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The way in which President Trump is implementing tariffs is utterly at odds with the needs of manufacturers.
In the midst of his rambling diatribes, flitting from subject to subject every few seconds, Donald Trump has repeatedly claimed that his tariffs are going to bring back manufacturing jobs. “The biggest win is if [factories] move into our country and produce jobs. That’s a bigger win than the tariffs themselves, but the tariffs are going to be throwing off a lot of money to this country,” he said to a meeting of CEOs recently.
In a “news analysis” at The New York Times, David E. Sanger takes Trump’s frame for granted. His trade war amounts “to a huge economic and political gamble: that Americans will endure months or years of economic pain in return for the distant hope of re-industrializing the American heartland,” Sanger writes.
Though Sanger brings up several of the problems with Trump’s idea, the article is still far too generous. The reality is simple: American manufacturing is already experiencing a renaissance, and if Trump isn’t stopped, he is going to destroy it.
Recall that one half of President Biden’s economic program was a targeted plan to greatly boost the manufacturing sector in advanced technology and critical industries. The Inflation Reduction Act, the CHIPS Act, and the bipartisan infrastructure law set up an immense subsidy scheme for both production and purchase of high-tech goods like solar panels, wind turbines, EVs, batteries, and semiconductors.
The supply chain carnage during the pandemic showed that America needed to be able to produce certain indispensable goods; the fact that so much of the semiconductor industry was concentrated in a country like Taiwan that is under geopolitical threat was another spur to diversify supply. The goals were to maintain resiliency on key manufacturing goods and components, and to build leadership in the advanced-technology industries of the future, where it makes sense for the U.S. to play a role.
You wouldn’t know it from reading the slanted coverage in outlets like the Times and Bloomberg last year, but despite some hiccups, Biden’s plan worked. Manufacturing investment in structures, for instance, increased by about 220 percent in inflation-adjusted terms from 2021 to 2024. New factories producing these high-tech goods are going up all over the country, ironically concentrated in red states. Just to use one statistic, the solar panel manufacturing industry now has enough capacity in the U.S. to meet domestic demand, a huge turnaround from the China-dominated 2010s.
New factories producing high-tech goods are going up all over the country, ironically concentrated in red states.
Manufacturing employment increased by about 750,000 during Biden’s term—only about 100,000 more jobs than in 2019, but still the first time in 50 years that the recovery from a recession ended up with more manufacturing jobs than before, and in any case much of the employment from that investment has not come online because the factories aren’t finished yet.
But that’s only if they’re finished. If Trump gets his way, they won’t be. He hates every part of Bidenomics. He hates renewable energy, he hates EVs (except Teslas), and for some bizarre reason he even hates semiconductors. Trump illegally froze all IRA spending, and despite multiple court orders ordering the money to be sent out, at least some of that spending remains locked down. He says that the IRA should be cut back or repealed entirely. During his recent address to Congress, he called the CHIPS Act a “horrible, horrible thing” and said it should be repealed. Chipmakers are reportedly worried that he might try to cancel or even claw back their funding.
For a concrete example of the stakes here, Princeton professor Jesse Jenkins recently produced an estimate for what would happen if Trump stops just the EV tax credits and EPA tailpipe emission regulations. He found that all planned investment in EV assembly, and up to half of existing capacity, would be “at risk of cancellation or closure.” The same is true of all planned battery cell production capacity, and between 29 and 72 percent of existing battery facilities.
Something similar will hold for solar, wind, and semiconductor manufacturers. The offshore wind industry in particular is already in deep trouble.
Moreover, the way Trump is doing tariffs is utterly at odds with the needs of manufacturers. Biden’s program did include some tariffs, some of which he borrowed from Trump’s first term, but they were set up in a rational and predictable manner aligned with clear goals and paired with investments in domestic industry. Chinese EVs, for instance, got a huge and increasing duty because Biden wanted to protect U.S. automakers from their arguably unfair competition. That gave Ford and GM the confidence that they could invest in EV facilities (and take advantage of IRA tax credits) without the rug being yanked out from under them.
Trump’s tariffs, by contrast, are being imposed in a wildly erratic manner, dialed up and down on a practically daily basis via posts on Truth Social. They also don’t have any clear economic goal. Why steel and aluminum? What quantity of these items is Trump aiming to produce? Why champagne, which cannot be produced in the U.S.? He doesn’t say, because he doesn’t know anything.
The actual story so far is Trump—who seems to view imports of any kind as an unfair subsidy to foreigners—imposing tariffs at random, reacting with scandalized outrage when the targeted countries respond in kind, and imposing some more. Then sometimes he dials them back, or cancels them at the last moment.
The result, as I have previously written, is a gigantic increase in economic uncertainty. Even if some company thought a tariff on, say, Canadian aluminum might make them competitive in the domestic market, they would be fools to try, because Trump might throw out the tariff on a whim at any moment.
Finally, this notion that there is some kind of inherent seesaw effect between a recession and manufacturing is the opposite of truth. The other half of Biden’s economic program was the American Rescue Plan, which stoked red-hot growth in spending and employment. That reinforced his manufacturing program, because it raised demand for manufactured products. Most American manufactured goods are sold to Americans, and if there is a recession, purchases will fall. That is doubly true for expensive, durable items where a purchase can usually be put off, like cars, washing machines, solar panels, or computers. Trying to rebuild manufacturing while creating a recession on purpose is like trying to do a pole vault after bolting a sandbag to your ankles.
Donald Trump, with his devil’s luck, was handed the best American economy in generations on a silver platter. Growth was strong, unemployment low, and investment booming. Manufacturing in particular was poised for growth if he merely did nothing. But unlike in his last term, this time Trump appears determined to take the prosperity created by Bidenomics, along with its manufacturing boom, and blow it to smithereens.
