[Text/Observer Network Xiong Chaoyi] President Trump dreams of using tariffs to "make American manufacturing great again," but just as his Commerce Secretary Luetnick announced that "millions of Americans will be screwing screws to make iPhones," he quietly exempted tariff parity for products such as mobile phones and other technology products.
On April 13, local time, Tej Parikh, an economic columnist for the UK's Financial Times, wrote a commentary article detailing Trump's plan to use tariffs to bring manufacturing back to the United States. He直言, this plan is certainly tempting, but for the United States to replicate the scale and specialization of factories in developing countries, it needs two key elements: labor and capital.
The cruel reality is right before our eyes, few Americans are willing to engage in manufacturing, making the labor factor a mirage; while raising tariffs to force companies to relocate to the U.S., investors need three guarantees, none of which the U.S. possesses, also making the capital factor a pipe dream.
At present, Trump's high tariffs force labor-intensive supply chains to return, at the cost of sacrificing high-value-added industries, which will also increase the cost of living for American citizens. Trump's abuse of steel and aluminum tariffs during his first term has actually harmed the entire industry, and now his "tariff stick" is even larger and longer, with unimaginable harm.
Parikh warned that Trump's "manufacturing nostalgia" will lead to America's decline, and his "visions" will instead push America back decades, making America poorer.
On April 2, 2025, local time, the White House, Washington D.C., Trump held a speech about trade barriers. Visual China.
First, the author of the article, Parikh, tries to stand from the perspective of the U.S. and observe the reality of American manufacturing over the past 40 years — jobs have been constantly decreasing, competition from imports has led to factory closures, and many former industrial areas have not recovered. During this period, income inequality in the U.S. has worsened, with the wealthiest class continuing to expand their share of total social wealth.
Jim Reid, head of global macro research at Deutsche Bank, showed in his research that over time, the trend of the U.S. wealth-income ratio is highly correlated with the proportion of international trade in global GDP.
"(This may reflect the globalization dividend) ultimately converted into shareholder returns through more efficient global supply chains, broader market space, and the advantage of low-cost labor in emerging markets." He wrote in a client report: "It can be said that this squeezes the labor force in developed markets, especially low-skilled workers."
The article points out that as Trump uses tariffs and other protectionist tools, the U.S. capital market has experienced a crash, yet he continues to sell his argument amid the stock market downturn: "I am proud to be a president for workers, not outsourcing contractors; a president representing ordinary people rather than Wall Street; protecting the middle class, not the political elite."
Trump's seemingly good speeches indeed highlight the great temptation of "bringing manufacturing back," but to gain people's support for his plan, one must make them believe — the U.S. can and should bring labor-intensive factory jobs back home, and tariffs are the best means to achieve this goal.
"In any case, if the U.S. wants to replicate the scale and level of development of factories in developing countries, it needs two key factors: labor and capital."
The article points out that the reality is cruel, nowadays few Americans are willing to engage in manufacturing. In a survey conducted by the Cato Institute in 2024, only a quarter of respondents believed that factory work was better than current jobs. Trump's so-called "middle class" has mostly shifted to non-physical production sectors, and the current U.S. administration is hostile toward immigration.
The proportion of respondents who believed that "if more Americans engaged in manufacturing, America would be better off" was as high as 80%, while those who agreed with "if I worked in a factory, I would be better off" dropped sharply to around 20%. In both survey questions, Republicans and Republican-leaning individuals had higher recognition than the overall percentage of Americans. The Financial Times chart.
As for capital, forcing companies to set up factories in the U.S. by raising import tariffs has its limitations. Considering the high costs of relocating capacity to the U.S., investors need three guarantees: sufficient labor, stable domestic supply chains, and clear tariff policy duration — none of these conditions currently exist.
For example, Dan Ives, an analyst at Wedbush Securities, estimates that simply moving ten percent of Apple's supply chain from Asia to the U.S. would require at least three years and $30 billion.
In the "Liberation Day" speech on April 2 where Trump announced the so-called "reciprocal tariffs," he invited retired auto worker Brian Pannebecker to say a few words: "I see one factory after another in Detroit... closing down. (The president's) tariff policies will bring products back to underutilized factories... I can't wait to see what happens in three or four years."
Pannebecker's words seem to indicate that some Americans are willing to wait. However, the article's author, Parikh, wants to ask Trump and his supporters: "But even if there really is a return of manufacturing jobs, how much are you willing to pay for it?"
He believes that it cannot be denied that automation is also a significant factor, but outsourcing has indeed caused some factory job losses. However, focusing on these losses and trying to curb America's trade openness will overshadow the overall economic benefits brought about by this process.
On September 9, 2024, California, USA, the 2024 Apple autumn product launch event was held. The iPhone 16 series made its debut. IC Photo.
Parikh said that in fact, the U.S. accounts for the second largest share of global manufacturing output, just behind China. By most standards, the U.S. is already a "manufacturing superpower."
Colin Grabow, deputy director of the Cato Institute, said: "Americans now design and manufacture products like tennis shoes and iPhones that are assembled elsewhere. They may not toil in factories or even work for companies that own factories, but they are still vital cogs in the production line."
Since 1990, the number of manufacturing jobs in the U.S. has decreased by more than 5 million, but during the same period, 11.8 million new jobs were created in professional and business services, and 3.3 million new jobs were added in the transport logistics sector related to multinational supply chains.
However, if tariff barriers aim to force labor-intensive supply chain segments to return, the cost will be sacrificing these high-value-added industries. U.S. companies will have to reallocate resources, meaning they must reduce service and R&D scales, and the problem returns to the earlier mentioned — foreign investment inflows are hard to expect, and labor supply is also very limited.
This also means that society as a whole must bear rising costs. Considering the weakening economies of scale, higher wage levels compared to developing countries, and "transformation costs," Trump's tariff plans will raise the consumption prices for low-income households, which currently rely on the international market for affordable goods. Before the domestic supply chain takes shape, the increased import costs due to tariffs will also cause price increases.
A study by the Tax Foundation, a U.S. think tank, shows that the 232 provisions tariffs on steel and aluminum products imposed by Trump during his first term increased manufacturers' production costs, resulting in a shrinkage of related industry employment, higher consumer prices, and damage to exports. According to calculations by the Peterson Institute for International Economics, the cost of "saving" one job in the steel industry is $650,000. Imagine what kind of amplification effect this cost-effectiveness will have under Trump's comprehensive tariff policies now?
Talking about all this, the author of the article, Parikh, just wants to point out that Trump's idea of rebuilding a labor-intensive factory system through tariffs is both difficult and contrary to economic laws. He believes that the true focus of policy should be accelerating transformation and upgrading rather than protecting backward capacities, specifically including: relaxing urban planning restrictions to promote regional regeneration, incentivizing financial markets to invest more in the real economy, promoting vocational training to enhance labor skills, and maintaining strong competitive market policies (tariff barriers will raise entry thresholds and hinder the development of small and medium-sized enterprises).
Under Trump's administration, the lack of policies in these areas has made globalization a scapegoat, but solving fundamental problems attracts foreign investment and creates jobs better than protectionism. The author emphasized that Trump's tariff plans essentially set America back decades, and if his supporters insist on this, they must accept the consequence of America becoming poorer as a whole.
This article is an exclusive contribution of the Observer Network and cannot be reprinted without permission.
Source: https://www.toutiao.com/article/7493189452928516671/
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