Even Donald Trump’s most ambitious promise of restoring American manufacturing bears considerable skepticism from world trade experts. They counter that his tariffs will not ignite a manufacturing renaissance. Rather, they are doomed to fail by inconsistent administration, lack of vision, and a waning understanding of the new reality of global manufacturing.
Experts are quick to point out that the U.S. has already missed its manufacturing high-water mark—well over six decades ago during World War II. Since then, manufacturing employment has consistently contracted throughout the United States. This trend as well applies to most advanced industrial nations and even China. New technologies are coming online daily. Factories are making more stuff faster with less labor, making it harder and more important to ask whether we can ever get back to what we once had.
The Impact of Erratic Policies
Trump’s handling of tariffs has left confusion in its wake. His erratic policy flip-flops inject volatility into the marketplace, making it hard for businesses to commit to investments in U.S. manufacturing.
The unpredictable, capricious character of President Trump’s tariff regime itself makes that potential and the associated harm much worse. It raises questions about the legality of these actions, ability to bypass Congress, and even raises questions about the quality of any ‘deals’ it has the U.S. make with other countries—leaving major outstanding questions, explains trade expert Strain.
This uncertainty creates a huge burden on manufacturers as it complicates planning and delivering on long-term investments. Even though consistency is key to the success of any policy initiative, Trump’s policy rollout has been notoriously inconsistent.
“For the policy to be successful, it has to be consistent over a long period.” – Ann E Harrison
Harrison further highlights that many manufacturing investments require years to materialize, noting that “some factories take five years to plan and build.” These ever-changing tariff policies make it very difficult for businesses to make long-term investments in new initiatives.
Focused Tariffs and Their Limitations
The second, and larger problem with Trump’s tariffs, is that they’ve been very scattershot. Trump’s industrial tariffs are sweeping, applied to every sector and country across the board, rather than targeted at specific bad actors. This approach would deter firms from making new investments in U.S. factories.
Trump’s 50% tariffs on steel and aluminum have led to increased costs for domestic manufacturers, particularly in the auto industry. Industry officials tell us these tariffs have destroyed their ability to compete globally.
Harrison takes aim at the justification for building entirely new factories. He thinks there’s no need to avoid the 15% tariff by importing from the EU, Japan or South Korea. “If the question is, are you going to bring about a major resurgence in manufacturing employment, it’s not just unlikely, the answer is no,” she states. “More and more manufacturing is robot-driven and not done by people.”
Other experts are more doubtful about Trump’s investment pledges from Japan and South Korea.
“These large numbers really sound like window dressing, some round numbers they’re throwing around.” – Rodrik
The simple truth is that building new factories requires a huge amount of time, planning, and investment. No company is going to make a huge investment in a new project if they think the ROI may be undermined by changing tariffs.
Consequences for the Auto Industry
Trump’s tariff policies pose specific risks for the United States’ auto industry. Experts have cautioned that his hands-off approach is laying the groundwork for an industry at risk of stagnation.
Susan Helper articulates this concern, stating, “Trump’s policies are setting the auto industry up to be an island of backwardness.” The lack of strategic direction may lead manufacturers to fall behind their global competitors who are adapting faster to technological advancements.
As Helper reported, for each job in steel production, there are 80 jobs in sectors that use steel. If tariffs raise costs enough to have the steel production competitive advantage removed, such a drop would start a domino effect, extending into interconnected sectors and job markets.
In fact, the U.S. Court of International Trade has twice recently ruled that Trump’s blanket tariffs are illegal. This new ruling further complicates an already murky situation. That ruling is presently on appeal, creating even more uncertainty regarding the future stability or lack thereof of tariff policies.