Trump's tariffs threaten to derail US factory revival
President Donald Trump 's tariff policies are posing a threat to the revival of US manufacturing. A push for a 'Made in America' renaissance has been a key priority for the White House , with particular focus on the American Rust Belt. But companies are warning how turmoil and confusion around Trump's trade wars is slowing the progress made in reinvigorating American factories.
The latest jobs report revealed that manufacturing jobs declined by 8,000 last month - the most this year so far. Anxiety is high in the Midwest, which remains home to the largest concentration of US manufacturing jobs — despite losing tens of thousands of workers to offshoring in the early 2000s. 'Overall, it is going to be a drag on the US economy ,' Gus Faucher, chief economist for PNC Financial Services Group in Pittsburgh, told Bloomberg .
'In particular, it's going to be a drag on the Midwestern economy.' US factory activity also contracted in May for the third month in a row. The Midwestern states of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin lost almost 2 million manufacturing jobs between 1998 and 2010, Bloomberg reported.
This was due to companies looking to cheaper production and labor outside the US - in China in particular. In recent years, a cautious optimism had returned, as supply chain shocks from the pandemic pushed some companies to bring production back to the US. But frequent changes and uncertainty around where Trump's tariff policy is headed has 'got people spooked,' Andrew Anagnost, CEO of Autodesk, told the outlet.
The company sells software used by manufacturers to design factories and improve processes. 'The current operating mode is just the death to long-term investment,' he said. While construction projects that were already underway are still going ahead, he added, confusion about the future is stalling new work. Some states are harder hit than others by tariff plans.
Illinois, for example, will see a 16 percent increase in effective tariff rate on manufacturing inputs, according to the National Association of Manufacturers . This means that the total cost of importing goods used in production increases, which could lead to reduced profits, supply chain shocks or higher prices for consumers. Minnesota will also see a 16 percent increase, while Missouri is facing a 15 percent hike.
The sense of uneasiness is particularly strong in the automotive industry, which is facing 50 percent tariffs on steel imports, a measure Trump announced at an appearance at Irvin Works , a steel plant outside the Pittsburgh city limits in West Mifflin, last month. Kenosha, Wisconsin-based company Snap-on provides tools used by car mechanics. Its CEO told Bloomberg that while the company can manage the impact of tariffs as it mostly serves US customers with domestically-made products, auto shop workers are 'confidence poor.'
Nicholas Pinchuk said customers are worried about economic disruption even if they are fans of the President. 'They're still big Trump fans. This is Trump territory. They believe in where we're going, but they're worried that something's going to happen,' he said. Even companies that stand to benefit from tariffs are expressing anxiety about what the future might hold. Ross Widmoyer, CEO of textile manufacturing company Faribuault Mill, told the outlet he has been getting calls from retailers looking for a producer in the US.
But he is still concerned that the trade wars could impact economic growth. 'If there's a slowdown in consumer spending, it doesn't matter if you're making products domestically or overseas, and that's not good for anybody,' Widmoyer, who is also chairman of the Minnesota Manufacturers' Council, said. The Trump administration has pointed to announcements from major companies of planned investment in the US as proof the policies are working.
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