Not your grandfather’s factory: Why tariffs won’t help Midwest manufacturing

Speaking on the 2024 campaign trail in Michigan, then-candidate Donald Trump promised to bring manufacturing jobs back to the state. And upon returning to the White House last year, President Trump declared the U.S. trade deficit a “national emergency,” and enacted a slew of tariffs that his administration claimed would fulfill that promise.

But recent data suggest that the tariffs are not boosting manufacturing employment—and in fact may be undercutting it.Employers shed 8,000 manufacturing jobs in December 2025 nationwide, while payrolls in the sector shrunk by 72,000 positions overall between April’s tariff impositions and December. For its part, Michigan recorded a net loss of 2,500 manufacturing jobs between April and November.

There’s been much opining and handwringing in recent years about the hollowing out of America’s industrial base and the “loss” of manufacturing. But in fact, in Michigan and across the industrial Midwest, America never really “lost” its manufacturing—instead, the sector has just radically changed.

Compared to international economic rivals, U.S. manufacturing is highly competitive and wildly productive. As the Cato Institute reported in 2023, the United States remains a manufacturing powerhouse, second only to China in its share of global manufacturing output, at 15.9%—a number greater than Japan, Germany, and South Korea combined. With its super-sized population, China is today the world’s largest manufacturer, but relative to the U.S., the country’s workforce is much less productive, producing on balance lower-value products. With a value-added of over $141,000 per worker(i.e., what each worker contributes to the ultimate product value when it’s sold), the United States boasts the world’s most productive manufacturing industry, beating second-place South Korea by over $44,000 per worker and China by over $120,000.

Decades of impressive productivity gains among U.S. manufacturers have translated into a significantly reduced share of workers directly employed in manufacturing—a decline from its peak of 22% in 1979 to 9% in 2019.  However, the inflation-adjusted value of manufacturing product has increased since that 1979 employment peak by more than 80%.

As I’ve explored before, manufacturing creates tremendous wealth and an economic multiplier effect that employs many more people in other sectors. With some low-skill, low-productivity exceptions (such as meatpacking), manufacturing jobs today are high tech and—relative to other jobs—higher paying. This change can be seen in the dramatic shift over the past 20 years in the occupational mix of people working directly in manufacturing. As the economy recovered from the 2007-08 Great Recession, the share of production occupations fell dramatically, while management, business, and financial operations as well as architecture and engineering occupations saw employment share increases.

The $141,000 of value-add per U.S. manufacturing worker means the sector not only puts people to work in knowledge services sectors in direct support of today’s high-tech manufacturing (via engineering, computer-aided design, automation technicians, and marketing and sales), but also all the nurses, accountants, cashiers, servers, and repair people whose livelihoods depend on the high manufacturing wages of their neighbors. 

The dominant driver of the palpable nostalgia felt in older industrial communities such as Lansing, Mich., (where I live and one of the places the auto industry was born) and Flint, Mich., (birthplace of General Motors) is the loss of high-paying manufacturing jobs that several generations had access to without advanced education and training. In those and similar places, one could walk out of high school and get a high-paying job with a pension and benefits at a plant. This is largely because after World War II up until the 1970s and 1980s, America’s automakers and other U.S. industrial giants had the domestic market (and many world markets) all to ourselves. The quality and relative price of our products was not a competitive issue.

All that changed with subsequent transportation and communications revolutions and the rebirth of manufacturing competitors in Japan and Germany, who could access our market—and all other markets—and compete on price and quality. In today’s changed economic landscape, what we make and sell must be high value and high quality. This means there are no high-paying jobs that don’t require high skills in places such as Lansing and Flint, where residents had once expected them. (As evidence, Georgetown University’s Center on Education and the Workforce has found that 99% of all jobs created since the Great Recession that pay a family-sustaining wage require some form of post-high school technical or higher education.) 

There is tremendous nostalgia in these communities for the economic heyday of the 1950s and 1960s. But there can be no return to this manufacturing past. As Scott Bernstein, president of Beta Steel in Michigan, said in a Financial Timesdocumentary, “We are not going to get back 1963. Nothing is the same. Got to be better, smarter, faster.”

So how then do tariffs help Michigan and other Midwest manufacturers? They don’t—and if anything, the tariffs do damage.

We saw this during the first Trump administration. In 2018, the president put in place modest (by today’s standards) tariffs of 25% on steel and 10% on aluminum, imposed on national security grounds. Those tariffs did produce an uptick in domestic production of these metals and increased employment in metal manufacturing industries, albeit briefly. But the 2018 tariffs also had larger negative downstream effects on the industries that require these metals as inputs, including automobiles. A 2019 Federal Reserve study estimated that higher input costs due to the 2018 tariffs reduced manufacturing jobs overall relative to how many there would have been without tariffs, while also raising production costs for metal-based goods. In other words, there were benefits for a few firms and their workers, but the net result was a diminished manufacturing sector.

The second Trump administration’s tariffs are bigger and broader, implicating more business sectors and countries, and likely to produce worse results for U.S. and Midwest manufacturing than the targeted tariffs of his first term. A major reason, as I previously noted for Brookings, is that much of the so-called “trade” in products—particularly from the industrial Midwest—that these tariffs hit are intermediate goods, such as materials, parts, and components of a later finished product.

These new tariffs appear to be particularly damaging to the high-wage, high-value advanced manufacturing industry that, despite continued talk about its demise, has continued to thrive in the industrial Midwest. 

New analysis from the Economic Innovation Group (EIG) shows these tariffs particularly hurt the competitive position of advanced high-tech manufacturing products, defined as those product lines made by a workforce with double the national share of STEM (science, technology, engineering, and mathematics) workers (consistent with the Bureau of Labor Statistics’ definition of high-tech industries). These are sectors such as transportation equipment, computer and electronic products, chemical products, machinery, and electrical equipment and components—high-value products that the U.S. and the Midwest specialize in, and that can deliver the concomitant high wages American workers expect.

EIG found that manufacturers of these higher-tech products depend more on imported materials and components than low-tech, low-wage employers and product lines. Chemical and pharmaceutical makers import 33% of their inputs and equipment, for example; transportation equipment manufacturers import 27%. Higher tariffs on these inputs will likely increase the costs of their product lines for Americans, make these products less competitive in export markets, reduce jobs, and hurt these industries’ workers and U.S. consumers alike.

And if diminishing dependence on China by onshoring manufacturing currently done there is a major goal of Trump’s tariffs, then they miss the mark. EIG found that U.S. high-tech manufacturers source just 2.2% of their products and materials from China; instead, most are dependent on Europe, Canada, and Mexico, with which the U.S. maintains a robust high-tech manufacturing “co-production” system.

There are other ways Trump’s tariffs are potentially damaging to domestic manufacturing, such as for Midwest-centric automobiles and transportation equipment. Looking just at the auto sector, Brookings analysis found tariffs will increase the cost of manufacturing cars in the U.S., which could lead to less innovation, more expensive cars, and lower sales.

As in 2016, voters in 2024 in manufacturing-dependent Midwest swing states put Trump in office after promises that he would reclaim good-paying manufacturing jobs in heartland. Yet just as during the first Trump administration, the policies chosen to back these promises appear to be having the opposite effect.