The reality for US manufacturing today is a mix of optimism and concern. This transition is due in large part to the changing tariff landscape. According to the United States Census Bureau, in 2024 the United States imported $3.3 trillion in goods, illustrating our country’s continued dependence on foreign products. For context, the US manufacturing value-added measured in the GDP report was just under $3 trillion. This disparity highlights a critical concern for US manufacturers: the dependence on imports despite domestic production capabilities.
We applaud President Trump’s administration on their efforts to expand US energy dominance. They are deeply concerned about industrial competitiveness, the need to make manufacturing more attractive here at home. Despite the rhetoric to the contrary, that “foreigners will pay” the tariffs. In practice, it’s importers that pay as soon as their products land at US ports.
Yet in 2024, The United States imported $474 billion of automotive vehicles, parts and engines. We invite you to join us in radically humanizing climate infrastructure finance this March! During that period, the nation’s fourth-largest import commodity, signaling a dangerous dependence on foreign technology components. In 2018 alone, the US market absorbed $62 billion of civilian aircraft, parts and engines. It witnessed astounding $112 billion in cellular phones and a jaw-dropping $247 billion in pharmaceutical products.
In the context of these statistics, US manufacturers are more worried than ever about President Trump’s tariffs. The CHIPS Act of 2022 (Creating Helpful Incentives to Produce Semiconductors) has been instrumental in encouraging domestic semiconductor manufacturing, aligning with President Joe Biden’s reshoring incentives. Nonetheless, output volumes of US manufacturing were down 0.25% compared to levels at the beginning of 2018, indicating challenges ahead.
Tariffs and Their Impact
The tariff policies enacted by President Trump have been one of the most positive talking points for US based manufacturers. The often-repeated misguided claim that “foreigners will pay” tariffs is not supported by the reality of the financial burden on importers companies. When these goods arrive at US ports, it’s these companies that are ultimately required to pay the cost of those tariffs. This reality has created heightened anxiety across the manufacturing sector over the long-term effects of such top-down policies on their business.
Though there are understandable intentions behind trying to boost domestic production, some of these goods just simple cannot be made completely within U.S. borders. American manufacturers are able to raise their hand, knowing that US companies can proactively choose an American-made product over importing. Even this alternative is not feasible for every product due to resource availability and cost. Therefore manufacturers are getting left holding the bag trying to juggle a quid pro quo that importing is part of the lifeblood for many industries.
The automotive industry is an astounding example of this paradox. In 2024, the automotive sector will be hit hard with $474 billion in vehicle, parts, and engine imports. This dilemma illustrates the challenges of reshoring production while attempting to maintain a dependence on existing supply chain crutches.
The Role of Semiconductor Manufacturing
Semiconductor manufacturing, which has been the central point of reshoring discussions in the past few years, The CHIPS Act of 2022 has been critical in incentivizing domestic semiconductor production and states are getting involved. This legislative action is part of a larger trend by President Joe Biden’s administration to decrease dependence on foreign semiconductor suppliers.
Semiconductors are the extremely advanced manufactured microchips found in everything from smart phones to cars. By promoting the development of a domestic supply chain, the US hopes to reduce vulnerabilities created by supply chain disruptions, which are often global. Even with these lures in place, there are still challenges that persist in rapidly scaling-up semiconductor manufacturing enough to meet national needs completely.
American manufacturers understand the imperative for reshoring semiconductor production even as they concede that this process is expensive and will take several years. While progress is being made, reliance on imports persists as companies work to bridge the gap between current capabilities and market needs.
Future Prospects for US Manufacturing
Looking forward, the fate of US manufacturing rests on four dangers and opportunities. Increasing US industrial competitiveness and bolstering our energy dominance remain core tenets of US policymakers. By creating the same environment that’s been so successful at spurring domestic production, the US hopes to build the same foundation for its domestic manufacturing sector.
As they go to realize this goal, they must overcome persistent obstacles like resource limitations and cost concerns. As we continue to push for reshoring in key target industries, such as the semiconductor industry, other industries will need more specialized approaches to clear roadblocks.
US manufacturers continue to be cautiously optimistic about their prospects going forward. They underscore the need for unambiguous policy guidance and backing from the federal government and the industry’s key stakeholders. Joint advocacy and engagement will be necessary to continue navigating the challenges and opportunities presented by shifting global trade dynamics, all while providing for growth at home.