President Donald Trump’s focus on restoring and reshoring American manufacturing is a misguided goal that ignores America’s key comparative advantage as a provider of global services. This fixation, despite being unachievable and terrible, has persisted in the White House’s myopic economic thinking.
Manufacturing accounts for only 10% of the US GDP and has been steadily declining over the years. Labor costs are less expensive overseas, making it cheaper to manufacture goods abroad. Automation has reduced the number of American workers needed to produce goods, making it even more impractical to bring manufacturing back to the US.
The White House’s emphasis on manufacturing ignores the real engine of US economic growth – services. These industries, including finance, healthcare, education, and technology, make up 70% of the US economy and a significant portion of exports. Trump’s tariff strategy only talks about manufacturing, while neglecting the massive trade surplus in services.
Trump’s obsession with manufacturing is further misplaced, as nearly 800,000 new manufacturing jobs were created during Biden’s presidency, primarily in industries like semiconductors and clean technology. These growths were a result of bipartisan legislation, such as the 2022 Infrastructure Law and CHIPS Act.
The administration’s tariff strategy has created economic uncertainty, making it unappealing for businesses to invest or hire workers due to the unpredictable nature of tariffs. The real problem lies in Trump’s complete misunderstanding of how the economy operates, which has led him to prioritize manufacturing over the country’s true strength: services.
Source: https://www.msnbc.com/opinion/msnbc-opinion/trump-tariffs-manufacturing-jobs-economic-growth-rcna200701