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New York
CNN
—
President Donald Trump’s shock-and-awe tariff campaign is off to a slow start when it comes to reviving American manufacturing jobs.
While it will take time for the full impact to play out, the early results suggest that not only have tariffs failed to inspire a hiring boom, but the chaotic policy rollout is paralyzing businesses.
Economists and trade researchers say the haphazard nature of the trade war is compounding the longer-term pressure on US manufacturing.
Even as Trump spiked tariffs to levels unseen in nearly a century, the manufacturing sector lost a combined 14,000 net jobs in May and June, according to federal data. Manufacturing employment is little changed overall since Trump took office in January.
Factory hiring plunged in May, below even the Covid-19 pandemic pace, to the weakest rate since 2016 under President Barack Obama, according to the Bureau of Labor Statistics. Manufacturing job openings — a sign of what’s to come — have plunged by nearly 100,000 since Trump took office.
Instead of giving bosses a reason to hire, the whiplash approach to the trade war is sowing confusion and uncertainty. CEOs need clarity on where tariffs will be in the long run. But under Trump, it’s not even clear where tariffs will be at the end of the day, let alone the end of the year.
“It’s a policy choice to sow this much uncertainty. And that uncertainty has a cost,” said Betsey Stevenson, professor of economics and public policy at the University of Michigan and a former chief economist at the Department of Labor under Obama.
Manufacturing executives have complained that they don’t know the rules of the road, making it impossible to forecast demand and decide whether to hire workers or fire them.
“The tariff mess has utterly stopped sales globally and domestically. Everyone is on pause. Orders have collapsed,” one machinery executive said in a survey released last month conducted by the Institute for Supply Management (ISM).
Another manufacturing executive said there’s too much volatility in policy to make long-term decisions.
“Tariffs, chaos, sluggish economy, rising prices, Ukraine, Iran and geopolitical unrest around the world – all make for a landscape that is hellacious, and fatigue is setting in,” a metals executive said in the ISM survey.
Trump has threatened steep tariffs on about two dozen countries – including 50% levies on imports from Brazil, a nation the United States has a trade surplus with. He has set in motion a 50% tariff on copper – a key input for manufacturers – and floated a 200% tariff on pharmaceuticals. Trump has threatened a 10% tariff on members of BRICS, the economic club that includes Brazil, Russia, India and China.
And that flurry of activity only captures the past five days.
“We haven’t seen a resurgence in manufacturing because there is a chilling effect from the president’s tariff policy,” said Hardika Singh, economic strategist at financial research firm Fundstrat Global Advisors. “It’s hard for companies to navigate this fog. Nobody knows what’s going on.”
Of course, it will take time to know the longer-run impact from Trump’s tariffs as well as from the sweeping legislation he signed into law that includes business tax breaks designed to encourage companies to build manufacturing facilities in America.
Factories, lured by Trump’s tariffs and tax breaks, can’t be built overnight.
The White House argues that Trump’s policies have helped stabilize a manufacturing sector that lost more than 100,000 jobs in President Joe Biden’s final calendar year in office.
Trump officials say manufacturing employment is a lagging indicator, and they instead point to more favorable statistics showing that factory employees are working longer hours and getting paid for more overtime in recent months.
Manufacturing industrial production, a proxy for factory output, has increased since Trump took office, reversing a decline at the end of last year, according to Federal Reserve data.
“The decimation of manufacturing jobs under Joe Biden came to an end the day President Trump took office,” White House spokesperson Kush Desai told CNN in a statement. “The Trump administration’s tariffs and full suite of supply side reforms – including rapid deregulation and the pro-growth provisions of The One, Big, Beautiful Bill like full equipment expensing – is now laying the groundwork for a long-term resurgence for American manufacturing.”
One challenge with that vision, however, is that some of Trump’s tariffs have made it more, not less, expensive to make stuff in America. For instance, Trump slapped steep tariffs on steel and aluminum and is targeting copper next — and those are critical inputs factories need to make goods.
Researchers found that while Trump’s 2018 steel tariffs during his first administration helped increase steel employment by 1,000 jobs, the levies ended up wiping out about 75,000 manufacturing jobs due to higher input costs.
“We lost more manufacturing jobs than we gained,” said Stevenson, the University of Michigan professor.
Robert Lawrence, a nonresident senior fellow at the Peterson Institute for International Economics, isn’t surprised by the lack of a manufacturing hiring boom so far this year — and he doubts one will materialize.
“I don’t think this is where the future lies,” said Lawrence, who’s also a professor of trade and investment at Harvard University. “These industrial and trade policies look like they were designed by an 80-year-old man who has nostalgia for the past when manufacturing was a real driver of employment opportunities.”
Lawrence noted that manufacturing today makes up just about 7.9% of total US jobs. His research found that even if the entire US manufacturing trade deficit was wiped out, manufacturing’s share of employment in the US economy would only increase by about 1.7 percentage points to just 9.7%.
Manufacturing employment has been shrinking for decades in the United States as the economy shifted from factories to services including technology and finance.
About 95% of America’s job growth since the 1950s has been in the service sector, according to Stevenson, the University of Michigan professor.
Manufacturing employment peaked in the United States at 19.5 million in 1979, according to the BLS. It plunged to 11.4 million in April 2020 during the pandemic and recovered to pre-Covid levels in 2022. However, since then, manufacturing employment has drifted lower.
Beyond the trade policy uncertainty, manufacturing employment has been limited by the rise of robots and automation and the availability of vastly cheaper labor overseas.
Chris Cocks, the CEO of toy maker Hasbro, told CNN’s Audie Cornish that because of the higher cost of labor, it’s 50% to 60% more expensive to make toys in the United States instead of overseas.
Many factories have struggled to find workers who have the skills and desire to work at manufacturing sites that are often located away from major population centers.
“There is this paradox where around 80% of Americans think it would be a good idea to have a bigger manufacturing sector, but only 25% want to work in it,” said Lawrence. “These are hard jobs.”
A CNN poll in April found that 73% of Americans would prefer a job doing office work over one with the same pay in manufacturing.
Although Trump often blames the smaller US manufacturing footprint on other nations “cheating” America, Lawrence has found this is a pattern that has played out elsewhere.
His research shows that as nations develop, manufacturing employment declines due to a combination of rapid productivity growth and a shift in spending away from goods in favor of services.
“Poorer people need clothes and shoes. Rich people need tax consultants, psychiatrists and a personal trainer,” Lawrence said.
This pattern has played out even in export-led economies in Asia like Japan, China and Singapore and regardless of whether countries had trade surpluses or deficits.
Lawrence worries that Trump’s tariff tactics will end up hurting American factories by simultaneously making it more expensive to manufacture in the United States and by angering overseas customers.
“We are setting ourselves up to be a highly uncompetitive country,” he said, “while alienating our allies and pissing off the biggest markets.”
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