
Trump's new war
Presented by
With help from Eli Okun, Bethany Irvine and Ali Bianco
On the Playbook Podcast this morning, Jack and POLITICO's Megan Messerly discuss why the Trump administration is so upset at suggestions its bombing of Iran might have failed. Plus: all the fallout from Zohran Mamdani's stunning Democratic primary win in New York.
Good Thursday morning. This is Jack Blanchard, thrilled to see the D.C. heatwave is finally over. Today will be topping out at no more than … 95 degrees, per the Capital Weather Gang, so be sure to pack your sweater as you head out to work.
THREE THINGS TO WATCH FOR AS WE HEAD TOWARD THE WEEKEND:
FIRST IN PLAYBOOK — What D.C. will be watching: Donald Trump will sit down with Fox News' Maria Bartiromo at the White House tomorrow to pre-record an interview for her 'Sunday Morning Futures' show. This is Trump's first TV interview since ordering airstrikes on — and then brokering a ceasefire deal with — Iran, a subject that will surely dominate the conversation along with the progress of the 'big, beautiful bill' through the Senate. The interview airs at 10 a.m. Sunday — though don't be surprised if Fox trails a few of the best lines in advance.
What Stephen Miller will be watching: There's now just a week to go until the Supreme Court justices pack away their robes and head off to the Adirondacks or Alaska for a summer break — and we're still awaiting several huge decisions with far-reaching consequences for the nation. Top of the list is a ruling on Trump's effort to end birthright citizenship, which has morphed into a push by Miller & co. to prevent federal judges from issuing nationwide injunctions against the government. Might today be the day? The court opens today's session at 10 a.m.
What Elon Musk won't be watching: The 'wedding of the century' in Venice, Italy, where occasional D.C.-dweller Jeff Bezos — apparently he still pops in to Kalorama once in a while — is marrying Lauren Sánchez. Only politicos with the wealthiest connections can expect an invite. So naturally, Ivanka Trump and Jared Kushner have been there since Tuesday, and politics-adjacent billionaires like Oprah Winfrey and Bill Gates just might sneak in, too. And yes, it turns out Trump himself bagged an invitation, per WSJ's Josh Dawsey and colleagues — but sadly 'scheduling conflicts' mean he's unlikely to attend. Che peccato, signor presidente.
In today's Playbook …
— Why Trump just can't stop talking about Iran.
— Dems in turmoil over Mamdani victory.
— Trump to host 'big, beautiful' White House event as he turns the screws on GOP.
DRIVING THE DAY
TRUMP GOES TO WAR: Trump will continue his aggressive PR blitz on Iran this morning as the president seeks to hammer home the message that his bombing raids were a success. Trump will send out Defense Secretary Pete Hegseth and assorted 'military representatives' for an 8 a.m. news conference — neatly timed to catch the Fox News breakfast crowd — to again make the case that Iran's nuclear facilities have been utterly destroyed.
And that's just the start: At 1 p.m. Trump's combative press secretary Karoline Leavitt will enter the fray with a televised White House press briefing, which you already know will be focused on Saturday's air strikes. (Also — don't be surprised if she gives representatives from CNN and The New York Times a hard time.) And then at 4 p.m. Trump himself will appear for a White House event specifically focused on the passage of his 'big, beautiful bill.' It surely won't take long for Iran to come up.
Here's the thing: It's rare to see the president this rattled by a negative story about his administration. Obviously Trump goes after the media all the time, but it mostly feels performative these days — and maybe it always did. This is different. The president posted 21 times on Truth Social yesterday about the supposed success of his military strikes. And at yesterday's NATO summit — a moment specifically designed by the Western world for Trump to bask in the glory of a huge defense spending boost — he spent most of his public appearances repeating his assertions on Iran.
What's going on? Critics see a president spooked by a bombshell leak that has undermined his authority. Supporters say Trump is genuinely outraged by what he claims is false reporting and wants the record corrected. Either way — he's using every tool in his arsenal to push back hard: Witness the hammer-like repetition that sites were 'obliterated'; the plentiful use of surrogates like Hegseth and Secretary of State Marco Rubio; the vindictive targeting of the journalists and media organizations involved; the barrage of statements from both U.S. and Israeli intelligence chiefs yesterday that the initial report was wrong.
Playing the patriotism card: Today things will get even more heated when we're told that to even question whether Iran's mountainous defenses might have held up a little better than expected is an outrageous slur on America's armed forces. Hegseth's job this morning is to 'fight for the Dignity of our Great American Pilots,' Trump wrote on Truth Social. 'These Patriots were very upset! After 36 hours of dangerously flying through Enemy Territory, they landed, they knew the Success was LEGENDARY, and then, two days later, they started reading Fake News by CNN and The Failing New York Times.'
And that's before we get to the leakers themselves … who are now facing an FBI investigation. The White House is already pointing the finger of blame at Congress, per Axios' Marc Caputo, and there will be retribution in that direction too. 'Administration sources say they're planning to limit posting on CAPNET, a system the administration uses to share classified information with Congress,' Caputo reports. 'Almost as soon as we put the information on CAPNET, it leaks,' an administration source tells him. 'There's no reason to do this again.'
The truth is, as Playbook has been saying all week, that nobody knows for sure the full extent of the damage done at Fordo — and won't for some time yet. Indeed, Rubio admitted as much yesterday in his interview with my Playbook colleague Dasha Burns. 'That's difficult,' he said, when asked when he expects to get a reliable assessment. 'This is a unique target set … 300 feet into a mountain. I don't think we'll be sending anyone down the hole anytime soon into those mountains.' He then added: 'Suffice to say we are very confident.'
What everyone ought to be talking about: Rather than spending the entire day debating what may or may not have happened beneath 300 feet of Iranian rock, it's worth paying a little more attention to the vibes coming out of NATO yesterday — where Trump was more fulsome in his support for the world's strongest military alliance than he has ever been. 'These people really love their countries,' Trump said of the other NATO leaders. 'It's not a rip-off, and we're here to help them.'
This is a big deal: Trump's anti-NATO rhetoric has always been the main reason he so unnerves America's European allies, who have placed their entire national security in the hands of the U.S. military for the past 80 years. His stance dates back well before he ever became president, and he even considered pulling America out of the treaty during his first term. Now, in 2025, he's learned to love the alliance and all it took was an extra $1 trillion or so in defense spending, plus one obsequious text message from Secretary-General Mark Rutte. Maybe this diplomacy lark is easier than it looks.
NEW YORK, NEW YORK
THE HOT TAKES KEEP COMING: As your social media feed since Tuesday night undoubtedly proves, everyone in politics has a hot take on Zohran Mamdani. And as the dust settles after his stunning triumph over former Gov. Andrew Cuomo in NYC's Democratic mayoral primary, it's already clear what Mamdani means for Republicans: They see his pending nomination as a political gift and are moving to make the 33-year-old Democratic Socialist an albatross they can tie to every possible Dem.
But for Democrats, the Mamdani story is way more complicated. 'Progressives see a roadmap for Democrats to take back power, while moderates worry that New York City voters have just handed President Donald Trump a cudgel to beat them with during the 2026 midterm elections,' POLITICO's Elena Schneider and colleagues write this morning. 'And it has reenergized divides — progressive versus moderate, establishment versus outsider, young versus old — that continue to plague the party after last year's presidential election.'
Simply put: 'For moderates and wealthy Democratic donors, the reaction is, this is horrible and it's going to ruin us. For center-left Democrats who don't necessarily support Mamdani's policies, the reaction is, this is a rejection of the Democratic establishment and Mamdani ran a great campaign against a sex offender,' said Tim Lim, a Democratic strategist and fundraiser. 'And for progressives, they believe this is what happens when you listen to voters.'
The one thing everyone agrees on: Mamdani ran a great campaign. Advisers to potential 2028 Democratic candidates say Mamdani's campaign 'is a promising blueprint for several of the contenders who want to style themselves as the party's next generation,' Elena and colleagues write. 'Several operatives named Rep. Alexandria Ocasio-Cortez (D-N.Y.) as one to watch.'
But before everyone gets too carried away … The Democratic and New York establishments are stirring. Is there life in the old dog yet? Plenty of observers believe Mamdani's rise has given incumbent Mayor Eric Adams' struggling reelection bid a new lease on life 'as real estate and business honchos ponder ways' to block Mamdani in November, POLITICO's Joe Anuta reports this morning. Adams is expected to roll out his longshot independent campaign in a rally on the steps of City Hall later today.
Follow the money: Top Democratic donors are also reluctant to support Mamdani and some are backing Adams instead, NYT's Dana Rubinstein and colleagues report. Their story reveals business groups and other big-money interests are quietly discussing ways to get a new independent candidate onto the ballot. Watch this space.
That's enough Mamdani hot takes: Take a minute now to bow your head and mark the passing of another American political dynasty: the Cuomos of New York. As Alex Burns writes for POLITICO Magazine, the fall of another establishment behemoth is just part of a much broader trend. 'This is an age of angry populism and political disruption; breakneck social and technological change; and broad, deep frustration with the economic status quo,' he writes. 'Family names that voters once found comforting now seem to have other connotations — complacency, insularity, privilege, obsolescence.'
More analysis: 'Zohran Mamdani Won Big. 8 Insiders Lay Out What That Means for the Democratic Party,' POLITICO Mag … '5 takeaways behind Mamdani's historic NYC win,' by POLITICO's Joe Anuta and Emily Ngo
MEANWHILE ON THE HILL
RECONCILABLE DIFFERENCES: Trump will turn the screws on warring GOP factions today ahead of this weekend's crucial vote on the megabill. Trump will host a 'big, beautiful event' in the White House at 4 p.m. where he will make the case for getting the bill signed into law ASAP, Axios' Alex Isenstadt reports. Trump will be joined in the East Room by 'everyday Americans' whom the administration says would benefit from the bill — including tipped workers, food delivery drivers and border patrol agents. The message to Congress is clear: the bill will be a GOP vote winner in 2026.
But but but: Even with a looming deadline and hundreds of billions of dollars at play, key GOP senators still aren't on board to move forward with a vote. During a closed-door meeting with Senate Majority Leader John Thune, GOP lawmakers warned leadership they did not have the 50 votes needed to advance the bill to a floor debate. Our Inside Congress colleagues have much more on the troubles Thune is facing in getting his conference in line.
Despite weeks of negotiations, Medicaid cuts and changes to the provider tax provisions remain key sticking points. Sen. Thom Tillis (R-N.C.) warned his colleagues he would not move ahead on the bill 'without further clarity on Medicaid changes,' Jordain reports. And Sen. Josh Hawley (R-Mo.) tells Semafor's Burgess Everett that 'unless we get further clarity on the rural hospital issue and what we're doing there,' there will be no progress.
Just do it: 'Some colleagues of the resistant Republicans think it's time to force' the vote despite the opposition, Everett reports. 'On legislation like this, the only way to know whether you got the votes to get on the bill is to take the vote. You're having a lot of people say, 'they can't vote for the bill, they can't vote for the bill,' that in my judgment, will vote for the bill,' says Sen. John Kennedy (R-La.). When and how they get there is a whole other story.
Should the Senate even get that far, GOP leaders are working to hammer out a version of the bill that can pass the House without returning to the negotiating table, per NBC's Sahil Kapur: 'That means hashing out SALT, Medicaid and clean energy. Easier said than done.'
BEST OF THE REST
FED UP: Trump is weighing whether to expedite his announcement to replace Federal Reserve Chair Jerome Powell, whose term is up in 11 months, WSJ's Brian Schwartz and Nick Timiraos scoop. 'In recent weeks, the president has toyed with the idea of selecting and announcing Powell's replacement by September or October,' though the already rocky relationship could 'prompt an even-earlier announcement sometime this summer.' Several names have been floated as candidates, including Fed governor Kevin Warsh, National Economic Council Director Kevin Hassett and Treasury Secretary Scott Bessent.
HE'S RUNNING: After days of build-up, Illinois Gov. JB Pritzker will formally announce he's seeking a third term in 2026 today at a rally on Chicago's South Side, POLITICO's Shia Kapos reports. But everyone agrees the Democratic governor is leaving the door open for a run for president in 2028.
AND SHE … MIGHT BE: D.C. Del. Eleanor Holmes Norton told reporters that she is running for reelection yesterday — only for her office to again walk back her comment. 'No decision has been made. She wants to run but is still discussing it with people close to her,' a spokesperson told POLITICO's Nicholas Wu. This is the second time this month Norton's office has walked back her vow to run.
FOR YOUR RADAR: The Wisconsin Supreme Court has rejected a challenge from Democrats hoping to overturn the battleground state's current congressional district boundaries before the 2026 midterms, AP's Scott Bauer reports from Madison. 'The decisions, made without explanation from the court, is a setback for Democrats who had hoped for new, friendlier district boundary lines in Wisconsin as they attempt to win back control of the House next year.'
IMMIGRATION FILES: Kilmar Abrego Garcia will stay behind bars as lawyers spar over whether to deport him on new federal charges, per the AP. The Salvadoran national has remained incarcerated since his return to the U.S. on June 7. A federal judge ruled yesterday Abrego 'has a right to be released,' setting 'specific conditions … for him to live with his brother.' But Abrego's attorneys expressed concern that it would lead to 'immediate detention' and 'possible deportation' by ICE.
A DECADE SINCE OBERGEFELL: POLITICO Mag's Dylon Jones is out with a moving profile of activist Jim Obergefell, 10 years after the Supreme Court case bearing his last name made gay marriage legal in all 50 states. Now, Obergefell has returned to Washington 'not to celebrate an historic anniversary of an historic decision, but to protest the institution that wrote his name into American law.'
TALK OF THE TOWN
Chuck Schumer went to the hospital for dehydration yesterday 'out of an abundance of caution' after getting lightheaded in the Senate gym. 'He wants to remind everyone to drink some water and stay out of the heat,' a Schumer spox said.
OUT AND ABOUT — The National Energy Resources Organization celebrated its 50th anniversary with a reception last night, where Sen. Shelley Moore Capito (R-W.Va.) was honored with NERO's Distinguished Service 2025 award and guests enjoyed a live band, pepperoni rolls, half smokes and moonshine cocktails. SPOTTED: Chris Tomassi, Donise Dukes, Kwame Canty, Bree Raum, Allison Hull, Carrie Domnitch, Brian Caudill, Kiran Malone, Nick Pearson, Lauren Allen, Montee Wynn, Marcie Haber, Jeff Leahey, Lindsay Westfield, Willie Lyles, Ryan Walker, Mike Sewell, Emily Duncan, Brittany Kelm, Laura Schepis, Billie Kaumaya and John Lee.
— SPOTTED last night at La Vie for ROKK Solutions' 10-year anniversary celebration: Ron and Sara Bonjean, Rodell and Sheena Mollineau, Kristen Hawn and Ted Derheimer, Elizabeth Northrup, Ashley Carpenter, Jeff Grappone, Anna Palmer and Patrick Mellody, Collin Allen, Neil Grace, Lisa Hanna, Mark Leibovich, Carl Hulse, Jacquelyn Cameron, Debbie Marshall, Steve Clemons, Amber Lyons, David Montes, Missy Kirk, Sara Conrad, Shannon and Sheldon Bream, Kristy Croushore, Cole Rojewski, Doug Heye, Nick Massella, Jeff Berkowitz, Steve Rochlin and Alex Schriver.
MEDIA MOVE — Caitlin Reilly will be a U.S. tax and fiscal policy reporter at Bloomberg. She previously has been a tax and economics reporter at CQ Roll Call.
TRANSITIONS — Former Air Force Secretary Frank Kendall will be a nonresident senior fellow with the Center for American Progress' national security and international policy team. … Kate Kamber Brennan is joining Rational 360 as SVP of digital. She previously led stakeholder targeting programs for Edelman's global business marketing team. … Andrew Forman is now a partner at Latham & Watkins. He previously was deputy assistant AG in the Justice Department's antitrust division. …
… Raymond Tolentino is now a partner with Cooley's commercial litigation practice. He previously was special assistant to the president and senior associate White House counsel under Biden. … Nicole Mason is now a senior counsel at Tully Rinckey. She previously was senior EEO adviser for Commerce's National Oceanic Atmospheric Administration research office. … Jeremy Eaton is now director of strategy for Techne. He previously was digital marketing strategist at Majority Strategies.
WELCOME TO THE WORLD — Liana Guerra, chief of staff to Rep. Darren Soto (D-Fla.), and Daniel Tillman, associate attorney at Vaughan, Fincher and Sotelo, recently welcomed Cali Alicia Guerra-Tillman.
— Megan Zavertnik, managing member of MZ Advising, and Brian Zavertnik, director of contracts at Divergent, yesterday welcomed Stevie Zavertnik, who joins big siblings Isabel and Benjamin.
HAPPY BIRTHDAY: Florida first lady Casey DeSantis … WaPo's Juliet Eilperin … NYT's Mike Bender and Daniel Victor … Emma Kinery … OpenAI's Elizabeth Wilner … POLITICO's Jonathan Finkelstein, Paroma Soni and Jacob Wendler … NBC's Scott Bland … Brunswick Group's Dave Brown … Rachel Gantz … DLA Piper's Preeya Noronha Pinto … Mark Kadesh … Emily McBride of Sen. Tommy Tuberville's (R-Ala.) office … Mark Ritacco … Mayer Brown's Mickey Leibner … Matthew Fery … Newsmax's Emma Rechenberg … Julie Norton … former Sen. Chuck Robb (D-Va.) … Merit's Trevor Cornwell … former Hawaii Gov. Neil Abercrombie … CAA's Mark McGrath … Ross Baker … Oubai Shahbandar
Did someone forward this email to you? Sign up here.
Send Playbookers tips to playbook@politico.com or text us on Signal here. Playbook couldn't happen without our editor Zack Stanton, deputy editor Garrett Ross and Playbook Podcast producer Callan Tansill-Suddath.
Corrections: Yesterday's Playbook misspelled the names of Israeli PM Benjamin Netanyahu and Andrew Desiderio.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
21 minutes ago
- Yahoo
Trump's latest trade threat looms over Wall Street as investors celebrate stock market's return to record territory
Major equity indexes including the S&P 500 tallied their first record closing highs in months on Friday — but something happened on the way to the closing bell that left a bad taste in some traders' mouths. Just a couple of hours before trading was set to conclude for the week, President Trump surprised investors with a Truth Social post that briefly sent stocks skittering into the red. 'He doesn't seem to care': My secretive father, 81, added my name to a bank account. What about my mom? My brother stole $100K from my mom to buy bitcoin. Do I convince her to sue him? My job is offering me a payout. Should I take a $61,000 lump sum or $355 a month for life? Most American weddings are a lot more extravagant than the nuptials of Amazon's Jeff Bezos Tech stocks are powering this record-setting rally on Wall Street — but how long can it last? The president announced that the U.S. would immediately end all trade talks with Canada in retaliation for Ottawa imposing a digital-services tax on American technology giants. 'Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately. We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period,' Trump said in the post. Although it may have been incidental, the timing of the post didn't sit well with some on Wall Street. Even though stocks had shaken off most of the losses by the closing bell, some investors couldn't help but wonder whether the market's remarkable comeback rally might have emboldened Trump to once again take a more aggressive tack on trade. If that was in fact the case, it could go a long way toward undoing much of the progress that has been made in markets over the past couple of months. Trump blamed turmoil in financial markets for his decision to walk back many of his most troublesome 'liberation day' tariffs in April after the S&P 500 tumbled right to the edge of bear-market territory, while ructions in the bond market stoked widespread alarm. Ultimately, the decision to hit the pause button helped inspire the concept of the 'TACO' trade. In this case, TACO stands for 'Trump Always Chickens Out.' See: The 'Trump always chickens out' trade is the talk of Wall Street. Here's one way to play it. But now that things have calmed down, could the TACO trade return — but this time, in reverse? 'If you think about it, he shifted when the market fell,' said George Cipolloni, a veteran portfolio manager, during a phone interview with MarketWatch Friday afternoon. 'He probably feels like he has a bit of wiggle room because the stock market has done so well over the past couple of months.' It isn't just markets. Cipolloni also pointed out that inflation has remained relatively tame since Trump imposed the first tariffs of his second term earlier this year, defying the expectations of many economists. That price pressures have yet to significantly surface in the data could also encourage Trump to consider taking a hard line on tariffs as he seeks political victories he can bring home to his base. Additional tariff revenue, in theory, could help offset the budgetary impact of his signature budget plan to extend tax cuts passed during his first term in office — unless parts of the economy, like farmers, require another round of significant federal bailouts due in part to tariffs. To be sure, the latest official economic data released this week included some signs of weakness that investors might want to consider, according to Mike O'Rourke, chief market strategist with Jones Trading. Revised first-quarter GDP, released earlier in the week, showed the economy contracted by more than previously believed between the beginning of January and the end of March. Then on Friday, new data showed personal spending declined in May for the first time in four months, while a reading on core inflation came in slightly hotter than expected. Although the inflation reading didn't exactly move the needle, Federal Reserve Chair Jerome Powell did say during congressional testimony earlier in the week that he expected tariffs to start to show up in the inflation data some time this summer. So far, investors have been mostly happy to tune out the constant noise regarding the administration's trade agenda as the Trump team pursued its goal of '90 trade deals in 90 days' as first touted back in April, O'Rourke said. In late May, Trump announced plans to slap a 50% tariff on E.U. imports, before quickly backing down after European leaders promised to speed up talks. Pain for stocks during that episode was pretty short-lived. On Friday, Commerce Secretary Howard Lutnick said during an interview that the U.S. and China had completed an accord negotiated last month in Geneva, and added that deals with 10 major trading partners would be announced imminently. Investors will be keeping a close eye on how things go with Canada, and a deal with the E.U. remains top of mind as well, O'Rourke said. Given Trump's unpredictable nature, it is impossible to say with certainty what might happen next. O'Rourke thinks there is almost no chance that Trump will allow the 'liberation day' levies to return. Indeed, Trump himself said earlier that he might not stick to the deadline. But with so much about Trump's trade agenda still up in the air, investors may want to consider taking some chips off the table. 'It's very easy for the tariff situation to come back into play, and this could be the first shot across the bow here,' O'Rourke said about Trump's decision to end talks with Canada. 'The way investors have to look at this is: Do you want to roll the dice here?' The S&P 500 SPX gained 32.05 points, or 0.5%, to finish at 6,173.07 on Friday — a record close, and the index's first since Feb. 19, Dow Jones Market Data showed. The Nasdaq Composite COMP rose by 105.55 points, or 0.5%, to 20,273.46, its own first record close since Dec. 16. The Dow Jones Industrial Average DJIA also finished higher, although it remained shy of record territory. The trade truce between the U.S. and China, strong consumer-confidence data from the University of Michigan, and investors' positive reaction to earnings from Nike Inc. NKE were just some of the factors that helped push stocks higher on Friday, according to Farzin Azarm, a managing director at Mizuho Securities USA. Reports about a coming U.S.-E.U. trade deal and an administration plan to boost energy availability for the purpose of powering the expansion of artificial-intelligence technology also helped, Azarm noted. 'I am horrified': My company won't allow me to tip more than 15% for Ubers. Do I explain this to the driver? JPMorgan has a new way of forecasting the stock market — and there's a surprising finding My cousin died before claiming his late father's $2 million estate. Will I be next in line for this inheritance? S&P 500 scores record high for first time in 4 months. What could push stocks higher from here? Coinbase's stock is up over 40% this month as Wall Street projects amazing profit growth

Yahoo
21 minutes ago
- Yahoo
AP Top Extended Financial Headlines at 6:13 p.m. EDT
U.S. stocks closed at an all-time high, another milestone in a remarkable recovery from a springtime plunge caused by fears that the Trump administration's trade policies could harm the economy Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
21 minutes ago
- Yahoo
Goldman Sachs warns tariffs won't help the U.S. boost manufacturing productivity as tech in American factories continues to lag
U.S. manufacturing has decelerated recently, both as a result of increased competition from China and as part of a broader manufacturing productivity slowdown. Goldman Sachs analysts argue tariffs will not lower supply chain and labor costs enough to boost reshoring, and instead, increased automation will be the most likely driver of a manufacturing productivity boost. As China continues to best the United States in manufacturing capabilities, tariffs may not be America's best bet to boost factory productivity. Instead, the U.S. should look to AI and automation to gain an edge in manufacturing, Goldman Sachs analysts argue. President Donald Trump aspires to return factory jobs to American shores by imposing steep tariffs on U.S. manufacturing rivals, but the taxes can only incentivize reshoring so much, analysts said in a note published Thursday. Instead, manufacturers should look to automation and the ever-more-accessible artificial intelligence as their best chance for boosting domestic manufacturing. 'A pickup in the pace of innovation—potentially from recent advances in robotics and generative AI—therefore remains the catalyst most likely to reverse the long-run stagnation in manufacturing productivity,' analyst Joseph Briggs and colleagues said in the note. As China capitalizes on automation and cheaper labor to grow its export footprint, the Bank of America Institute has found mounting evidence of a recent U.S. manufacturing slowdown, including U.S. Census Bureau data showing new orders for manufactured durable goods decreasing 6.3% in April. The Institute of Supply Management Manufacturing Purchasing Managers' Index (PMI) has fallen since March, also indicating a contraction. The U.S.'s productivity woes are part of a larger manufacturing productivity slowdown happening over the last two decades as a result of investment pullback following the global financial crisis, as well as a slowdown in the burst of technological advancements of the early 2000s, according to Goldman Sachs. Trump's tariff plans for China—which the president has not disclosed, despite touting a new trade deal—aim to help the U.S. claw back manufacturing opportunities from its economic rival. But while they make consumers' lives more expensive, they are not a panacea for manufacturers, the bank argued in its note. 'Tariffs are unlikely to result in much reshoring because production costs in other countries are well below the U.S.' for most products (even after accounting for tariffs), and China will likely continue to grow its exports on the back of cost advantages and industrial policy support,' the note said. Instead, analyst Briggs said, the U.S. should focus on another area in which it's lagging: automation. The U.S. has trailed other manufacturing giants in implementing AI into factory operations, according to a Boston Consulting Group (BCG) Henderson Institute report released earlier this month. Only 46% of U.S. respondents of BCG's Global Manufacturing Survey of 1,000 manufacturers reported multiple use cases of AI in their plants, falling short of the 62% average and lagging behind China's 77%. 'This is one of the key technologies that I think could drive productivity growth in a cost-competitive manner,' Briggs told Fortune. 'And we just haven't seen that occur on a meaningful scale yet.' The U.S. did not previously invest in factory automation as a result of a 'hangover' from the global financial crisis, Briggs said, but the U.S. now has a real shot at prioritizing factory technology updates, given the growing ubiquity and therefore affordability of automation and AI. Companies such as aviation precision parts-maker MSP Manufacturing have already begun to adapt accordingly. MSP president and chief operating officer Johnny Goode recently learned of an AI-powered software able to program the machine building the precision parts, reducing production time from an hour and a half to seven minutes per part—plus 15 minutes necessary for a human operator to refine it. 'I was like, holy snap, this is going to be a game changer,' Goode told Fortune's Jeremy Kahn this week. 'Going from 90 minutes to 22 minutes is a big deal, and we've seen that get even better as we've learned to use the software more.' Goldman Sachs analysts conceded that while automation provides the largest area for growth in manufacturing productivity in the U.S., it is unlikely to solve the broader manufacturing slowdown, which is global. The slowdown is 'historically unusual,' Briggs said, with the maturation of the tech sector the likely culprit. Any hope for a global uptick in productivity would come from mass advancement and adoption of AI and robotics on a large scale. 'The main thing that would drive a large pickup in manufacturing productivity and manufacturing growth would be a sharp increase in the pace of innovation,' Briggs said. 'And this type of inflection upwards and technological progress are very hard to predict.' Advancement in tech could have a two-fold benefit for domestic manufacturing productivity, both in driving factory investments and in bettering technology to be installed in factories to automate tasks. But with the specifics of the future of AI and automation applications still unknown, it's difficult to predict whether a reversal of a domestic manufacturing slowdown is truly possible. 'We just need to see it happen before we have a lot of confidence in that dynamic being a big driver,' Briggs said. This story was originally featured on