In this note, Stephen Jen and Joana Freire explain why revitalising US manufacturing is a central pillar of the Trump Administration’s industrial policy, and why it makes sense economically and geopolitically.
The authors highlight the multiplier effect of manufacturing, which extends beyond direct output and jobs into energy, engineering, software, and other support sectors. They argue that a strong manufacturing sector could boost US GDP by as much as 30% through its indirect effects. Moreover, manufacturing wages are significantly higher than services wages, offering a pathway to better earnings and productivity for the American workforce.
The note also explores the US’s dependence on Asian supply chains in key industries like rare earths, solar power, batteries, and semiconductors. Rebuilding domestic manufacturing in these areas, they argue, is crucial not just for economic growth but for national security. The authors caution, however, that reshoring efforts will require more than tariffs, it will take STEM investment, targeted R&D, and a holistic approach to avoid the fate of an unbalanced and vulnerable economy.
Key Quote
“The more likely it is that the future growth of a product could be exponential, the more urgent it is to bring it back onshore.”
Table of Contents
- Bottom line
- US manufacturing atrophy
- Made in the USA 2035
- Reasons to reinvigorate manufacturing in the US
- US policy challenges
- Bottom line
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