Tariffs won't reverse US manufacturing decline — Capital Economics

Donald Trump's tough trade policies may bring some manufacturing jobs back into the United States, but the impact will likely be limited, Capital Economics says.

The US President has repeatedly claimed that higher import tariffs on key trading partners will help boost employment in the manufacturing sector. But Capital Economics experts believe these measures won't deliver as promised.

Analysts note some sectors, like car and drug manufacturing, might actually benefit from the duties. In both sectors, production capacity utilization remains relatively low. Moreover, these industries don't directly compete with ultra-low-cost producers.

However, overall efforts to attract foreign manufacturers to the US through import tariffs face two major constraints: worker shortages and much lower overseas production costs. Even tariff-free access to the American market can't overcome these fundamental challenges, Capital Economics notes.