 80–90% of U.S. sorghum exports. Sorghum is popular in China, not only for livestock feed but also for the production of Baijiu, a traditional Chinese spirit. Now, because of retaliatory tariffs, China buys none, and they are shifting their source of supply.

In western Kansas, grain elevators are overflowing with last year’s crop, and this year’s harvest has no home. Prices have collapsed to levels farmers haven’t seen in 40 years. Vance captured the frustration plainly: “We’re getting our butts kicked—we are not winning this thing.”

Trade Wars Change Behaviors

When I spoke to a group of manufacturing managers last week, I warned about the false assumption underlying current U.S. trade policy: that our partners will tolerate whatever restrictions we impose. They won’t; they will build new partnerships.

Vance and Louise have already seen how quickly behaviors shift. China has rerouted its grain purchases to Australia, Brazil, and Africa. These are not temporary adjustments. They are long-term supply chain investments that deliberately bypass the United States.

The personal costs are mounting. The demise of programs like USAID’s Food for Peace has closed another outlet for Kansas grain. Farmers face storage shortages, crop spoilage, and mounting debt. Louise summed it up: “Farmers cut back on everything. The outlook is grim, and bankruptcies are continuing.”

The story in Kansas is a microcosm of a larger truth: once markets move on, they rarely come back. This is especially true for industries that require substantial capital and infrastructure investments.

The Bigger Cost: Innovation

Agriculture shows us the immediate pain. Innovation shows us the long-term risk.

For decades, America’s edge wasn’t just natural resources or vast markets; it was talent. The U.S was a magnet for scientists, engineers, and entrepreneurs who turned ideas into breakthroughs. Restricting immigration doesn’t just close borders. It closes pipelines of discovery. This cost will not be felt in the short term, but in the long term, when scientists shift to new countries that will become havens for innovation.

Consider the data. According to a 2023 NBER working paper, immigrants make up just 16% of U.S. inventors but contribute nearly one-quarter of innovation output. When quality is measured by citations, economic value, or spillover effects, the share jumps to 36%. In fields such as computing, communications, and medicine, where speed is most crucial, immigrants generate over 25% of innovations.

And here’s a sobering detail: when an immigrant inventor leaves, their collaborators’ productivity falls almost twice as much as when a native-born colleague dies. America doesn’t just lose people; we lose networks of ideas. The spillover from innovation is a positive externality that fosters the development of new industries. This is why local economic development organizations strive to cluster firms with intellectual property; it fosters an innovation ecosystem that benefits us all.

Policy Chaos and Crony Capitalism

The H-1B visa program has served as a bridge, keeping international graduates, especially those from India and China, in the U.S. Approximately 65% of approvals are for computer-related jobs, making it indispensable to the tech sector.

But the program has grown unstable. Under Trump’s first term, denial rates peaked at 15% in 2018 before falling under Biden. Now, with the new $100,000 annual fee, the program will collapse.

That is a 6,600% increase over previous costs. For tech giants like Amazon or Google, it’s painful but manageable. For startups, research labs, and entrepreneurs, it’s catastrophic. Immigration attorneys are blunt: we are creating a two-tier system where only corporations with deep pockets can afford global talent.

And even for the giants, the incentives are shifting. Why pay $100,000 to bring an engineer to Silicon Valley when the same person can work remotely from Bangalore or Amsterdam? A policy intended to “protect” American jobs could ultimately lead to their export.

Facebook’s headquarters in Dublin, Ireland, is an excellent example of how firms can still employ international employees, pay U.S benefits, and yet not increase their employment of domestic workers. The new H-1 B policy will increase the likelihood of offshoring by firms, which contradicts the administration's goal of bringing jobs back to the U.S.

Large firms will adapt. They already engage in regulatory arbitrage, setting up offices abroad, relocating operations, and exploiting more favorable rules overseas. For them, this is costly but manageable.

Small firms cannot. Startups, research labs, and entrepreneurs don’t have the resources to relocate. They are left stranded, while entrenched corporations entrench themselves further. The ladder of innovation pulls up, and the gap widens.

Medicine on the Line

Over 30% of U.S. medical residents are international graduates. Roughly 10,000 residency slots, out of 43,000, are filled by H-1B visa holders.

Hospitals once paid under $5,000 per visa. At $100,000, it becomes economically impossible. Residents earning $55,000 a year are not going to be worth a $100,000 fee. The result? Fewer doctors in a system already groaning under staffing shortages. Patient care will pay the price.

My colleagues in medicine inform me that this policy will have severe impacts on rural hospitals and access to medical care.

Crony Capitalism

Even the rollout of the new rules has been chaotic. Critics note that the proclamation doesn’t clearly distinguish between current visa holders and new applicants. Immigration lawyers are preparing lawsuits. Customs and Border Protection has already had to issue clarifications. Press Secretary Levitt had to issue a statement clarifying the proclamation and correcting Secretary Lutnick when he said, “A company that wants to buy an H-1B visa... it’s $100,000 per year.”

Ambiguity is not an accident; it’s an opportunity. The lack of clarity provides well-connected firms with space to lobby for carve-outs and special treatment. That’s not policy; that’s crony capitalism dressed up as immigration reform. As Justin Wolfers said, "we are now in the early stages of crony capitalism... The most important business asset right now is being friends with the White House."

The Long-Term Risk

In the short run, these policies may feel like protection. In the long run, they are isolation. They risk locking us out of global markets, draining us of talent, and weakening the innovation engine that has always set America apart.

The world isn’t standing still. While the U.S. turns inward, others are moving forward, for talent, for trade, and for the future. The question is whether America will compete or retreat.