Dec 19, 2018

Myth 7: Tariffs Will Revitalize the American Manufacturing Sector

12 Days of Christmas Trade Myths
Christine McDaniel Senior Research Fellow , Veronique de Rugy Senior Research Fellow

This is the seventh installment in a holiday-themed series aimed at correcting common misconceptions about trade. Each day until Christmas, economists Christine McDaniel and Veronique de Rugy will address a new claim about trade or tariffs while providing additional resources for those interested in learning more about the topic.

Myth: Tariffs Will Revitalize the American Manufacturing Sector

This is roughly the same as saying that eating Christmas cookies can make you lose weight. This promise sounds appealing, but no president or any politician can deliver this particular present. American manufacturing output is currently near an all-time high in spite of the sharp reduction in manufacturing jobs over the past few decades. Some jobs have been lost to low-wage workers in other countries, but most of the manufacturing job loss reflects companies moving toward automation, not trade. As with farmers starting in the 19th century, manufacturers today can produce more and more output with fewer and fewer workers. And those low-skilled jobs that were replaced by a smaller but higher-skilled labor force? Not even Santa can bring them back.

Suggested Resources

  1. "Trump’s Trade Policy Is an Exercise in Futility," Douglas A. Irwin, Chicago Booth Review
  2. "Making it in America: Revitalizing US Manufacturing," by Sree Ramaswamy, et al, McKinsey & Company
  3. "How to Revitalize US Manufacturing," by Bob Tita, Wall Street Journal

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