Here’s Why Tariffs Won’t Bring Back Manufacturing

Tariffs are being pitched as a magic bullet to revive American manufacturing, pushing out foreign competitors to bring red, white, and blue factories humming back to life. It sounds great: tax imports to bring companies back to the States, and generate a flood of revenue in the process as jobs flood back to the heartland. But in reality, prices will rise, demand will drop, and foreign companies will just sell elsewhere. 

Tariffs incentivize other countries to disengage economically, find new trading partners, and de-dollarize. Meanwhile, the higher prices they charge for goods will be passed onto consumers. Higher prices will inevitably decrease demand, and tariff revenues along with it. Despite what they say, Americans who are used to cheap foreign goods won’t want to pay the “Made in America” premium. 

As Peter Schiff said on his podcast earlier in May about Trump’s “Liberation day:”:

“…all he’s going to liberate Americans from is their access to low-cost consumer goods.” 

And besides, who is going to produce them? A major skills gap has developed that means even with a million new manufacturing or trade jobs, there wouldn’t be a million people to fill them. The skills don’t exist and the jobs can’t possibly pay enough to their employees and offer low-enough prices that their products will sell. Young Americans have neither the technical ability nor the interest to fill demand for manufacturing careers.

Community colleges and trade schools are underfunded, and cultural emphasis on four-year degrees has left vocational skills in the dust. With the plummeting real-world value and skyrocketing price of college degrees, the cultural tide is turning back to the trades. But they won’t become attractive again overnight, especially with low pay and automation threatening to take more of those jobs than foreign workers ever could. 

Manufacturing Year-Over-Year, 2015 to Present

Manufacturing’s decline isn’t just about cheap foreign labor—it’s about technology. Robots don’t care about tariffs. The U.S. manufacturing output isn’t relevant for creating manufacturing jobs if robots are doing all the work. A large and ever-growing number of manufacturing job losses since 1990 have been due to automation and robotics, not trade. Tariffs can’t reverse that trend.

Millions of manufacturing jobs will go unfilled in the next decade due to this gap. Tariffs might nudge companies to consider U.S. factories, but who’s going to work in them? Without a skilled labor pool, those factories stay empty or go elsewhere. Companies (like IBM) that have announced US investment will struggle to find enough workers for the jobs that it can’t automate.

Tariffs aren’t paid by foreign producers—they’re paid by American consumers. When a tariff hikes the cost of imported goods, companies pass that increase onto buyers. Everything from electronics and cars (and car insurance) to clothing gets pricier, and domestic manufacturers, shielded from competition, often raise their prices too. 

This creates a double whammy: consumers pay more, and demand for those goods drops as wallets tighten. Lower demand means fewer sales, which undercuts the very manufacturing jobs and revenue that tariffs aim to create. It’s a vicious cycle—higher costs, less consumption, stalled growth. Meanwhile, retailers will have to raise prices on their pre-tariff stock even as demand goes down.

U.S. retailers will soon jack up prices on the inventory they stocked up on pre-tariffs. They will need to make higher margins on their existing inventory to make up for the plunge in sales that will result once they must price in the full impact of tariffs on future imports.

— Peter Schiff (@PeterSchiff) April 30, 2025

Americans can’t stomach higher prices for long. Tariffs sound great until your grocery bill or new TV costs 20% more. Consumer behavior shifts fast—people buy less, switch to cheaper alternatives, wait it out, or turn to black markets. This reduces the revenue tariffs are supposed to generate. This is why tariffs will always fall short of projections—they conveniently omit from their calculations that demand will go down and imports will drop as prices rise. 

Once tariffs are fully priced into U.S. merchandise, many consumers who can afford to pay the higher prices won’t. They may decide to wait out the tariffs, especially on big ticket items. Who wants to make a major purchase, then watch the price of what they just bought collapse.

— Peter Schiff (@PeterSchiff) April 30, 2025

Plus, higher prices hit lower-income households hardest, who spend a larger share of their income on essential goods, stirring resentment and political backlash.

Tariffs also disrupt global supply chains, which are tightly optimized. When the U.S. slapped tariffs on steel in 2018, domestic manufacturers faced shortages and delays because foreign suppliers rerouted elsewhere. This raised costs for U.S. companies that rely on imported materials, like automakers or appliance makers, who then passed those costs to consumers or cut production. Jobs didn’t flood back and demand predictably went down. Retaliation is another kicker—in a previous tariff conflict, China hit back with tariffs on U.S. agriculture. Tit-for-tat trade wars hurt more than they help. 

Peter Schiff said in April:

“What really hurt…was China’s retaliation…But the foreign markets didn’t go down when Trump announced tariffs. They really went down because China retaliated with tariffs of its own, which is a mistake for China to have made…tariffs always do the most harm to the nation that imposes them.” 

Tariffs are a blunt tool—costly, disruptive, and counterproductive. They’re blind to the real barriers holding back sustainable economic strength; a nation declaring economic war on itself. They may have had a shot at working in previous centuries, when the US economy wasn’t nearly so vast…but even then, tariffs produced predictable problems. 

Today, they will make life more expensive and push jobs to other countries. Tariffs can never produce enough income to eliminate the income tax, as Trump has alluded to, without far more spending cuts than DOGE could ever hope to accomplish.

Tariffs have induced waves of uncertainty and talk of global economic restructuring. Stagflation is here, and QE is coming. The losers of all this in the end, as usual, will be the American taxpayer and the US dollar.