Politics

Trump’s Tariffs Raise Costs but Not Manufacturing Jobs

By Jake Beardslee · January 16, 2026

When President Donald Trump unveiled sweeping tariffs this spring — the highest U.S. import duties since the Great Depression — he framed them as the cornerstone of an American industrial revival. Standing in the Rose Garden, Trump promised that “Jobs and factories will come roaring back into our country.” He labeled the announcement “Liberation Day,” signaling a decisive break from decades of globalized trade.

Months later, the promised manufacturing resurgence has not appeared.

Since April, U.S. manufacturing employment has declined every month. Factory payrolls now stand at roughly 12.7 million workers — about 72,000 fewer than when Trump made his tariff announcement. Rather than spurring production hiring, economists say the trade measures have created new cost pressures across industrial supply chains.

A central issue is that nearly half of U.S. imports consist of intermediate goods — raw or semi-finished materials used by American manufacturers. While tariffs shield certain domestic producers such as steel mills, they simultaneously raise costs for industries reliant on imported components. Auto and auto-parts manufacturers have already shed around 20,000 jobs since April.

Smaller manufacturers report particular difficulty navigating the administration’s shifting tariff policies. A Federal Reserve Bank of Richmond survey found that 57 percent of midsize manufacturers and 40 percent of small manufacturers lack clarity about their future input costs, compared with just 23 percent of large manufacturers. These smaller firms were also more than twice as likely to delay investments in new plants and equipment in response to tariff uncertainty.

High-tech manufacturing has been hit especially hard. Industries such as semiconductor and aircraft production depend heavily on imported precision components. Semiconductor manufacturers alone have cut more than 13,000 jobs since April.

Tariffs, however, are not the only headwind facing U.S. manufacturers. Factory employment began softening in early 2023, well before Trump returned to office. Elevated interest rates have increased borrowing costs for business expansion, with banks charging top-tier borrowers roughly 6.75 percent. At the same time, consumers have shifted spending away from durable goods toward services such as restaurants and entertainment.

This transition has been visible in industries like recreational vehicle production. After record RV sales during the pandemic, demand has since dropped sharply. Major manufacturers, including Thor Industries, have laid off workers as sales cooled.

Recent layoffs have been scattered across the sector. Westlake Corp., a Houston-based industrial chemical producer, announced idling four production lines in Louisiana and Mississippi, eliminating 295 jobs. Company executives cited weak demand and global oversupply.

Despite employment losses, factory output has risen modestly in 2025, reaching its highest level in nearly three years. Administration officials argue that investment incentives included in Trump’s fiscal legislation — particularly full expensing for equipment and research — will eventually translate into job growth. Treasury Secretary Scott Bessent said the policy direction would strengthen domestic industrial capacity. “It also encourages the build-out of high-precision manufacturing here at home, which will lead to high-paying construction and factory jobs,” Bessent said.

Still, the long-term decline of manufacturing employment in advanced economies poses a structural challenge. U.S. factory jobs peaked in 1979 and have steadily fallen since, largely due to automation. Recent efforts by both Trump and former President Joe Biden to reverse the trend have produced short-lived gains, many of which faded by the end of 2024.

Speaking this week at the Detroit Economic Club, Trump praised current economic indicators and renewed his optimism. He touted “the strongest and fastest economic turnaround in our country’s history.” He concluded, “The Trump economic boom is officially begun.”