“If you build it, they will come” was the iconic line from the classic 1989 film Field of Dreams. Abbott Laboratories, an American multinational medical devices and health care giant, became the latest company to announce a hefty US manufacturing investment. Honda also announced shifting production from Japan to the United States due to tariffs. To date, the Trump Effect has been real, with scores of domestic and foreign businesses pledging to invest more than $4 trillion in the United States.
But while Trump is rebuilding America’s manufacturing base, will the people be ebullient about the potential work, and will consumers want to pay a higher price?
The Trump Effect
Apple is investing $500 billion over four years. Artificial intelligence chipmaker Nvidia plans to park $100 billion in the United States. Johnson & Johnson, Eli Lilly, and Merck are dumping tens of billions of dollars into the US marketplace. The list of US firms, overseas titans, and foreign governments bullish on Trumponomics continues to grow – and the White House is pleased.
These investments include building new facilities, fostering education and training, expanding research and development, and adding manpower. Indeed, the Trump administration is betting that tariffs will fuel employment growth and give hope to the forgotten men and women abandoned by globalization through jobs at nearby factories. President Donald Trump calls it the Golden Age of America.
The current administration has been adamant about reshoring manufacturing.
In April, Commerce Secretary Howard Lutnick told CBS News’ Face the Nation that Americans will soon build smartphones. “The army of millions and millions of human beings screwing in little screws to make iPhones — that kind of thing is going to come to America,” Lutnick said. Vice President JD Vance said on the campaign trail last summer that Americans will make toasters again. These comments are similar to when Sen. Bernie Sanders (I-VT) was outraged in 2011 that the United States no longer manufactured snow globes and bobbleheads.
Economists have debated how much the president’s tariffs will impact the labor market. The primary argument, as was during the 2018-2019 round of higher import duties, is that only certain industries stand to benefit from protectionist trade measures while others will be adversely affected. For example, a new report by Goldman Sachs economists determined that Trump’s tariffs will bolster manufacturing employment by about 100,000, “but higher input costs will create an almost 500k drag on employment.” So, while steel companies enjoy the tariff-driven advantage, steel-consuming businesses will be harmed.
But let’s say these suppositions are incorrect and economists’ Cassandra-esque prognostications fail to materialize. The key question is: Will the American people fill these positions? If they do, will they have the qualifications? And, if President Trump’s endeavors succeed, will consumers want to pay the higher price?
Manufacturing a Demand for Jobs
The Cato Institute’s 2024 Trade and Globalization National Survey found that 80% of respondents said Americans would be better off if they worked in manufacturing. However, only a fifth of polling participants agreed that they would be personally better off if they were employed in a factory.
This is consistent with the Job Openings and Labor Turnover Survey (JOLTS) data, which indicate that workers are uninterested in filling available manufacturing positions. The number of employment vacancies in the manufacturing sector has hovered between 300,000 and 500,000 over the last ten years.
While the idea that America does not produce anything anymore has been accepted without pushback, the numbers suggest that the country remains a manufacturing powerhouse.
The difference is that the sector accounts for about 11% of GDP, much less than the peak of approximately 23% in the 1970s. Federal Reserve data suggest domestic industrial production has evolved since the turn of the century. Yes, the United States does not produce apparel, shoes, and textiles, but it does engage in high-tech industries and defense and space equipment. Although manufacturing payrolls have cratered – from around 20 million in the 1990s to roughly 13 million today – real (inflation-adjusted) value has rocketed.
This is not enough for the administration, as Treasury Secretary Scott Bessent has stated that global trade needs to be rebalanced, with the United States building more and China consuming more. However, if President Trump builds it, they might not come after all.
Apple CEO Tim Cook espoused a crucial reality: American workers do not match Chinese workers. “The reason is because of the quantity of skill in one location, and the type of skill it is,” Cook said at an industry conference, adding that the number of tooling engineers in China could fill “multiple football fields.”
In other words, someone from Gary, IN, may not possess the qualifications after the government education system failed him. With too many public schools concentrating on 2SLQBTQQIA+ and teaching everyone they are racist, US education has metastasized into a joke on the world stage. Students struggle to read and write despite the federal government spending trillions of dollars over the last 50 years. While kindergarteners in China have learned to lay bricks and memorize multiplication tables, a lot of US five-year-olds sit before drag queens reading leftist books.
If Trump wants to resurrect American manufacturing, he might require the assistance of Mike Rowe!
Everybody Has a Price
Will “tarifflation” dominate the US economic landscape over the coming years? The White House has presented various scenarios: There might be a one-time price adjustment, foreign-made goods may become more expensive, China might eat the tariff-fueled cost, and there will be little change in the broader economy.
Everyone concentrates on the short-term, but the long-term transition should be a source of intrigue for prices. Of course, it is challenging to gaze into the economic crystal ball because there is still plenty of uncertainty on the trade front. That said, if more Americans make T-shirts, smartphones, and microwaves, the conclusion is that costs will inevitably increase.
This is a likely conclusion since the United States maintains one of the highest wage rates in the world, in addition to other complements like health benefits, unemployment insurance, retirement-related remunerations, union dues, and the plethora of other goodies attached to worker compensation. This is not true in various overseas markets, whether China or Laos.
For example, the average annual income in the United States is about $80,000. By comparison, it is $7,200 in Thailand, $4,110 in Vietnam, and $2,540 in India. As a result, Apple, denying its foreign presence is about labor costs, would have to compensate potential US factory workers vastly more than their Southeast Asian counterparts.
Last week, Bank of America Securities analyst Wamsi Mohan estimated that the cost of an Apple iPhone 16 Pro would rise 25%, mainly due to labor, increasing from $1,200 to $1,500 per device. Dan Ives, global head of technology research at Wedbush Securities, says a US-made iPhone might cost $3,500. This assumes that an industry leviathan like Apple would overhaul its supply chain by transferring virtually all iPhone manufacturing to the United States, which experts contend is unlikely.
A Tariffying Balancing Act
Trump, Lutnick, Bessent, and other senior administration officials assert that the Trump Effect involves reshaping international trade. Was the decades-long globalization trend a mistake? If some were given a time machine or a genie in a bottle, they would have abandoned outsourcing, prevented China from entering the World Trade Organization, and maintained some semblance of the gold standard. Since there is no going back, will a so-called Mar-a-Lago Accord breed a renaissance of American manufacturing? It depends on whether the American people want to produce AI chips or Nike sneakers.