President Donald Trump has long advocated for tariffs as a way to push companies to bring back production to the U.S. and create jobs. It’s not so simple.
“Jobs and factories will come roaring back into our country, and you see it happening already,” Trump said on Wednesday. “We will supercharge our domestic industrial base. We will pry open foreign markets and break down trade barriers.”
Manufacturing employment in the U.S. has been falling for decades and major corporations have developed deep global supply chains. The U.S. doesn’t have enough operational factories capable of mass-producing necessary parts, such as screws, which is set to drive up costs for manufacturers. Labor also tends to be more expensive in the U.S. than in most other countries.
Steel tariffs implemented between 2002 and 2003 by then-president George W. Bush cost 168,000 jobs per year in steel-using industries, according to CNBC (CMCSA-1.35%). And a 2024 research paper found that tariffs Trump implemented during his first term didn’t bring back jobs in protected sectors.
“Many manufacturers in the United States already operate with thin margins,” National Association of Manufacturers CEO Jay Timmons said in a statement. “The high costs of new tariffs threaten investment, jobs, supply chains and, in turn, America’s ability to outcompete other nations.”
The Trump administration has set tariff rates at about half of what it says other countries levy on American imports, and imposed a 10% base tariff on almost all nations. After all the tariffs take effect next week, importers, who are responsible for the levies, will pay much more for most goods.
Scott Paul, president of the Alliance for American Manufacturing, which supports the tariffs, told Quartz that he believes the duties will help push re-shoring — where companies bring back production based abroad back to their home country — or near-shoring, where that production is returned to a nearby country.
Mexico and Canada, facing their own 25% tariffs, will not yet be affected by the new tariff actions, while most Latin American countries will face lower rates, according to Goldman Sachs (GS-8.34%). The tariffs especially hurt Southeast Asian countries, including Vietnam and Thailand, whose leaders are trying to negotiate with the White House.
China is one of the countries hardest hit by the tariffs, now facing a 54% duty on all shipments to the U.S. Several products face even higher tariffs, as the past few American administrations have moved to develop trade barriers against goods like electric vehicles.
“If you look at the weight of the tariffs, you’re likely to see some suppliers [say] they can move from Asia to the Americas,” Paul said. While the U.S. wouldn’t be able to absorb all of the apparel production in Asia, Paul said, there could be an opportunity for North American supply chains.
There have been some new investment announcements in recent months from major firms like OpenAI, which launched a $500 billion Stargate venture. Machinery maker JCB said Thursday it will double the size of a planned factory.
But those plans are as yet the exception, not the rule.
“From a supply chain perspective, we’re not seeing a flood of factories breaking ground,” David Warrick, a Microsoft (MSFT-1.73%) veteran and executive at Overhaul, a supply-chain risk management firm, told Quartz by email. “We’re seeing spreadsheets. Modeling. Risk assessments.”
Even companies that have been willing to work with the Trump administration are set to be affected. Hyundai Motor Co. (HYMTF-1.81%), which is investing in a $5.8 billion in a steel plant to supply its car factories in Georgia and Alabama, will be slammed by new tariffs on vehicles and parts, as will Honda Motor Co. (HMC-3.41%), which has shifted planned vehicle output to Indiana from Mexico.
Apple (AAPL-9.30%) plans to invest $500 billion in the U.S. across Trump’s term in office, something the president often applauds. During Trump’s 2018-2019 tariffs, Apple won a tariff exemption for parts used in Mac Pro computers.
The tariffs on China could push the cost of the cheapest iPhone 16 model to $1,142 from $799. The $1,599 iPhone 16 Pro Max could become almost $2,300 if Apple shifts the brunt of the duties to customers, according to one estimate.
But Apple is nonetheless unlikely to bring much production back to the U.S., as moving output to Texas or New Jersey from abroad would raise the price of an iPhone to $3,500 from $1,000, according to Wedbush Securities analyst Dan Ives.
“Making Apple products and iPhones in the US sounds great behind the microphones in the 202 area code … but in reality, they are a fantasy,” Ives said in a note on Thursday. The “tariffs in their current form are a shut-off valve for U.S. consumer sales or risk prices going up to levels that are hard to digest.”
The post Trump says his tariffs will bring jobs back to the U.S. It’s not that simple appeared first on Quartz.
