Tariffs Cannot Bring Back Manufacturing Jobs As Consumers Won’t Pay Much More For American Goods

President Donald Trump is waging his trade war using the same fundamental principle he applies to every issue: say a ton of contradictory stuff then claim to have been right all along when some of it turns out to be right.

Whatever Trump says, I can guarantee that we’re not going to both raise a ton of tax revenue from tariffs and only have them on for a short time. We’re not going to both bring back American manufacturing jobs and bring down prices. It’s like saying, “The stock market is going to go up tomorrow or down.” You don’t get to claim to be a prophet when one of those things turns out to have been true.

So, we don’t really know what Trump’s goals are here, or if he truly has any policy aims at all. We do know he likes to make big announcements to take credit for things, like when he just declared victory based on as-yet unwritten agreement with China to temporarily lower the huge tariffs he caused to be imposed in the first place.

One thing I do know is that manufacturing jobs are not coming back to the United States on a massive scale. American manufacturing jobs hit their all-time peak in 1979 at about 19.6 million — just 22% of the total nonfarm workforce. These days, more like 12.7 million Americans are employed in manufacturing.

We are not going back to the 1970s, nor should we want to. The same year manufacturing jobs hit their peak in America, the nation was also going through a terrible bout of stagflation. The Consumer Price Index increased 9% in 1979.

American workers won’t or can’t work the manufacturing jobs that have been lost since 1979 to the much smaller sums it costs to hire workers abroad. Thus, Americans would have to be willing to pay substantially more for all the stuff we buy to theoretically bring back some of the jobs that only ever represented 22% of the nonfarm labor market.

Polls consistently find that a majority of Americans say they prefer items that are made in the U.S.A., with one recent survey noting that 72% seek out such products. When it comes to actually paying more, however, only about half of those surveyed said they would pay just 10% to 20% more for an American-made product. Only 17% said they would pay 30% more for a domestically produced product.

Even factoring in high tariffs adding to the prices of foreign goods, for most of the things that are now made overseas it would cost way, way more than an additional 30% to move production to the United States. One business recently tested the hypothesis that Americans would be willing to pay more for U.S.-made products by sourcing an identical version of their high-end shower head to be fully made in America, as opposed to being made in China and Vietnam as it had been previously. The one labeled “Made in the USA” on their website actually cost three times more to manufacture domestically but had a comparatively modest 85% price premium at $239. In contrast, the original version labeled “Made in Asia” was for sale at $129.

After 25,000 people had visited this company’s website, 580 of them had purchased the Asian-made shower head. There was not a single sale of the higher-priced American-made version.

For most goods that are manufactured overseas, it is impossible to produce an American-made version of equivalent quality that is anywhere close to being affordable to American consumers. Even slashing the benefits and wages of American factory workers would not be enough to make up the difference (though replacing humans entirely with robots might).

Tariffs are not going to bring factory jobs back to America. And that’s fine. Even when we were at the peak number of factory jobs in our history, the economy was a disaster. The only reason factory jobs in the mid-20th century provided good benefits and wages sufficient to support a family on a single income was that we’d just finished demolishing all the industrial infrastructure of our international competitors in World War II.

Instead of a counterproductive trade war that is already raising prices, maybe Trump should, oh, I don’t know, focus on making the jobs we already have here less awful. But I suppose he’s got cryptocurrency to sell and bribes to solicit from foreign governments.

Jonathan Wolf is a civil litigator and author of Your Debt-Free JD (affiliate link). He has taught legal writing, written for a wide variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at jon_wolf@hotmail.com.

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