In his inauguration speech, President Donald Trump promised that his sweeping tariff regime would help America become a “manufacturing nation once again.” But so far his tariffs and his broader handling of the economy are achieving the opposite reality: New data shows America’s manufacturing sector has been shrinking consistently — and executives in the industry are complaining about tariffs as a key factor.
Bloomberg reported Tuesday that “US factory activity shrank in August for a sixth straight month, driven by a pullback in production that shows manufacturing remains bogged down by higher import duties.”
If American factories aren’t experiencing a boom, how can Trump defend his protectionist extremism?
“We continue to have weak demand overall, still due to tariff uncertainty,” Susan Spence, chair of the Institute for Supply Management’s Manufacturing Business Survey Committee, said on a call with reporters, according to Bloomberg. “Sixty-nine percent of manufacturing GDP is in contraction.”
In its story on the ISM survey, Reuters reported, “Some makers of transportation equipment said conditions were worse than the 2007-09 recession, adding ‘there is absolutely no activity’ and ‘this is 100 percent attributable to current tariff policy and the uncertainty it has created.’”
The American manufacturing sector has long been challenged by intensifying international competition and automation. But the sector’s contraction under Trump undermines the central rationale for inflicting what even he admits is “pain” on American consumers. If American factories aren’t experiencing a boom, how can Trump defend his protectionist extremism?
University of Michigan economist Justin Wolfers recently created a pie chart based on Texas manufacturers’ responses to the August edition of the Federal Reserve Bank of Dallas’ manufacturing outlook survey. As you can see, over 70% of respondents described the tariffs as having had a negative impact on their business, while less than 5% said they’ve had a positive impact.
The argument is: We're all meant to sacrifice a bit, so that tariffs can help rebuild American manufacturing. Let's ask American manufacturers whether they're helping. Another question in the survey illustrates the main reason: Close to 80% of the manufacturers said tariffs had increased their “input costs” (the expenses incurred to create goods). Consider, for example, how manufacturing a car in the United States is now more expensive because imports of car parts from other countries are being slapped with border taxes. And about half the businesses in the Dallas Fed’s survey say tariffs have caused them to increase selling prices. This is the crux of why Trump’s vision of tariffs as a simple tool for reviving domestic industries is so naive: Supply chains and access to raw materials are both so deeply embedded in a globalized economy that the tariffs also punish companies that make products domestically. Moreover, the president’s capricious and arbitrary deployment of tariffs has created an environment of sustained uncertainty. As a result, businesses are more hesitant to make investments that could help them grow, which in turn acts as a further drag on the economy. Trump’s stated quest to revive American manufacturing through indiscriminate tariffs is less of a forward-looking vision than it is a vain desire to turn back the clock. Manufacturers would be better off if Trump were far more targeted and predictable in the way he issued tariffs and instead focused on strategic public investment in the sector.
Zeeshan Aleem is a writer and editor for MS NOW. 
