A year ago President Trump declared “Liberation Day,” unleashing the highest tariffs in more than 80 years in an attempt to end a system under which, he argued, “foreign leaders have stolen our jobs, foreign cheaters have ransacked our factories and foreign scavengers have torn apart our once-beautiful American dream.” To prove that he was turning the tide, he offered one impressive statistic: In one month, he said, “We created 10,000 — already, in a few weeks — new manufacturing jobs.”
Perhaps Mr. Trump should have knocked on wood because as more information became available, the Bureau of Labor Statistics revised that number downward. In a full accounting, during the first full month of his second term, the United States lost 2,000 manufacturing jobs. Losses continued almost every month, totaling 100,000 manufacturing jobs since January 2025.
Mr. Trump is not the first president to make an ill-timed boast about the return of manufacturing jobs. In his 2024 State of the Union address, President Joe Biden declared, “We’ve got 800,000 new manufacturing jobs in America and counting.” The next morning the Bureau of Labor Statistics announced that the economy had lost 4,000 manufacturing jobs the previous month. More losses followed, in almost every subsequent month of Mr. Biden’s presidency, totaling 202,000 in his last year. The 800,000 new jobs he exulted in were not the beginning of a sustained recovery of manufacturing but rather the return of some of the 1.4 million positions lost during the Covid pandemic.
Mr. Trump and Mr. Biden ran up against something that predecessors going all the way back to Ronald Reagan had already experienced: Reversing the loss of manufacturing jobs is extremely hard — and not necessarily desirable.
Manufacturing job share has been dwindling in nearly all middle- and high-income countries. By one analysis, China lost more than 30 million of those jobs from 2011 to 2020, more than twice as many as the number of jobs that exist in the entire U.S. manufacturing sector. Yet total employment continued to grow, meaning the relative share of jobs in manufacturing fell even more sharply than the numbers alone would indicate.
Manufacturing output, meanwhile, has risen, because workers now produce far more per hour using better and more sophisticated equipment. Today a given number of autoworkers can make, according to my calculations, three times as many cars in a year as they could 50 years ago.
The problem is that consumers do not want three times as many cars. Even as people get richer, they increase their spending on manufactured goods only modestly, preferring instead to spend more on services like travel, health care and dining out. There are only so many cars a family can own, but that’s not the case for expensive vacations or fancy meals. As a result we have fewer people working in auto factories and more people working in luxury resorts and the like.
These forces — rising productivity but steady demand — explain why the United States was losing manufacturing job share as far back as the 1950s and 1960s, long before trade became a major factor. The downward trend changed little after the U.S. entered NAFTA in 1994 or granted permanent normal trade relations to China in 2000. Economists continue to debate the magnitude of the “China shock,” but though it hit some regions harder than others, much of the research suggests that overall, it was responsible for a small fraction of the total manufacturing jobs lost since then.
When governments try to reverse the trend, they mostly succeed only in shifting jobs from one industry to another rather than expanding manufacturing overall. Tariffs on steel, for example, may protect jobs in steel production, but they cost jobs in downstream industries such as automobiles by raising costs and undermining global competitiveness.
Subsidies for targeted industries — Mr. Biden’s preferred approach, particularly for microchips and green energy — have similar trade-offs. They help the favored industries but they also drive up construction and equipment costs across the board, making it harder for companies in other arenas to compete. So instead of creating more jobs overall, the subsidized industries just crowd out unsubsidized ones.
Efforts to revive manufacturing are rooted in nostalgia. Once upon a time, manufacturing jobs provided a reliable pathway to the middle class, offering a wage premium to workers without a college degree. In 1970, roughly 80 percent of manufacturing workers had no more than a high school education. Today that figure is closer to 40 percent.
Manufacturing jobs also used to pay more than nonmanufacturing jobs with similar skill requirements. Not anymore: Today people in nonmanagerial manufacturing jobs average $30 an hour as compared with $32 for truck drivers, $33 for wholesale trade workers and $38 for construction workers. Trying to push more people into manufacturing jobs is therefore more likely to harm the middle class than help it.
There might still be very good reasons for the government to want to support American industries in limited ways. Proponents of manufacturing are right that an overreliance on imports leaves the United States vulnerable to potential adversaries. The bipartisan CHIPS and Science Act, for example, justifiably subsidized domestic microchip fabrication: Relying on Taiwan for 90 percent of advanced chips is too risky given China’s ambitions. Likewise, watching the growing sophistication of drone warfare in Ukraine — or even the scale of drone shows in China — makes a strong case for investing in U.S. drone manufacturing.
But in both cases, we should be honest. Producing microchips or drones domestically is not an economic benefit; it is an economic cost, one we choose to bear in exchange for greater security. Once we admit that, we can make smart decisions about which industries are worth subsidizing or protecting, rather than deluding ourselves that we can protect them all.
A smarter economic strategy would stop measuring success by the number of assembly lines reopened and start focusing on what actually raises living standards: productivity, affordability and the growth of the whole economy.
Jason Furman, a contributing Opinion writer, was the chairman of the White House Council of Economic Advisers from 2013 to 2017.
Graphics by Bhabna Banerjee.
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