President Trump has long promised that tariffs would bring about a manufacturing renaissance. As factory employment continued to sink in recent months, he assured Americans it would just take a little time before jobs and investment started pouring in.
A year into his second term, there is little sign of a change in direction. Some manufacturers are benefiting from new protections, but most are taking a hit, paying higher taxes on their imported components and wondering whether tariffs will be around long enough for restructured supply chains to pay off.
Overall, the factory sector is neither collapsing nor booming. Employment has fallen by 68,000 jobs over the past year and remains at just 8 percent of the work force, but production is slightly up. Manufacturers remain downbeat in surveys. Spending on factory construction has fallen from the end of the Biden administration, but it’s still near record highs.
The mixed picture bears out the opinion of some economists: Tariffs can help protect favored industries, but often by imposing high costs.
“It creates this patchwork effect,” said Bradley Saunders, a North America economist for the consulting firm Capital Economics. “It creates a lot of unintended consequences.”
Among the beneficiaries are people like Drew Greenblatt, owner of the Baltimore-based company Marlin Steel Wire Products, which makes metal racks and baskets for food processors and aerospace companies. After being battered by cheaper imports from China, Mr. Greenblatt became a cheerleader for tariffs. Now he thinks they are paying off. He recently bought the priciest piece of equipment in the company’s history — a TruMatic 3000 punch laser machine that will speed up production.
“You don’t buy expensive things if you’re not going to hire a lot of talent. We’re a microcosm of that,” said Mr. Greenblatt, who employs 130 people and says he plans to hire at least 20 more in the next year. “I’m going to be buying 10 times more steel, so my steel company is going to be sending me valentines early.”
But many manufacturers see only downsides from tariffs. Lou DeCuzzi’s company, DRR USA, makes electric and gas-powered all-terrain vehicles in Brunswick, Ohio. He buys most of his batteries and other parts from Taiwan, South Korea and Vietnam because they’re not available domestically. With the help of Cleveland State University, he developed a plan last year to export to overseas hotels and resorts building fleets of eco-friendly touring vehicles.
“We start out the year gangbusters, absolutely on fire,” Mr. DeCuzzi said. He planned to add a second building and hire more people, before the tariffs hit and threw his pricing models into disarray. Retaliatory tariffs from other countries added another barrier.
“Once this tariff war started, you don’t know what’s going to happen from day to day,” Mr. DeCuzzi said. “It just crushed it, just completely eliminated sales outside the U.S. for the last six months.”
Now the plans for a new building are off, and he’s hoping domestic customers fill the gap.
Some Ups, but More Downs
Over the past decade, the idea that globalization was not an unalloyed good for the United States has gained traction on both the political left and the right. Policymakers warmed to tariffs as a tool to protect strategically important industries. President Joseph R. Biden Jr. maintained many of the tariffs that Mr. Trump had imposed in his first term, and supplemented them with subsidies to support sectors like semiconductors and batteries.
Mr. Trump’s approach in his second term has been radically different. Driven also by a desire to raise revenue, new tariffs have been imposed on nearly every country and a vast range of goods, even those the United States hasn’t made in a long time. Some of the heaviest duties are being collected on inputs, like steel or machinery, that other manufacturers need to make their goods. Anyone thinking of starting a factory in the United States often has to factor in those higher costs.
Jamieson Greer, Mr. Trump’s top trade negotiator, conceded in an interview this month that it was challenging to impose tariffs that wouldn’t harm some companies that import parts and materials. But he said the problem underscored that some companies were “dangerously dependent” on foreign supply chains.
“There’s going to be frictions like this,” he said. “And I think that we are trying to look at it from a long-term perspective.”
Still, there’s not much to suggest a boom is underway. Juan Arias is the director of industrial analytics for CoStar, a real estate data firm, where he can see how many people are searching for factory space on the company’s listing website. Activity was heating up until last April, when Mr. Trump announced tariffs across nearly every country. Search activity then fell sharply.
“The feeling in the industry was rising, and all of a sudden, I can’t expand as a manufacturing player in your country because I don’t know how much I’m going to pay for the inputs,” Mr. Arias said.
The companies that make those raw materials, primarily iron and steel, have seen brighter fortunes. Mr. Trump reimposed a 25 percent tariff on foreign steel in February and raised it to 50 percent in June. Primary metals production has increased slightly over the past year, as have prices — both imported and domestic.
Lourenco Goncalves, the chief executive of Cleveland-Cliffs, a steel manufacturer based in Cleveland, praised the tariffs on his industry as “absolutely necessary and overdue.” He has sold more steel to U.S. automakers over the past year, though he said they were bringing business back to the United States “much more slowly than I would like to see.”
In the long run, Mr. Goncalves sees only one way to comply with what the Trump administration wants manufacturers to do. “Bring production back to the United States and then there are no more tariffs, life is good,” he said.
From the automakers’ perspective, it’s not that easy. Cars and car parts have been some of the most heavily taxed products, and production has slumped in recent months.
Jeff Aznavorian is the president of Clips & Clamps Industries, which manufactures a wide array of fasteners that go into cars made in the United States. He has paid more for steel and copper and raised his own prices in response. Although he received scores of inquiries from automakers and their suppliers seeking to reshore imported parts, none of those quotes turned into orders — it was still too expensive to make the shift.
At the same time, the automakers have not been introducing new products because they are nervous about the future of the U.S.-Mexico-Canada Agreement, which has allowed for the continued flow of many duty-free parts. It’s up for renewal this year, and Mr. Trump has threatened to scrap it.
“We’ve spent the last 40 years building up a trade bloc to compete with the rest of the world,” Mr. Aznavorian said. “When we don’t know whether that’s going to hold or not, our customers can’t make investment decisions.”
Still, he feels lucky to be in business — some auto suppliers have gone under. United Piston Ring in Manitowoc, Wis., said it would close and lay off 60 people starting in March, which its part owner Tenneco blamed on “changing market conditions and an increasingly challenging economic environment.” Other companies are trimming head count by attrition.
The manufacturers that are doing the best are those that have avoided tariffs, such as those in the aerospace sector. Mr. Trump also called off tariffs on pharmaceutical companies, some of which committed to making more drugs in the United States. The entire industry has avoided duties, even on imported chemical ingredients. The electronics and semiconductor industries received an exemption last April after Tim Cook, Apple’s chief executive, promised to make more iPhone parts in the United States.
Chuck Robbins, the chief executive of Cisco Systems and chair of Business Roundtable, an association of executives of big companies, said that exemption had been helpful for technology companies. Generally, he said, the effect of tariffs varied by industry.
“It depends on where certain industries have supply chains, the global competitiveness of these industries and what exemptions might have been put into place,” he said.
Beyond tariffs, fiscal policy has also created both headwinds and tailwinds. New military spending and arms sales to other countries have bolstered defense and aerospace production. But removing Biden-era subsidies for clean energy has prompted a wave of cancellations of planned investments, according to Rhodium Group, crushing the emerging industry. Companies have also praised the administration for stripping away environmental and safety regulations they say were costly.
Another variable: Small manufacturers, which have fewer resources to pay tariffs and less leverage to pass along prices, are faring worse than bigger ones. In some cases, their overseas rivals have absorbed more of the tariffs than expected.
Eric Hagopian runs a 35-person factory in Massachusetts called Pilot Precision Products, which makes cutting tools. He was optimistic about gaining an edge over companies in India and China that make similar products for far less, but tariffs haven’t helped much.
“The foreign competitors have not raised their prices proportionately, and it’s created an uneven competitive environment for us,” Mr. Hagopian said. He thinks those importers must be somehow evading the duties. “Honestly, I think they could help us if they’re enforced.”
A Cloudy Future
It is possible that 2026 could bring a factory rebound.
Many manufacturers have been hoping that the constant tariff changes would calm this year, clearing the coast for investment. A pending Supreme Court decision on the White House’s ability to impose tariffs on national security grounds may yet deprive Mr. Trump of his most flexible trade weapon.
Manufacturers are also excited about the provisions of last year’s major tax and spending law that renews tax breaks for research and development, and new equipment. That might encourage factory owners to invest in machinery and squeeze more out of the factories they have.
Scott Paul, the president of the Alliance for American Manufacturing, said manufacturers were also benefiting from a trend toward more secure supply chains after the pandemic.
“This is a not a Trump boom or a Biden boom, but it is, at least recently, the new normal for American manufacturing,” Mr. Paul said. “There are a lot of factors that are contributing to that.”
Plenty of factories are still being built around the United States. But much of it is previously announced investment in semiconductor factories, which received $50 billion in subsidies from the Biden administration. For those contemplating future investment, interest rates are still high. And lately, what had been a comparative advantage for U.S. manufacturers — cheap energy — is turning into an obstacle, as a data center boom pushes up electricity prices.
Both supporters and critics of tariffs said uncertainty over the future policy might be the worst effect of all. As Mr. Trump’s popularity sinks in the face of stubbornly high prices, the prospect that tariffs may be suddenly lifted is just as much of a dampener as the fact that they’re in place today. Research suggests that while well-designed, permanent tariffs could raise manufacturing employment over time, transitory ones would bring about no such payoff.
“That’s why we hear a lot about the near-term pain and hear fewer stories about short-term gains,” said Stephan Whitaker, a policy economist at the Federal Reserve Bank of Cleveland. “The gains, if there are going to be any, would be over the longer term when it’s clear that some of the domestic markets are being protected.”
Lydia DePillis reports on the American economy for The Times. She has been a journalist since 2009, and can be reached at [email protected].
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