Trump dreams of making America a "manufacturing powerhouse", experts: "Absolutely impossible"!
On April 15, South Korean media "Today Finance" published an article stating that behind US President Trump's out-of-control tariff policy is his determination to make America a manufacturing powerhouse again. However, "The Wall Street Journal" reported that experts are skeptical about President Trump's plan to revitalize manufacturing.
America was the pioneer in mass production using interchangeable parts at the beginning of the 20th century, and its manufacturing industry developed greatly after World War II. After the war, as more and more Americans entered the middle class, spending on durable goods such as new homes and household appliances surged. Many technologies developed during the war led to the production of various products by America, such as dishwashers, televisions, and jet planes. Subsequently, influenced by the high school education movement that emerged in the early 20th century, manufacturing also benefited from the addition of highly educated workers to the workforce.
Therefore, in the 1950s, manufacturing accounted for around 35% of private sector employment in America. However, the role of manufacturing in the American economy has begun to gradually decline, with its current employment share being 9.4%.
The weakness of manufacturing is due to increasingly affluent American consumers increasing their spending on services such as travel, dining, and healthcare. As spending increased, employees in industries such as hotels, banks, law firms, and hospitals also increased. From the mid-1960s to the early 1980s, manufacturing employment stagnated, but service sector employment continued to grow.
Thereafter, they began to lag behind in competition with countries where labor costs were lower. The Wall Street Journal pointed out that initially, they fell behind South American and Asian countries in non-durable goods production like clothing, but later the same phenomenon occurred in durable goods production.
In particular, after China joined the World Trade Organization (WTO) in 2001, so-called "China shock" severely hit America's manufacturing bases in the Midwest. While China's manufacturing strength increased, America focused more on service sector production and has become a service export country mainly focusing on software, advertising, and intellectual property.
Therefore, experts believe that no matter how much emphasis President Trump places on revitalizing manufacturing, America cannot restore its former glory. Harvard economist Gordon Hanson predicts that even if manufacturing jobs increase by 30%, the proportion of manufacturing jobs in the private sector will still remain around 12%.
Some people believe that tariffs should not be widely applied but should be specifically targeted and focused on specific product production. The idea is to focus on producing cutting-edge products such as semiconductors rather than large quantities of low-cost products. As American economist Hausmann said, "Do we really want to make T-shirts again? How important is this?"
Original source: https://www.toutiao.com/article/1829468334423044/
Disclaimer: This article only represents the views of the author.