Democrats and Republicans don’t agree more than they agree, but they firmly believe that the government should help U.S. manufacturers in one way or another.
Democratic President Joe Biden has distributed subsidies to chip manufacturers and electric car manufacturers. Republican President Donald Trump is focusing on the U.S. economy around the import tax wall (tariff) of domestic industry protection from foreign competition.
But American manufacturing has always been Get stuck in the rut Nearly three years. And it remains to be seen whether the trend will reverse itself.
The U.S. Department of Labor reported that U.S. factories offered 7,000 jobs in June for the second consecutive month. Manufacturing employment is expected to decline for the third consecutive year.
The Institute of Supply Management of the Purchasing Managers reported that manufacturing activity in the U.S. shrank for the fourth straight month in June. In fact, U.S. factories have been declining for 33 of the 32 months since October 2022.
“The last three years have been a real obstacle to manufacturing,” said Eric Hagopian, CEO of Pilot Precision Products, a manufacturer of industrial cutting tools in South Deerfields, Massachusetts. “We weren’t destroyed like we did in the 2008 recession. But we have been in this stagnant and static environment.
Huge economic factors led to a slowdown: inflation surged, as the unexpected economic recovery that prompted the Fed to raise factory fees in 1922 and 2023, increased factory fees and prompted the Fed to raise interest rates 11 times. Increased higher borrowing costs.
Government policies are designed to help.
Biden’s tax incentives for semiconductor and clean energy production have sparked a boom in factory construction – Investment in manufacturing facilities exceeds twice From April 2021 to October 2024 – this seems to herald a forthcoming surge in plant production and recruitment. In the end, no matter what.
But with the upcoming Trump administration launching a trade war and working with Congress, the factory investment frenzy has disappeared Ended Biden’s green energy subsidy. Now, Mark Zandi, chief economist for Moody’s analysis, now: “Manufacturing production will continue to be flat.”
“If production is flat, it means manufacturing employment will continue to decline,” Zandi said. “Manufacturing could suffer a recession in the coming year.”
Meanwhile, Trump is trying to protect U.S. manufacturers by imposing tariffs on goods manufactured overseas and coaxing to move and produce in the United States. He taxes on steel and aluminum at 50%, 25% on automobiles and auto parts, and many other import taxes.
In some ways, Trump’s tariffs can give our factory an advantage. Chris Zuzick, vice president of Waukesha Metal Products, said the Wisconsin-based Sussex manufacturer is facing fierce competition from a big Texas contract. Foreign companies offer much lower prices. But “when you come up with tariffs, it brings us closer,” Zuzick said. “It’s definitely a beneficial situation.”
However, U.S. factories also import and use foreign products – raw materials such as machinery, chemicals, steel and aluminum. Taxing these inputs can increase costs and make U.S. producers less competitive in the world market.
Consider steel. Trump’s tariffs will not only make imported steel expensive. By putting foreign competition at a disadvantage, tariffs allow our steel manufacturers to raise prices – and their prices. As of June 23, US-MADADE Steel was priced at $960 per metric tonne, more than double the global export price of $440 per tonne, according to industry monitor Steelbenchmarker.
In fact, U.S. steel is so expensive that Pilot Precision Products continue to buy the steel they need from suppliers in Austria and France and pay Trump’s tariffs.
Trump also created A lot of uncertainty His tariffs were repeatedly adjusted and rescheduled. For example, before the new import tax is set to take effect on July 9, the President Push the deadline back to August 1 To give more time to negotiate with U.S. trading partners.
Slippers confuse factories, suppliers and customers’ positions on things. The manufacturer expressed their complaint in an ISM investigation: “Customers do not want to make a commitment after large-scale tariff uncertainty,” said a metal product company that manufactures.
“Tariffs continue to cause confusion and uncertainty in long-term procurement decisions. “This situation is still too volatile to be firmly developed for such plans.” ”
Some might argue that things are not good for the United States. They just returned to normal during the pandemic-related bust and prosperity.
Factory cut nearly 1.4 million jobs in March and April 2020, when Covid-19 forced many businesses to close and Americans stay home. Then something interesting happened: American consumers, working with government co-relief checks and flushing, went on a spending frenzy, snapping up finished products like Air Fryers, terrace furniture and sports machines.
Suddenly, the factory was scrambling to the forefront. They brought back the workers they gave up and then withdrew some of them. The factory added 379,000 jobs in 2021, the largest number since 1994, and then received another 357,000 jobs in 2022.
But in 2023, hiring at factories stopped growing and began to go back as the economy returned to something closer to the regular pre-pandemic scope.
Finally, it’s a wash. Factory wage exchange rates reached 12.75 million last month, almost exclusively where they were in February 2020 (12.74 million), before Covid slammed the economic state.
“It’s been a long and weird trip,” said Jared Bernstein, chairman of the Biden White House Economic Advisory Council.
Zuzick of Waukesha Metal Products said he wanted to see if Trump’s tariffs succeeded in bringing factories back to the United States.
“The truth is that manufacturing is not going to open a dime. It takes time to shift gears.”
Hagopian Primot Precision hopes tax cuts in a massive Trump bill will help U.S. manufacturing regain momentum.
“There may be light at the end of the tunnel, which may not be the bearing of the locomotive,” he said.
At present, manufacturers may delay major decisions about investing or coming up with new workers until they see where Trump’s tariffs and how they impact the economy, said Ned Hill, a professor of economic development at Ohio State University.
“The uncertainty over all these remaining time in the year will be an uncertainty,” he said.
“Everyone,” Zuzick said at Waukesha Metal Products, “just waiting for a new normal.’’
