No. 31 of 108
July 14, 2025
Manufacturing, including announcements for future manufacturing, has yet to see a boost from the tariff wars. Analysts say changes are causing uncertainty, and the heavy investment nature of manufacturing is allergic to uncertainty. New manufacturing hires dropped to a 9-year low in May. This sector has steadily shrunk since its peak in 1979. Research shows that as nations develop, manufacturing declines, in part due to shifts in spending from goods to services as income levels rise. Low-cost goods make up most goods purchased, which are needed and bought by folx at the middle to lower end of the income scale. Higher income folx purchase more services than goods. Higher tariffs raise costs of overseas manufacturing, but those costs may still be lower than bringing manufacturing back to America. Net impact may be higher costs for consumers and lower volume of sales, less employment in the sales and servicing sectors. Steel and aluminum (spelling corrected on 3rd try) tariffs are in effect. Previous increases in steel tariffs during the first Trump term increased steel manufacturing by 1,000 jobs and eliminated 75,000 manufacturing jobs due to higher costs of steel, whether U.S. or imported.
In the 1990’s, a governor from a state with significant manufacturing railed against the false economy of states built on service industries, declaring services to be soft, easier to collapse, and manufacturing, the production of things, to be the solid, durable base of a country, and leaders who supported services to be wrong-headed. (You won’t find this in a written account. I just happened to be there.) By then, U.S. manufacturing had begun its decline. What wasn’t understood is how natural it is for massive, structural changes to occur because of a rising economy, better education, changing aspirations. Success can mean a “natural” decline in a sector. It should not be natural to leave people behind. Restoring that which was is more fraught and complicated than moving forward without leaving people behind. (Non sequitur: in the 1992 amateur softball game between the manufacturing governor’s people (state and governor unnamed) and the services governor’s people (Hawai‘i and Governor John Waihe‘e), the services won.)