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.”