The topic of tariffs doesn’t end with settling trade deals and reciprocal pricing for products. Ultimately, the effects that are on consumers, industry, business, innovation and jobs point to today being a critical time in our country’s economic future.
Because of the loss of manufacturing jobs in the United States over the last 40 years, there are many who assumed that manufacturing jobs were gone for good. With free trade, companies could build manufacturing plants overseas at lower labor costs and ship the same products back to this country for a lower price.
President Trump’s tariff policy was aimed at revitalizing American businesses. But even before his second term, there were significant events that occurred which really put the spotlight on revitalizing American manufacturing as well. They included Brexit, war in Eastern Europe, and in 2020, it was the COVID-19 pandemic. What we saw happen was that the supply chains originating in one geographical area of the world presented problems in supplying products to other companies and consumers in countries like the United States.
It became apparent very quickly that effective supply chains needed to be free from geographical and political risks which could result from events such as a pandemic, changing geopolitical relationships or other factors. Governments and businesses began using a new term to describe the direction of trade policies – “reshoring” – which is the process of bringing production or manufacturing back to the country of origin to elevate these problems.1
Even though U.S. manufacturing tumbled during these last 40 years, the steady drop in manufacturing actually stopped in 2010. In the 15 years since 2010, manufacturing’s share of total employment has only dropped by one percentage point, from 9 percent to 8 percent. 2 But still the damage was done – by 2020, the service sector dominated the U.S. economy, contributing a staggering 79% to GDP, up from 52% in 1950 and representing 80% of total employment as low overseas labor costs – which invited the production of goods – transferred overseas.3
Reshoring started to revitalize key industries back into the United States. The production of semiconductors would be an example of this change in policy as the federal government gave incentives for companies to expand production in the U.S. The supply chain damage during the height of the pandemic provided the necessary incentive for both the government and industries to come back into the U.S. Also, one of the targeted benefits of tariffs is to revive domestic manufacturing and boost U.S. manufacturing jobs. The question now is what will be the end result of reshoring, the tariff issues… the overall changing landscape in trade policies? That can’t be determined until more of these issues are finalized and the business climate becomes more stabilized.
The good news is that U.S. manufacturing is gaining steam. This is coming from more construction spending, hiring and corporate interest. As of May 2024, annual construction spending in manufacturing soared to $234 billion, tripling since January 2020.3
The job market may be following this construction boom. Since early 2021 to date, there have been over 750,000 new manufacturing jobs created. Due to evolving demand, the industry is projected to create 3.8 million new job openings by 2033.3
Top executives at corporations have been focused on reshoring as well. In the first quarter of 2023, mentions of reshoring in S&P 500 earnings calls more than doubled to 128% compared to the previous year. Altogether, rising manufacturing, hiring, and corporate focus on reshoring could mean manufacturing activity may increase in the U.S. in the coming years.3
Where does the United States stand today as a manufacturing nation? The following numbers3 may surprise you a bit – U.S. manufacturing looks more promising than it has for quite awhile.
Trade Snapshot: Deficit in Goods, Surplus in Services
The U.S. trade deficit (the value of exports minus imports) hit $918 billion last year, largely due to goods imports. The U.S. has run an annual trade deficit, of varying sizes, every year for 50 years. But when it comes to services, America is a global leader, running a $300 billion surplus—thanks to high-value exports in tech, finance, and logistics.
What America Still Builds—and Exports
The U.S. remains the second-largest manufacturer in the world, just behind China. While we import many consumer goods, we excel in capital equipment and high-tech exports like:
- Industrial and farm equipment
- Aircraft and engines
- Electrical gear and telecom components
- Pharmaceuticals and computers
Energy Independence: From Importer to Exporter
A major shift has occurred in energy. The U.S. now exports 3 million more barrels of oil per day than it imports. We’re also the world’s top exporter of liquefied natural gas (LNG), with more capacity being built.
Services and Software: Silent Powerhouses
Digital services are booming. With $1.1 trillion in exports last year, the U.S. dominates cloud computing, software licensing, and logistics—thanks to the internet’s reach. These “digitally enabled” exports are a key U.S. strength.
Agricultural Concerns
Traditionally a strong point, U.S. agriculture is now facing trade deficits, due to a strong dollar and rising global competition.
Where U.S. Manufacturing is Poised to Grow
Chemicals
With abundant energy and materials, the U.S. has a $25.7 billion trade surplus in chemicals—second only to China in production volume. Exports include plastics, pharma, and petrochemicals.
Microchips
After years of decline, U.S. chip production is rebounding, backed by $450 billion in investment. New plants from Intel, TSMC, and others are boosting domestic capacity, set to triple by 2032.
Aerospace & Defense
From rockets to satellites, the aerospace sector is booming, led by SpaceX and Amazon. The U.S. also dominates global defense exports, with growing demand due to global tensions.
The Talent Challenge
Future growth depends on one key resource: skilled labor. Advanced manufacturing needs engineers, technicians, and tradespeople—not traditional assembly lines. Labor shortages are a concern, but vocational interest is rising, and expanded apprenticeship programs could help meet demand.
Final Takeaway:
It is a different time from when the U.S. was the world’s powerhouse manufacturing leader come out of World War2. After a tumultuous few decades, America’s manufacturing engine today is evolving—not shrinking. From chips and chemicals to software and satellites, the U.S. remains a global powerhouse in high-value exports. With the right workforce and policy support, its industrial future is bright. There are multiple factors contributing to these trends which include the pandemic to possibly the tariffs. Many of these effects still have to play out fully but this may be a good time to point to a bright future of American manufacturing – one that we have not seen for several decades.
References:
- Jacobs, Jay. (July 18, 2025). The Rebirth of American Manufacturing: Growth and Innovation, iShares. https:// www.ishares.com/us/insights/exploring-us-manufacturing
- McLaughlin, Dan. (April 17, 2025). American Manufacturing Is Stronger Than You Think, National Review. https:// www.nationalreview.com/corner/american-manufacturing-is-stronger-than-you-think/
- Patterson, Jim. (2025). America’s Surprising Strengths in Manufacturing and Exports, Kiplinger. https://www.kiplinger.com/investing/economy/special-report-us-manufacturing-export-strength
- Chart Source: Federal Reserve Bank of St. Louis, “Total Construction Spending: Manufacturing in the U.S. https:// fred.stlouisfed.org/series/TLMFGCONS
- Chart Source: Deloitte, “Executing on the $2 trillion investment to boost American competitiveness,” 03/16/2023
Disclosures:
This piece is intended for general education only, and is not intended as a recommendation to purchase or sell any investment or security, or as to the value of any investment or security, or to solicit investment advice. This material may or may not be relevant to any particular reader, and this is not intended as being particular to any investor or and particular financial situation.
The S&P 500 Index is an unmanaged market-value-weighted index of 500 stocks that measures the performance of large- capitalization US stocks. The S&P 500 Index is not available for direct investment and as shown does not include any expenses or fees that would be associated in investing in a like portfolio. The S&P 500 Index does not take into account any fees or expenses that may apply to comparable investments.