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April 17, 2025
Can (and Should) US Manufacturing Make a Comeback?
Although proponents believe the U.S. needs to be less dependent on foreign supply chains for economic and security reasons, skepticism remains high that tariffs will pave the way to rebuilding American manufacturing.
A CNBC Supply Chain Survey of 380 logistics managers in the U.S., taken from April 7 to 10, showed that cost, cited by 57%, was the top reason against reshoring production. Beyond infrastructure investments, higher American labor wages are expected by many to make U.S. producers less competitive than foreign ones. Analysis by Apollo Academy last year found that manufacturing wages in China are 20% of those in the U.S., and in India, they’re 3%.
The second-most-cited reason for avoiding reshoring in CNBC’s survey was the challenge of finding skilled labor, cited by 21%. An aging workforce with younger workers reluctant to embrace work equated to sweatshops has led to labor shortages at U.S. factories for years.
An AI-generated video mocking the prospect of overweight Americans working in manufacturing jobs has gone viral on Chinese social media.
Building new factories also takes time, with 41% of respondents agreeing that reshoring would take at least three to five years and a third seeing it taking over five years.
Beyond tariffs directly, other supply chain concerns expressed by respondents were consumer demand, raw material prices, and the “current administration’s inability to provide a consistent strategy.”
Firms may hesitate to invest heavily in building U.S. factories amid uncertainty over whether tariffs will be lifted as part of negotiations or due to recession concerns.
Deregulation and automation are also expected to play a role in any potential revival of U.S. manufacturing. Many economists argue that automation, which has enabled fewer workers to generate greater output, has played a larger role than trade in the decline of American factory jobs.
With advances in robotics and AI, any returning factories to the U.S. are expected to be even more highly automated. They’ll likely require fewer but better-paid workers who will need to be upskilled with knowledge of software, data analytics, and coding, or at least robot repair.
“The skills U.S. workers have are mismatched for manufacturing right now,” Olaf Groth, who teaches about the future of the global economy at the Haas School of Business at the University of California, Berkeley, told CNN. “What we need to do is lift the majority of American labor from mid-skilled to high-skilled.”
Other factors weighing on U.S. manufacturing are other countries’ greater access to components to support the production of certain electronics or textile products, as evidenced by China’s move to suspend exports of critical minerals and magnets to the U.S.
Finally, American consumers may have to give up their addiction to cheap goods in a tradeoff for the promise of economic competitiveness and security. Trump administration officials at times have acknowledged the prospect of higher prices from tariffs. Treasury Secretary Scott Bessent said during a speech last month to the Economic Club of New York, “Access to cheap goods is not the essence of the American dream.”
Discussion Questions
How much of an imperative is revitalizing America’s production base for either economic or national security reasons?
Where are the biggest hurdles to doing so?
Poll
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Brian Cluster
Insights Consultant
Bob Phibbs
President/CEO, The Retail Doctor
Richard J. George, Ph.D.
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
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The only proper way of answering this is by allowing the market to decide. And the market has already spoken: its answer was that while the US can make some things, other things can more effectively be manufactured overseas. And this isn’t always for reasons of cost: it’s also about network effects, skills levels, capacity and so forth. Trying to buck this intricate system of supply chains is highly disruptive.
Two hundred years of trade economics have proven exactly what you stated.
This is the best and most succinct 1-sentence summary of the situation I have yet seen. Thank you, Gene, for distilling it down for all to see!
Not only do new factories cost billions and take years, but the chaotic economic environment in the US right now should deter just about everyone. Companies don’t know what tomorrow is going to look like, much less three years from now. Chaos isn’t conducive to business.
People want to wear Nike, not make them. If 1 in 4 U.S. jobs depend on retail, where’s the National Retail Federation lawsuit over IEEPA misuse?
The China tariffs aren’t policy—they’re punishment to our industry.
Retailers need advocacy, not silence.
…and punishment to our citizens.
A good friend of mine has brought products in from China for 40 years. All along, he has observed that we misunderstand the strength of their factories. What the Asian factories do well is what Trump oddly called putting screws in iPhones – millions and millions of them. What we do well here is build high touch sophisticated things in lower volume. It is irrational to believe the US should be trying to do what it doesn’t do well. It’s also irrational to send work outside the US that we would do well. But, then, irrationality seems to be today’s prime directive. Only it won’t work.
We must also not forget many of those jobs were sent overseas …checks notes… based on shareholder value theories and executive stock plans. Certainly haven’t seen enough recognition of that issue to expect any change soon.
Short answer is, some manufacturing can come back, but not all will. And for what does come back will take several years. It can happen by driving clear policies from the administration, and through large scale economic incentives. We also need clarity in policy – what needs to made at home for reasons of national security, or strategic interests.
For now, this is a work in progress. Tariff and trading deals must get sorted out, and the sooner the better for everyone. If it comes in 90 days, investment money can plan, the business sector can better understand where they want to invest domestic production or what to keep making overseas.
As I said a couple of weeks ago, it’s a pipe dream to imagine that the industrial base of the 1960’s and earlier is going to return…or should return. The American economy has moved on to technology, robotics, AI-driven industry, and services. A recent survey was revealing: 75% of respondents thought a return to America’s manufacturing base was desirable, but only 20% of those surveyed wanted that kind of job. Like it or not, that ship has sailed.
Due to globalization, and as we already know, outsourcing to countries with lower labor costs, manufacturing in the United States has declined.
It is true that globalization has reduced consumer prices and expanded market access, but it has also resulted in the loss of jobs and the weakening of domestic production. Economic resilience and national security are at risk as a result of this dependence on foreign supply chains.
By revitalizing domestic production, this reliance can be reduced. However, challenges such as outdated infrastructure, a lack of skilled labor, and regulatory hurdles complicate efforts to strengthen domestic manufacturing.
Manufacturing output in the U.S. has not declined. Except for the pandemic years, every year since 2000 has brought us record manufacturing output.
Here for this. While the percentage of jobs in manufacturing has fallen, the overall real-dollar output of US-manufactured goods has steadily increased. Meaning we’re producing more efficiently and making higher-value items. Trump’s policy does nothing to help American manufacturing get even better at what it excels at & instead seems bound & determined to have us sewing buttons, whittling drawer handles, and trying to grow coffee and avocados in places they won’t survive.
Likewise, unemployment has been low. Stating job losses as a driver for onshoring manufacturing is a dubious claim and the data would seem to indicate just the opposite. While those jobs were initially lost, they were replaced with other jobs seen as more desirable for job seekers. As others have stated, our economy has moved on to non-manufacturing jobs that in many cases are higher skilled and higher paying. In fact many have cited that the manufacturing job market has seen a labor shortage, indicating a lack of desire in the population to hold those jobs. There are simply too many strong reasons outweighing the benefits of anchoring most product categories we have sent overseas as a result of globalization. The benefits to consumers and lower prices top the list, as does the lack of necessary manufacturing skills for modern manufacturing development which has evolved considerably in Asia and other places.
For the last half century the US has become a service, not a manufacturing economy. Manufacturing jobs, for the many reasons already noted, are not returning to the States. Expensive & time-consuming factory construction is not really a viable option. In the meantime the economy continues to suffer from tariffs, that appear to have no related strategy.
Very little (that is sold) in retailing can be covered under the guise of “national security”, so to me the question is really “Should ill-educated thugs be allowed to use legal fiction to force companies where to make things?” My answer is “no”.
The US can compete in certain types of manufacturing. Other types that are deemed strategic will likely require subsidies and long-term strategic plans and consistent actions.
Some of the hurdles include popular interests of the youngest generation. 20 years ago, industrial engineering was a popular career interest. Now, I don’t here that type of career choice as much as I do from the myriad of digital and analytics careers and the AI boom. Another related hurdle is whether universities will have enough programs to serve the manufacturing industry in the future. Lastly, this industry takes planning and a concerted effort to build a supply chain. The US changes strategy with every administration which may limit the long-term impact of what the US government can do to support manufacturing.
China graduates three to four times the number of engineers a year as the U.S., and be sure they are every bit as smart as our graduates.
If we only had an industrial policy to recruit those engineers to move to the States, welcome them with open arms, encourage them to settle down, raise families, and even start their own businesses!
Several of my RetailWire colleagues have noted the CATO study, which found that few Americans want to work in factories. Politicians talk about manufacturing as if it is the Holy Grail of employment. Multiple university studies have shown that less than 20% of manufacturing jobs have been lost to outsourcing, and over 80% to
automation.
And we never talk about the service economy. The U.S. actually has a trade surplus with China and the rest of the world in services. This is an area that is growing. It should be the focus of new jobs for the country, but then the U.S. must invest more in education and research. We know what is happening there.
To truly understand China Manufacturing, check out this podcast by Ezra Klein and Tom Friedman. Ignore it to your own naivety. https://www.youtube.com/watch?v=UqBa0hBAQBA
The often crass but rarely inaccurate comedian Dave Chappelle said it best seven years ago: “Americans don’t want to make Nikes—we want to wear them.” There’s a lot of truth to that.
Take the largest iPhone assembly plant in the world—Foxconn’s factory in Zhengzhou, China—where the average worker reportedly makes around $13,000 a year, working seven-day shifts and living on-site. Those are not conditions that would fly under U.S. labor or union standards.
Some might argue that automation will solve this by replacing skilled labor. Even if we agree that automation will handle many tasks—how long would it take to build that fully autonomous factory of the future? And how much would it cost? Not to mention, you’d still need a vast supplier ecosystem to source materials, components, and rare earth elements like specific metals and plastics that power electronics. Where are those going to come from?
It wasn’t just labor costs and laws that made Asia the center of electronics manufacturing – Africa, Latin America, and other regions may offer even lower labor costs than Asia. For decades, a dense, well-integrated network of component suppliers has been built around manufacturing hubs in China, South Korea, Taiwan, and Japan. That kind of infrastructure can’t simply be replicated in the U.S.
So, the question shouldn’t be: Can U.S. manufacturing make a comeback? It should be: Why does it matter?
The future lies not in competing to bring back low-wage manufacturing jobs but in continuing to innovate and lead in technology, services, and software—areas that command higher wages and global influence. We should be investing in the education and upskilling of the next generation for these roles, not fighting allies (and others) to chase yesterday’s economy.
Is everything perfect in the U.S.? Of course not. But in terms of relative economic prosperity, we’ve outperformed much of the world. In 2008, the U.S. GDP was $14.7 trillion—similar to the Eurozone’s $14.3 trillion. In 2023, the U.S. stood at $27.7 trillion—nearly double the Eurozone’s $15.7 trillion.
If GDP isn’t the right measurement, look at wages: In 1990, U.S. wages were 22% higher than the industrial world average ($54K vs. $44K). Today, the gap has grown to 38% ($81K vs. $58K). And finally, GDP per capita in 2023 (per the IMF) was $89,678 in the U.S.—compared to $49K in the UK, $44K in France, and just ~$12K in China, where many want to “bring manufacturing back from.”
I like the way Neil put it, because the market did indeed decide. Year after year for the last 50-60 years. And no magnitude of tariff sledgehammer can turn back the clock now. Sure, we can re-shore some industries and product categories, given time and investment and patience. But as the article makes clear, there are a lot of products where it will never make sense to again manufacture them in the USA. And that’s so obvious to so many people it begs the question of WHY were the tariffs imposed with the magnitude and timing we are experiencing…??? How was this level of chaos and uncertainty ever going to incentivise reinvesting is domestic manufacturing? It was pretty simple math that led to the exodus over the years. And it will be really complicated math and logistics that will bring manufacturing back.
The economists aren’t wrong. It simply costs more in America. “Made in America” is a nice-to-have, but it is not practical for many products. The problem is obvious for all the reasons stated in the article. I’ve talked with several businesses that say that even paying the high tariffs makes economic sense compared to bringing everything back inside the US. It’s not that way for every business, but for many, that is the case.
The current administration believes bringing everything back to America is a good thing. I like the idea. Is the play realistic? Perhaps, their economists know something the others don’t. But for many areas of manufacturing, farming, etc., this may not be practical – again for the reasons mentioned in the article.
The United States has a strong opportunity to reestablish itself as a key player in the manufacturing sector. We have a workforce ready to be trained in skilled trades, available land for new factory construction or revitalization of dormant facilities, and emerging technologies that can modernize outdated processes and accelerate production. This resurgence won’t happen across every industry, and it doesn’t need to. Sectors like apparel, semiconductors, and steel, which were all manufactured in the U.S. as recently as the 1980s before the decline marked by events like the shuttering of U.S. Steel, are prime candidates.
But for this momentum to take hold, the narrative around manufacturing must shift. We need to elevate the value of “Made in the USA,” so that infrastructure investment, educational institutions, and consumer sentiment and support can align behind it and drive meaningful activation.
Despite the growth of the “Buy local” movement over the past decade and a desire to protect domestic jobs, U.S. consumers have come to expect cheap products. Lingering inflation and economic uncertainty make value shopping a hard habit to break.