President Donald Trump’s tariff agenda hasn’t caused increased inflation, as predicted by many economists, but it does appear to be having one unintended consequence: shrinking America’s manufacturing workforce.
Though Trump didn’t make good on his campaign promise to wipe out post-pandemic price spikes immediately upon entering office, economic forecasts claiming the president’s tariffs would drive inflation even higher have simply not come to pass. Prices across most sectors have remained relatively stagnant since January 2025 and even dropped significantly in some sectors, most notably gas prices which now average below $3 per gallon in more than 40 states.
Still, Trump and his allies claimed that a core driver of the tariff agenda was to rebuild America’s manufacturing base, but, after one year, they appear to be having the opposite effect.
The Bureau of Labor Statistics’ December jobs report found that the economy actually shed 8,000 jobs to end the year, marking the eighth consecutive month of job losses within the sector. In total, factory jobs declined by some 70,000 since April, when Trump announced his “Liberation Day” tariff rates, with manufacturing employment slipping below levels set during the pre-coronavirus period of Trump’s first term in office.
Meanwhile, the U.S. Institute for Supply Management’s Purchasing Managers’ Index, which tracks new orders contracting, production expansion, employment contracting, and supplier deliveries, fell to 47.9 in December of 2025, the tenth consecutive month PMI contracted following two months of expansion after Trump began his second term.
“Looking at the manufacturing economy, 85 percent of the sector’s gross domestic product (GDP) contracted in December, compared to 58 percent in November, and the percentage of manufacturing GDP in strong contraction (defined as a composite PMI of 45 percent or lower) increased to 43 percent, compared to 39 percent in November,” wrote Susan Spence, chair of ISM’s Manufacturing Business Survey Committee. “The share of sector GDP with a PMI at or below 45 percent is a good metric to gauge overall manufacturing weakness. Of the six largest manufacturing industries, only Computer & Electronic Products expanded in December.”
One Chemical Products respondent in the ISM survey said that “tariffs are ultimately to blame” for the industry contractions.
“It has not been a great year,” they wrote. “I hope for some return to free trade, which is what consumers have ‘voted for’ with their spending.”
“Morale is very low across manufacturing in general. The cost of living is very high, and component costs are increasing with folks citing tariffs and other price increases,” an Electrical Equipment, Appliances, and Components respondent added. “So, things look a bit bleak overall.”
And a Miscellaneous Manufacturing respondent claimed that “2025 revenue was down 17% due to tariffs,” making it more difficult for the firm to hire new employees or increase pay for existing workers.
J.B. Brown, the CEO of a family-owned metal foundry in Indiana, gave an even more blunt assessment to Reuters last week.
“Every time I hear that manufacturing is booming, I scream at the TV,” he stated, noting that his workforce had virtually halved over the past two years.
Tom Barkin, president of the Federal Reserve Bank of Richmond, said earlier this month that the government’s data “is very much in line” with sentiment expressed by business owners, “which is that the low-hire environment continues” as the president’s tariffs continue to affect the economy.
“Some of it is uncertainty. A lot of it is productivity,” Barkin said. “It is hard to find businesses outside of the AI ecosystem or healthcare that are talking about hiring.”
White House officials denied that a shrinkage of the American manufacturing workforce meant a weakening of the industry and reiterated that creating “manufacturing jobs was one of many benefits the administration was targeting with our trade push, in addition to increasing overall manufacturing.”
“I don’t think industrial output data suggests a decline in manufacturing,” one senior official told the Washington Examiner, who pointed to December data from the Federal Reserve Board of Governors that showed total industrial production registering at its highest point since 2019 but still below marks set under the Trump administration the year prior. “Manufacturing jobs, I believe, also increased on net in red states, while the decline is from blue states who obviously aren’t embracing the other supply side ‘carrots’ we are implanting on deregulation and energy.”
“The trade deficit has also hit lows driven in large part by surging exports as well,” the senior official said. “The totality of the data is quite positive even before factoring in our conducive policies and other leading indicators.”
Senior administration officials also pointed to how manufacturing productivity grew by more than 3% across the first three quarters of 2025 after declining during former President Joe Biden’s term in office and that average hourly earnings for manufacturing workers rose 4.4% for the year ending in December 2025.
Trump did receive some much-needed economic news in December, with third-quarter GDP growth clocking in at a 4.3% annual rate. Much of the economic growth of the past year, however, was driven by massive investments in the artificial intelligence sector, which have been linked to significant increases in electricity costs for households located near newly constructed AI data centers.
Trump continues to claim his tariffs will provide a massive boost to the manufacturing sector, specifically by securing hundreds of billions in new domestic and foreign investments.
“We have manufacturing plants opening up at levels that nobody has ever seen before because of tariffs,” Trump said Sunday while traveling from Florida back to Washington, D.C. “If we didn’t have tariffs, you wouldn’t have them opening.”
During a trip to Detroit on Tuesday, the president additionally claimed that U.S. auto manufacturers have committed upwards of $70 billion in new domestic factory investments.
In addition to new direct investments, Trump routinely touts the major upswing in tariff revenue, which currently sits at roughly $30 billion per month, as evidence of the efficacy of his policies.
However, even if Trump’s newly secured investments result in the rapid construction of new factories, it may not be American workers who will immediately fill those jobs, as the administration has promised.
A December analysis from Deloitte Insights suggested that the U.S. manufacturing workforce would fall short of Trump’s loose benchmarks over the next eight years by nearly 2 million workers and that firms would likely prioritize “skilled foreign workers to run and oversee manufacturing facilities initially while training U.S. workers for the future.”
“And since population growth has slowed in the United States over the years, a larger workforce may also need more immigrant workers to fill gaps in low- to medium-skilled roles,” the analysis concludes. “In fact, analysis by the Bureau of Labor Statistics suggests that, in 2024, foreign-born workers were more likely to be employed in production, transportation, and material-moving occupations compared to native-born workers.”
The president himself has suggested that any shortfalls in the manufacturing workforce could easily be made up by using “robots” in factories. He first made the claim while announcing the launch of a new class of battleships for the Navy in December and reiterated the sentiment during a Tuesday interview with CBS.
“People are being trained rapidly and you’re gonna have a thing called robots, and robots are gonna be a big factor,” he said in response to a question on labor concerns. “I predict that robots are going to be a big factor in the future and it’s going to help out. But you have a situation now where our economy is doing so well that it’s not that easy to get people. We’re training people, they’re training people, companies are training people, and they’re doing well. You know, that’s a positive question you asked me. I don’t think you asked it in that way, but we are doing so well right now that we’re training people to take those jobs.”