US factory jobs shrink again as tariff policy fuels uncertainty
Democrats and Republicans don't agree on much, but they share a conviction that the government should help American manufacturers, one way or another.
Democratic President Joe Biden handed out subsidies to chipmakers and electric vehicle manufacturers. Republican President Donald Trump is building a wall of import taxes — tariffs — around the U.S. economy to protect domestic industry from foreign competition.
Yet American manufacturing has been stuck in a rut for nearly three years. And it remains to be seen whether the trend will reverse itself.
The U.S. Labor Department reports that American factories shed 7,000 jobs in June for the second month in a row. Manufacturing employment is on track to drop for the third straight year.
The Institute for Supply Management, an association of purchasing managers, reported that manufacturing activity in the United States shrank in June for the fourth straight month. In fact, U.S. factories have been in decline for 30 of the 32 months since October 2022, according to ISM.'The past three years have been a real slog for manufacturing,'' said Eric Hagopian, CEO of Pilot Precision Products, a maker of industrial cutting tools in South Deerfield, Massachusetts. 'We didn't get destroyed like we did in the recession of 2008. But we've been in this stagnant, sort of stationary environment.''Big economic factors contributed to the slowdown: A surge in inflation, arising from the unexpectedly strong economic recovery from COVID-19, raised factory expenses and prompted the Federal Reserve to raise interest rates 11 times in 2022 and 2023. The higher borrowing costs added to the strain.
Government policy was meant to help.
Biden's tax incentives for semiconductor and clean energy production triggered a factory-building boom – investment in manufacturing facilities more than tripled from April 2021 through October 2024 – that seemed to herald a coming surge in factory production and hiring. Eventually anyway.But the factory investment spree has faded as the incoming Trump administration launched trade wars and, working with Congress, ended Biden's subsidies for green energy. Now, predicts Mark Zandi, chief economist at Moody's Analytics, 'manufacturing production will continue to flatline.' 'If production is flat, that suggests manufacturing employment will continue to slide,' Zandi said. 'Manufacturing is likely to suffer a recession in the coming year.'' Meanwhile, Trump is attempting to protect U.S. manufacturers — and to coax factories to relocate and produce in America — by imposing tariffs on goods made overseas. He slapped 50% taxes on steel and aluminum, 25% on autos and auto parts, 10% on many other imports.
In some ways, Trump's tariffs can give U.S. factories an edge. Chris Zuzick, vice president at Waukesha Metal Products, said the Sussex, Wisconsin-based manufacturer is facing stiff competition for a big contract in Texas. A foreign company offers much lower prices.
But 'when you throw the tariff on, it gets us closer,'' Zuzick said. 'So that's definitely a situation where it's beneficial.''But American factories import and use foreign products, too – machinery, chemicals, raw materials like steel and aluminum. Taxing those inputs can drive up costs and make U.S producers less competitive in world markets.
Consider steel. Trump's tariffs don't just make imported steel more expensive. By putting the foreign competition at a disadvantage, the tariffs allow U.S. steelmakers to raise prices – and they have. U.S.-made steel was priced at $960 per metric ton as of June 23, more than double the world export price of $440 per ton, according to industry monitor SteelBenchmarker.
In fact, U.S. steel prices are so high that Pilot Precision Products has continued to buy the steel it needs from suppliers in Austria and France — and pay Trump's tariff.
Trump has also created considerable uncertainty by repeatedly tweaking and rescheduling his tariffs. Just before new import taxes were set to take effect on dozens of countries on July 9, for example, the president pushed the deadline back to Aug. 1 to allow more time for negotiation with U.S. trading partners.
The flipflops have left factories, suppliers and customers bewildered about where things stand. Manufacturers voiced their complaints in the ISM survey: 'Customers do not want to make commitments in the wake of massive tariff uncertainty,'' a fabricated metal products company said.
'Tariffs continue to cause confusion and uncertainty for long-term procurement decisions,'' added a computer and electronics firm.
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Fact check: Did US go from ice cream trade surplus to deficit under Biden?
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The trade change was driven mostly by a jump in imports. Exports have remained largely unchanged since 2020. And the cherry on top? Disagreement over which products to classify as 'ice cream' also affects data, experts say. For example, the data referenced by the office of the US Trade Representative also includes 'edible ice', which some experts (and dairy defenders) say doesn't qualify as ice cream. Removing edible ice shows that 'the US is a net exporter by a significant margin of ($193 million) or +85% larger by value,' International Dairy Foods Association Executive Vice President Matt Herrick told PolitiFact via email. Ice cream imports increase causes US trade deficit From 1995 to 2020, the US had an ice cream trade surplus, ranging from about $20m to about $160m, according to the Observatory of Economic Complexity, an online economic data platform. Longtime customers include Mexico, followed by Saudi Arabia and Canada. In 2021, that surplus nearly vanished, and in 2022 and 2023, the US notched up an ice cream trade deficit of $92m and $33m, respectively. At first glance, importing frozen foods doesn't seem practical. 'Shipping refrigerated and frozen products overseas is expensive,' dairy economist Betty Berningat of HighGround Dairy said. 'Mexico is the top destination for US dairy exports.' But many US and European companies have tapped into global markets. 'Consumers may also want a specific treat that is styled after or known to be from another country,' Herrick said. Italy, the birthplace of gelato, is now the United States' largest single source of imported ice cream. Italian ice cream imports more than quintupled from about $12m to almost $65m between 2020 and 2021 alone, before decreasing somewhat in 2023, the last year for which data is available. Some of this stems from increased consumer demand for specialty pints. A report by Mordor Intelligence, a global market research firm, said 'product innovation and premiumisation' have become key in the US ice cream industry. 'This trend is particularly evident in the growth of premium pint offerings and individually wrapped novelties that cater to both indulgence and portion control preferences,' the report said. The US produces far more ice cream than it imports or exports To get to the pint: The vast majority of ice cream consumed in the United States is made there, not overseas. The Trump administration is cherry-picking stats from a fraction of a sliver of the US ice cream industry. According to US Agriculture Department data, US ice cream makers churned out 1.31 billion gallons of ice cream in 2024. This includes regular ice cream, low-fat and nonfat ice cream, sherbet and frozen yoghurt. By comparison, the US imported 2.35 million gallons of traditional ice cream in 2024 – that's 0.18 percent of the amount produced domestically, Herrick said. 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The White House has churned out plenty of ice cream devotees. George Washington stocked the capital with ice cream-making equipment. Thomas Jefferson is credited as being the first American to record an ice cream recipe. Ronald Reagan declared July National Ice Cream Month in 1984. Barack Obama even slung scoops back in the day. Biden, who was often sighted with a cone in hand, proclaimed while visiting Jeni's Splendid Ice Cream headquarters in 2016: 'My name is Joe Biden, and I love ice cream.' But consumption of regular dairy ice cream – a category that does not include frozen yoghurt, sherbet or nonfat and low-fat ice creams – has been trending down for years. In 1975, Americans ate an average of 18.2 pounds each of ice cream per year. That figure fell to 11.7 pounds by 2023. Our ruling The office of the US Trade Representative purported a summertime scoop: 'America had a trade surplus in ice cream in 2020 under President Trump's leadership, but that surplus turned into a trade deficit of $40.6 million under President Biden's watch.' It's accurate that the US ice cream trade balance had a surplus for a quarter of a century before turning negative while Biden was president. But the US Trade Representative's statement makes the US ice cream deficit appear out of cone-trol. There are three scoops of context on this trade sundae: The change was driven mostly by a jump in imports. Exports have remained largely unchanged since 2020. US ice cream imports and exports are a negligible amount compared to domestic production. There's also disagreement over which products should or shouldn't be included in the data set, which can skew trend interpretations. Excluding edible ice products and factoring in ice cream mixes leaves the US with a surplus. The statement is accurate but needs a sprinkling of clarification and additional details, so we rate it Mostly True. Louis Jacobson contributed to this report.
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US District Court Judge James Boasberg had ordered the deportation flights in March to return to the US and has since indicated that the Trump administration may be in contempt of court for failing to do so. In June, Boasberg further ruled that the deported Venezuelan men must be given the opportunity to challenge their removals in US courts. His decision indicated that there was 'significant evidence' that many of the men were languishing 'in a foreign prison on flimsy, even frivolous, accusations'.
