Manufacturers are stuck in a rut despite subsidies from Biden and protection from Trump
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. 'The situation remains too volatile to firmly put such plans into place.''
Some may argue that things aren't necessarily bad for U.S. manufacturing; they've just returned to normal after a pandemic-related bust and boom.
Factories slashed nearly 1.4 million jobs in March and April 2020 when COVID-19 forced many businesses to shut down and Americans to stay home. Then a funny thing happened: American consumers, cooped up and flush with COVID relief checks from the government, went on a spending spree, snapping up manufactured goods like air fryers, patio furniture and exercise machines.
Suddenly, factories were scrambling to keep up. They brought back the workers they laid off – and then some. Factories added 379,000 jobs in 2021 — the most since 1994 — and then tacked on another 357,000 in 2022.
But in 2023, factory hiring stopped growing and began backtracking as the economy returned to something closer to the pre-pandemic normal.
In the end, it was a wash. Factory payrolls last month came to 12.75 million, almost exactly where they stood in February 2020 (12.74 million) just before COVID slammed the economy.
'It's a long, strange trip to get back to where we started,'' said Jared Bernstein, chair of Biden's White House Council of Economic Advisers.
Zuzick at Waukesha Metal Products said that it will take time to see if Trump's tariffs succeed in bringing factories back to America.
'The fact is that manufacturing doesn't turn on a dime,'' he said. 'It takes time to switch gears.''
Hagopian at Pilot Precision is hopeful that tax breaks in Trump's One Big Beautiful Bill will help American manufacturing regain momentum.
'There may be light at the end of the tunnel that may not be a locomotive bearing down,'' he said.
For now, manufacturers are likely to delay big decisions on investing or bringing on new workers until they see where Trump's tariffs settle and what impact they have on the economy, said Ned Hill, professor emeritus in economic development at Ohio State University.
'With all this uncertainty about what the rest of the year is going to look like,'' he said, 'there's a hesitancy to hire people just to lay them off in the near future.''
'Everyone,'' said Zuzick at Waukesha Metal Products, 'is kind of just waiting for the new normal.''
Wiseman writes for the Associated Press.
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USA Today
25 minutes ago
- USA Today
Columbia University to pay $200 million fine in new agreement with Trump administration
On Thursday's episode of The Excerpt podcast: Columbia University has struck another deal with the Trump administration. A federal judge has rejected the Justice Department's bid to unseal grand jury testimony tied to Florida-based investigations of sex offender Jeffrey Epstein. Plus, Attorney General Pam Bondi reportedly told President Donald Trump in May that he was named multiple times in the government's files on Epstein. And the House Oversight Committee will subpoena Epstein files and documents from the Clintons and others. USA TODAY National Security & World Affairs Reporter Cybele Mayes-Osterman discusses why a handful of tech executives are joining the Army and what critics are worried about. A notorious Idaho killer was sentenced Wednesday to life in prison. Victims' families gave powerful testimony in court. USA TODAY Congress Reporter Savannah Kuchar breaks down a Republican redistricting plan out of Texas. We remember Amelia Earhart on her birthday. Hit play on the player below to hear the podcast and follow along with the transcript beneath it. This transcript was automatically generated, and then edited for clarity in its current form. There may be some differences between the audio and the text. Podcasts: True crime, in-depth interviews and more USA TODAY podcasts right here Taylor Wilson: Good morning. I'm Taylor Wilson, and today is Thursday, July 24th, 2025. This is USA TODAY's The Excerpt. Today, breaking down Columbia's latest deal with the Trump administration, plus what tech executives are doing in the Army, and how a potential map redraw in Texas could kick off a coast-to-coast redistricting battle. ♦ Columbia University has struck another deal with the Trump administration. 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And outside experts are also frequently brought into the military under this title, Highly Qualified Expert, which is unique to the Pentagon. But that being said, directly commissioning in tech executives and at this rank of lieutenant-colonel, which takes around 17 years to achieve from the bottom up, is not something that is so common Taylor Wilson: In terms of the Army perspective here, why does the Army say this is necessary? How is this part of the broader Army Transformation Initiative? Cybele Mayes-Osterman: The Army says that these executives are going to bring good insight and advice as they undertake this big shift that's called the Army Transformation Initiative. Now this was ordered by Pete Hegsath, the Secretary of Defense, and he wants the Army to get rid of some equipment that he calls obsolete, like heavy ground vehicles, and get more of this newfangled technology like AI and drones, which are the area of expertise of these executives. 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And critics are concerned that the executives could either get inside information that would make it easier for them to win future contracts, or they'd be in a position where they could influence the army to buy things in the future from their companies or feel like they need to. Taylor Wilson: All right. So what's next for this work and this conversation going forward? Cybele Mayes-Osterman: The executives I've been told are going to arrive in Fort Benning by the end of the month to start training. The Army says they're going to undergo the same training that anybody else would and they're going to be subject to the same physical fitness requirements. In fact, I heard from one Army official that they're going to be teaching them which hands that they need to salute with to be officers. Taylor Wilson: All right, interesting stuff. Folks can find the full version with a link in today's show notes. Cybele Mayes-Osterman covers National Security and World Affairs for USA TODAY. Thanks, Cybele. Cybele Mayes-Osterman: Thanks so much. ♦ Taylor Wilson: Bryan Kohberger was sentenced to life in prison yesterday for the 2022 murders of four University of Idaho students, receiving the ruling after hours of emotional statements from family and friends of the victims. Loved ones of Madison Mogen, Kaylee Goncalves, Xana Kernodle, and Ethan Chapin honored the students in court and spoke about the anger and devastation they felt after the killings. Those killed were all aged 20 or 21 years old. Olivia Goncalves: Do you feel anything at all or are you exactly what you always feared? Nothing. You didn't win, you just exposed yourself as the coward you are. Taylor Wilson: That was some of what Olivia Goncalves, sister of Kaylee Goncalves, had to say. 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USA Today
25 minutes ago
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Los Angeles Times
25 minutes ago
- Los Angeles Times
Letters to the Editor: Congress requires fundamental reforms to regain its relevance to the people
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