Trump says tariffs are meant to bring back more factory jobs. Will it work?

Tariffs, according to the Trump administration, are the solution to many of America’s problems.

More revenue. More jobs. More equitable trade deals.

"I always say 'tariffs' is the most beautiful word to me in the dictionary," Trump said at a rally shortly after his January inauguration. "Tariffs are going to make us rich as hell. It's going to bring our country's businesses back that left us."

But economists aren’t so sure that tariffs will pan out to be a panacea, especially when the Trump administration appears to be treating them as a negotiation tool. Job growth could be lackluster, they told USA TODAY, while consumers get stuck with higher prices.

While targeted tariffs can help certain industries remain competitive or aid national security, “blanket tariffs to even out trade deficits on a country-by-country basis is not a recipe for strong economic growth,” said Erin McLaughlin, senior economist at the Conference Board, a nonprofit business-research group.

President Donald Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, D.C. on April 2, 2025.

Will tariffs lead to more US factories?

Trump has said tariffs will have factories “roaring back” into the U.S.

“You see it happening already. We will supercharge our domestic industrial base,” Trump said on April 2.

Economists are less confident, especially since the Trump administration has had a haphazard approach to its trade policy. Already, the administration has adjusted tariffs against the United Kingdom and China and says other deals are in the works.

“It takes time to build factories and hire and train workers. Making money in manufacturing takes years of investment,” said Nancy Qian, an economics professor at Northwestern’s Kellogg School of Management. “No one’s going to do it if they think the demand will change, or the economic environment will be very volatile.”

Experts say that’s especially true if companies expect tariff rates keep falling, as they did with China. Current rates are 30% after being as high as 145%.

“One-hundred-forty-five percent was unworkable for many retailers and manufacturers working with China,” said Erin McLaughlin, a senior economist at the Conference Board, a nonprofit business-research group. “We'll see if 30% triggers onshoring. We don’t know. That might not be high enough.”

Even if companies decide to shift production out of China – which has a higher tariff rate than most countries – experts say they may find it more affordable to shift to lower-tariffed countries than move production to the U.S.

“It seems like there's a bipartisan desire to pivot away from China,” said Susan Helper, an economics professor at Case Western Reserve University in Ohio who served on the White House staff in both the Obama and Biden Administrations. But “that doesn’t necessarily mean (manufacturers) come to the U.S. Maybe they go to Mexico, maybe Vietnam.”

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Others say tariffs could disincentivize certain companies from expanding production in the U.S. by driving up the cost of imported goods. Nearly one-third of U.S. manufacturers’ intermediate inputs are imported from other countries, according to a 2022 report from the Commerce Department.

Data already suggests some manufacturers are holding off on investments to see how tariffs play out.

The value of private manufacturing construction in the country remained near record levels but fell 0.6% month-over-month in April and 0.9% in March, according to the Census Bureau. The National Association of Manufacturers’ website says high interest rates, increases in construction material prices and economic uncertainty threaten growth in the months ahead.

A project site from Kentucky-based Gray, a family-owned designer-builder that has completed more than 1,500 projects for manufacturing customers.

“Everybody is kind of in a holding pattern until the uncertainty gets resolved, so we’re in a little bit of a lull right now,” said Jeff Bischoff, chief sales officer at Lexington, Kentucky-based designer-builder Gray. “Companies just aren’t willing to make decisions on major investments when they don’t know what their input costs are going to be.”

Other companies are outright canceling expansion plans amid the uncertainty. International Recycling Group halted plans to build a $300 million recycling plant in Erie, Pennsylvania, in part because “substantially higher project development costs” driven by tariffs, according to the Erie Times-News, part of the USA TODAY Network.

Michael Strain, director of economic policy studies at the American Enterprise Institute, a conservative think tank, expects to see “some,” but not much, reshoring tied to tariffs.

“There’s a sense in which we could, in theory, make everything we need here. But that would require undoing a lot of the way business is done today. So that transition would be very painful and it would make America a lot poorer,” he said. “It would take years, if not decades, to achieve. Even then, there’s some stuff we just wouldn’t be able to make here.”

Will more manufacturing create more jobs?

Even if manufacturers shift production to the U.S., it’s not clear that would result in a large influx of manufacturing work.

Companies that do reshore would face higher operating costs: labor is more expensive in the U.S. than other countries, and tariffs drive up the costs of imported inputs that factories rely on.

To trim costs, economists say they’d expect companies to increasingly turn toward automation.

McLaughlin of the Conference Board said she believes it makes sense to onshore some of the more technologically advanced manufacturing – think semiconductors versus textiles and toys.

Even then, she’s not confident that onshoring would create many jobs.

“The modern U.S. factory is probably not what we all imagined. And maybe not even what our administration imagines," she said. “They may not employ as many people because of robotics, the use of advanced equipment.”

Mercedes-Benz U.S. International held the opening for the company's new batter factory in Woodstock, Alabama, located between Birmingham and Tuscaloosa on March 15, 2022. The assembly area makes liberal use of robotics.

Some worry tariffs could actually drive manufacturing employment down by raising the cost of doing business.

That’s how tariffs played out under the trade war during Trump’s first administration, according to one paper. Federal Reserve Board economists found Trump’s first-term tariffs boosted manufacturing employment protected by tariffs by 0.4%, but those gains were more than offset by the jobs lost due to rising input costs (2%) and retaliatory tariffs (1.1%). 

“When you expected to see some of the employment gains and some of the reshoring the administration was talking about, there is not much evidence of that,” said Rodrigo Adao, an associate professor of economics at the University of Chicago. “That puts a little bit of a question mark going forward.”

A May 21 report from Wells Fargo economists found a meaningful increase in factory jobs “does not appear likely in the foreseeable future,” with higher prices and policy uncertainty weighing on companies.

Meaningful job growth is possible in the long term, but it would take at least $2.9 trillion in net new capital investment to add 6.7 million manufacturing jobs and return the sector to its historic peak, according to the report.

“Even if current tariff policy sticks, a full rebound in manufacturing employment looks hard-pressed,” the report, led by Wells Fargo senior economist Sarah House, reads.

Hasbro layoffs: Toymaker restructures due to tariff struggles and weak demand

Lower deficit, higher costs

Trump in April acknowledged that tariffs may hit consumers’ wallets.

“Maybe the children will have two dolls instead of 30 dolls. And maybe the two dolls will cost a couple of bucks more than they would normally," he said during an April 30 cabinet meeting. “But we're not talking about something that we have to go out of our way. They have ships that are loaded up with stuff, much of which, not all of it, but much of which we don't need.”

Trump’s comments came when tariffs against China were at 145%. They have since dropped to 30% amid a 90-day pause, but even the lower tariff rates will likely mean price increases. Federal Reserve Chair Jerome Powell on June 18 said he expects a "meaningful amount of inflation to arrive in coming months."

The latest inflation report showed tariffs’ effects were more subdued than anticipated, but economists say higher prices will likely be here by summer. Major retailers like Walmart have already warned that they will soon raise prices to offset tariff costs.

In total, about three-quarters of businesses facing cost increases from tariffs plan to pass on at least some of those higher costs to customers, with a “significant share” of businesses raising prices for goods unaffected by tariffs, according to a May survey from the New York Fed. Over half of manufacturers and service firms said they hiked prices within a month of experiencing cost increases.

"The cost of the tariff has to be paid, and some of it will fall on the end consumer," Powell said after the June Fed meeting. "That's what businesses say, that's what the data say. ... So we know that's coming."

A container ship is seen near the Hai Phong International Container Terminal, after President Donald Trump announced a 90-day pause on tariffs for many countries, in Hai Phong, Vietnam, April 16, 2025.

Tariffs would cut federal deficits by $2.8 trillion over the next 10 years, but also reduce economic output by 0.6% and reduce households’ purchasing power by increasing inflation by 0.4 percentage points in 2025 and 2026, according to a June report from the Congressional Budget Office.

Another June report from the Yale Budget Lab found tariffs are set to increase consumer prices 1.5% in the short run, the equivalent of a $2,000 loss of purchasing power per household on average.

Consumers can expect shoe and apparel prices to go up 33% and 28% in the short run and 18% and 15% in the long run, respectively, according to the Budget Lab. Food prices are expected to increase 2.2% in the long run, while vehicle prices would rise 11.9%.

Other economic risks

Economists lowered their recession odds this year after China and the U.S. on May 12 agreed to lower tariff rates during a 90-day pause, set to expire in August.

Ryan Sweet, chief U.S. economist of Oxford Economics, said his estimate dropped from 50% to 35% after the pause was announced. Goldman Sachs’ dipped from 45% to 35% in May, then to 30% in June. J.P. Morgan placed the odds below 50%, while Barclays has dismissed recession risks altogether.

The risk is still elevated compared to recession odds before Trump announced sweeping tariffs on April 2. J.P. Morgan, for instance, placed recession odds at 20% in January. Goldman Sachs in December said 15%.

Looking forward, this year's tariffs and retaliation from other countries mean GDP growth is expected to be 0.6 percentage points lower in 2025, with the U.S. economy 0.3% smaller in the long run, according to the Yale Budget Lab.

“In the short run, they’re going to make life harder for consumers, workers, and manufacturers,” Qian of Northwestern said. In the long run, if increased tariffs hold, “there will be more manufacturing in the U.S. but it will come at a very high cost. It’s hard to see how American manufacturing and American workers will win more than they lose.”

This article originally appeared on USA TODAY: Will tariffs bring back jobs, factories? The challenges ahead.