Trump's Tariffs Are Backfiring on US Manufacturing

During the 2024 campaign, Donald Trump promised Michigan voters he would bring manufacturing jobs back. Upon returning to the White House last year, his administration declared the U.S. trade deficit a "national emergency" and rolled out a wave of tariffs intended to make that promise a reality.

The latest data, however, suggests these policies are not only failing to boost manufacturing employment but may be actively harming it. In December 2025, U.S. employers cut 8,000 manufacturing jobs. Between the imposition of tariffs in April and the end of the year, the sector lost a total of 72,000 positions. In Michigan, the very state targeted by the campaign promises, there was a net loss of 2,500 manufacturing jobs between April and November.

The Myth of a "Lost" Manufacturing Sector

For years, the narrative has been one of a hollowed-out American industrial base. But the reality is that U.S. manufacturing never disappeared—it transformed.

The United States remains a global manufacturing powerhouse, second only to China in its share of worldwide output at 15.9%. This figure is greater than the combined output of Japan, Germany, and South Korea. While China produces more overall, its workforce is significantly less productive.

American manufacturing is, by a wide margin, the most productive in the world. The value added per U.S. worker is over $141,000. That’s $44,000 more than second-place South Korea and over $120,000 more than China.

Decades of these productivity gains mean fewer workers are needed. Manufacturing's share of the U.S. workforce fell from a peak of 22% in 1979 to 9% in 2019. Yet, during that same period, the inflation-adjusted value of what America produces has soared by more than 80%.

High-Tech, High-Skill: The New Factory Floor

Today’s manufacturing jobs are increasingly high-tech and higher-paying. This shift has created a powerful economic multiplier effect, supporting countless jobs in other sectors. The $141,000 in value created by each manufacturing worker supports engineers, software developers, and automation technicians, as well as the nurses, accountants, and service workers who depend on their high wages.

The occupational mix within manufacturing itself has changed dramatically over the last 20 years. As the economy recovered from the 2007-08 recession, the share of traditional production jobs fell, while roles in management, finance, architecture, and engineering grew.

Why We Can't Return to the 1960s Economy

The nostalgia felt in old industrial hubs like Lansing and Flint, Michigan, is for an economy that no longer exists. It’s a longing for a time when a high school graduate could walk into a factory and secure a well-paying job with a pension.

That era was possible because, from World War II through the 1970s, U.S. industrial giants faced little global competition. Revolutions in transportation and communication changed everything, as competitors from Japan and Germany entered the market, competing on both price and quality.

Today, American products must be high-value and high-quality to compete. This means high-paying jobs require high skills. According to Georgetown University, 99% of all jobs created since the Great Recession that pay a family-sustaining wage require some education or technical training beyond high school.

There is no going back. As Scott Bernstein, president of Michigan’s Beta Steel, put it, "We are not going to get back 1963. Nothing is the same. Got to be better, smarter, faster."

How Tariffs Undermine Modern Manufacturing

If the goal is to help manufacturers in Michigan and the Midwest, tariffs are not the answer. In fact, they risk doing significant damage.

Lessons from the 2018 Steel Tariffs

We saw this playbook during the first Trump administration. In 2018, tariffs of 25% on steel and 10% on aluminum were imposed. While this led to a brief uptick in domestic metal production and employment, the downstream effects were negative.

A 2019 Federal Reserve study found that the higher input costs caused by the tariffs actually reduced overall manufacturing jobs and raised production costs for industries that use metal, such as automaking. The policy benefited a few firms at the expense of the broader manufacturing sector.

Why Broader Tariffs Cause Broader Problems

The second Trump administration's tariffs are larger and more expansive, affecting more industries and countries. The results will likely be worse. A primary reason is that much of the "trade" impacted by these tariffs involves intermediate goods—the parts, materials, and components used to create a finished product.

This structure is particularly damaging to the advanced manufacturing industry that defines the modern industrial Midwest.

High-Tech Manufacturing in the Crosshairs

New analysis from the Economic Innovation Group (EIG) shows these tariffs disproportionately hurt America’s most competitive high-tech manufacturers. These sectors, defined by a high concentration of STEM workers, include:

• Transportation equipment

• Computer and electronic products

• Chemical products

• Machinery

• Electrical equipment

EIG found that these advanced industries are more dependent on imported materials than low-tech producers. For example, chemical and pharmaceutical makers import 33% of their inputs, while transportation equipment manufacturers import 27%. Higher tariffs on these inputs raise costs, make U.S. goods less competitive in export markets, and ultimately hurt American workers and consumers.

Missing the Target on China, Hitting Allies Instead

If a major goal of the tariffs is to reduce dependence on China, they are poorly aimed. EIG's research shows that U.S. high-tech manufacturers source just 2.2% of their materials from China. Their supply chains are deeply integrated with Europe, Canada, and Mexico.

The auto sector is a prime example of this dynamic. Analysis from Brookings found that tariffs will increase the cost of building cars in the U.S., which could lead to less innovation, more expensive vehicles, and lower sales.

Just as in 2016, voters in Midwest swing states supported Trump in 2024 on the promise of reclaiming manufacturing jobs. Yet, the policies enacted to achieve this goal appear to be having the opposite effect, repeating a pattern that has already proven counterproductive.