Tariffs won’t bring back American manufacturing 

Tariffs targeting China, Canada and Mexico reflect a fundamental misunderstanding of the American economy — and especially America’s manufacturing challenges. While the proposed tariffs on Canada and Mexico have been paused for 30 days, those on China remain, and there is little hope they will revive American manufacturing. 

The uncomfortable truth is that we can’t simply tax our way back to industrial dominance — we’ve lost not just factories but the entire ecosystem that once made American manufacturing great. 

President Trump introduced tariffs for two primary reasons: first, to pressure Canada and Mexico into addressing U.S. concerns over immigration and fentanyl trafficking; and second, to reinvigorate American manufacturing. Although this second reason has received less attention, Trump put it front and center last weekend with a social media post, where he said, “We don’t need anything they [Canada] have … [We] should make our own cars.” 

While the motivation to rebuild American manufacturing is praiseworthy, a comprehensive program beyond simply tariffs is needed.  

Consider what manufacturing once meant in America. In 1940, Ford’s River Rouge Complex embodied industrial might: iron ore and raw rubber entered one end, completed cars rolled out the other. Today, a typical vehicle crosses the U.S.-Canada border numerous times during production, with parts sourced from dozens of suppliers across North America. This isn’t inefficiency — it’s the reality of modern manufacturing. 

The numbers tell a stark story.

Manufacturing has plunged from about a quarter of GDP in the 1950s to just 10 percent today. More troubling than this decline is what lies beneath: We have lost the crucial supporting industries that make domestic production possible.

In 1980, the U.S. was the largest and most technologically sophisticated manufacturer in the world of machine tools — the mother machines that make all other machines. Today we are not only a declining fifth behind Italy and China in machine tool production and sales, but also rapidly losing a workforce knowledgeable in machine tool development. This erosion of expertise extends throughout the supply chain. 

Take, for example, our struggling efforts to rebuild semiconductor manufacturing.  

As part of the CHIPS Act to bring semiconductor manufacturing back to American soil, billions in grants were handed out to firms like Taiwan Semiconductor Manufacturing Company, the world’s largest and most advanced maker of semiconductors, to build fabs in the U.S. Yet that company found that the U.S. had lost the capability not only to run such fabs but even to build them. For its $12 billion Arizona facility, the Taiwan giant has had to import thousands of workers from Taiwan both to build the factory and to run it.

Slapping tariffs on imports won’t solve these fundamental problems. We learned this lesson from the 2018 steel tariffs, which mainly succeeded in raising costs for American manufacturers above global prices while failing to rebuild domestic capacity. You can’t tax or subsidize your way to manufacturing expertise. 

If we are serious about reviving American manufacturing, as Trump and his allies say, then we ought to look to success stories.

The East Asia miracle economies of Japan, South Korea and Taiwan guided their economies in the second half of the 20th century to become industrial powerhouses. They made selected use of tariffs, to be sure, but did so as part of comprehensive strategy that included long-term industrial planning, coordinated development of domestic supply chains, investment in education, and entrepreneurial training and development. 

The path forward requires a similar commitment to industry and manufacturing. Tariffs may play a role, but only for certain sectors to develop in jump-starting an industry. A national strategy that involves tariffs must make up a program that includes things like access to capital for small and medium businesses, targeted assistance for critical points of the domestic supply chain, and technical and market support for manufacturing firms. It must also include robust educational programs to prepare citizens for innovation and 21st century manufacturing.  

This isn’t about nostalgia for mid-century America. Modern manufacturing requires different skills and technologies than it did 70 years ago. But the principle remains the same: a strong manufacturing sector needs the ecosystem to support it. Tariffs might make for good politics, but they’re a poor substitute for the hard work of rebuilding American industrial capacity. 

The choice here is not between protectionism and free trade — it’s between serious industrial policy and continued decline. If we want to revive American manufacturing, we need to move beyond simple solutions and commit to the complex work of rebuilding the manufacturing capacity of our industrial base. 

Macabe Keiliher is an associate professor in the Clements Department of History at SMU Dallas. He is writing a book on industrialization and manufacturing capacity in East Asia.