The First Trump Administration Pledged to Strengthen US Manufacturing, but Tariff Policy Decreased Production and Employment
Throughout 2016, the Trump Administration campaigned with two key promises: to raise US employment and strengthen domestic manufacturing. In a Detroit rally, Trump proclaimed that “My plan includes a pledge to restore manufacturing in the United States.” The strategy in question was revealed to be a series of protectionist trade measures and tariffs implemented throughout 2018 to inhibit demand for foreign manufactured goods, which were competitive to American manufacturers.
Tariffs included 20–50% tariffs on imported solar panels and residential washing machines in January of 2018, and a 25% tariff on imported steel and 10% tariff on aluminum enacted three months later. The tariffs, which were broadly used to inhibit Chinese imports, initiated the US-China trade war, and China implemented retaliatory tariffs on thousands of US imports.
The administration’s tariffs did not prove to be effective in strengthening US manufacturing: manufacturing production output throughout the period saw a decline, with the Federal Reserve Division of Research and Statistics finding that manufacturing industrial production decreased 1.5% over the period as a direct result of US tariff policy raising input costs and reciprocal tariffs. Further Federal Reserve research found that 2018-2019 tariffs resulted in a net reduction in U.S. manufacturing employment of ~1.4%.
Even worse, the US-China trade war, which failed to measurably improve US manufacturing, had pernicious impacts on the broader US economy. Oxford Economics estimated that by the end of the first-term Trump Administration, tariffs and the resulting trade war cost the US 245,000 jobs and 0.5% of GDP while reducing real incomes by $675 per household.
Recent 2025 Tariffs on Steel and other Manufacturing Inputs Are Yielding Similar Employment Declines
Despite the first trade war’s consequences to GDP growth, employment, and US manufacturing production,, the recently-elected second-term Trump Administration has rolled out further tariffs on steel and foreign inputs with the same goal of strengthening US domestic production–a reiteration of a previously failed plan with no new difference in strategy.
The US implemented 25-50% tariffs on US steel in March, sweeping 10% tariffs in April, and significant tariffs on materials such as Canadian softwood lumber in October. Throughout the same period, the American economy has seen similar employment and production trends to the last trade war: following April 2nd’s “Liberation Day”, manufacturing employment has dropped steeply by around 58,000 jobs.
Manufacturing Employment From January to September 2025, FRED.
The inverse correlation between tariff implementation and manufacturing employment is a testament to companies’ expected profitability during heightened trade barriers. US tariff policy and the ongoing US-China trade war has also driven rising costs of manufacturing inputs: PPI data, an index that measures the price of materials and components for manufacturing, shows that input costs for US manufacturing have been rising at the fastest rate in years throughout 2025.
With input costs rising rapidly and manufacturing employment dropping steadily, it’s likely that the US will again see a decline in manufacturing output as the industry faces higher costs of production and global price disadvantages. Additionally, trade volatility and uncertainty will drive a decrease in manufacturing investment. The Joint Economic Committee projects that under recently enacted tariff policy, investment in US manufacturing will see a 13 percent decrease per year, totaling more than $490 billion by 2029.
The Bottom Line and Better Policy Solutions
The Trump Administration’s use of protectionist measures and tariff policy within its first term did not strengthen US domestic manufacturing. Instead, it drove measurable declines in both production output and manufacturing employment. Recent tariffs imposed by the second-term administration indicate a return to protectionism with the same goal of bolstering US manufacturing, yet history and data shows that this strategy is counterproductive.
The performance of American manufacturing is contingent on low cost of inputs and access to the global market without the obstacle of reciprocal tariffs. In order for US manufacturers to reap the benefits of free trade and avoid retaliatory obstacles, ongoing trade wars and protectionist trade measures need to be reversed. The reduction of trade barriers and implementation of global manufacturing partnerships are better solutions for strengthening US manufacturing.
If you’re interested in learning more about how tariffs have affected consumer conditions, read our other posts about how tariffs are destroying American farmers here