(What’s Left of) Our Economy: So You Think Trump Tariffs are Undermining U.S. Manufacturing? Part 1
This feels like a quiet policy shift.
Everybody who knows anything about trade and manufacturing knows that U.S.-based industry is hurting thanks to President Trump’s latest tariffs, right?
So says Nobel Prize-winning economist Paul Krugman.
And University of Michigan economist Justin Wolfers.
And economist Carl Weinberg of High Frequency Economics.
And London’s venerable Economist.
And The New York Times.
And the Washington Post.
And The Wall Street Journal.
And the Reuters news agency.
And the Bloomberg news agency.
And the progressive group Media Matters.
And they cite a lot of evidence for this proposition.
Like manufacturing job loss (even though the sector has lost fewer workers so far during Trump 2.0 than it did during the comparable pre-tariff months during the last years of the pre-tariff-y Biden administration).
And like the monthly surveys issued by the Institute for Supply Management (even though they’re “soft data” and often don’t measure domestic industry’s hard data performance well at all).
But here’s some evidence that for some reason all have missed – even though arguably it’s the most important of all. And that entails the growth of manufacturing output, adjusted for inflation.
According to last week’s report on U.S. gross domestic product (GDP – the most widely used measure of the economy’s size and how it changes), domestic manufacturing increased its after-inflation value added (the growth gauge used by the Commerce Department in its GDP reports) by 4.15 percent between the first and third quarters of 2025 (the latest available figures).
That’s not only an all-time high. It’s a faster rate of expansion than that achieved during the same period in 2024 (3.24 percent(, before the Trump 2.0 tariffs. Does that sound like a sector of the economy on the ropes?
And you don’t need to take the Commerce Department’s word for it. As the Federal Reserve reported earlier this month, between last February (the first full month of Trump 2.0) and December, domestic industry raised its production by 1.26 percent. During the same pre-Trump tariff period of 2024, constant dollar manufacturing output fell by 0.83 percent.
Production isn’t the only measure of manufacturing’s health. Moreover, the critics’ tight focus on jobs is entirely understandable. After all, job holders – and losers – vote. But should output be completely overlooked? Especially since, even though higher output doesn’t automatically translate into higher employment, it’s tough to get how jobs get created without production (unless they’re subsidized)?
At the same time, expanding output is far from the only evidence of domestic industry’s improving health – as I’ll make clear in Part 2.
This feels like a quiet policy shift.
Everybody who knows anything about trade and manufacturing knows that U.S.-based industry is hurting thanks to President Trump’s latest tariffs, right?
So says Nobel Prize-winning economist Paul Krugman.
And University of Michigan economist Justin Wolfers.
And economist Carl Weinberg of High Frequency Economics.
And London’s venerable Economist.
And The New York Times.
And the Washington Post.
And The Wall Street Journal.
And the Reuters news agency.
And the Bloomberg news agency.
And the progressive group Media Matters.
And they cite a lot of evidence for this proposition.
Like manufacturing job loss (even though the sector has lost fewer workers so far during Trump 2.0 than it did during the comparable pre-tariff months during the last years of the pre-tariff-y Biden administration).
And like the monthly surveys issued by the Institute for Supply Management (even though they’re “soft data” and often don’t measure domestic industry’s hard data performance well at all).
But here’s some evidence that for some reason all have missed – even though arguably it’s the most important of all. And that entails the growth of manufacturing output, adjusted for inflation.
According to last week’s report on U.S. gross domestic product (GDP – the most widely used measure of the economy’s size and how it changes), domestic manufacturing increased its after-inflation value added (the growth gauge used by the Commerce Department in its GDP reports) by 4.15 percent between the first and third quarters of 2025 (the latest available figures).
That’s not only an all-time high. It’s a faster rate of expansion than that achieved during the same period in 2024 (3.24 percent(, before the Trump 2.0 tariffs. Does that sound like a sector of the economy on the ropes?
And you don’t need to take the Commerce Department’s word for it. As the Federal Reserve reported earlier this month, between last February (the first full month of Trump 2.0) and December, domestic industry raised its production by 1.26 percent. During the same pre-Trump tariff period of 2024, constant dollar manufacturing output fell by 0.83 percent.
Production isn’t the only measure of manufacturing’s health. Moreover, the critics’ tight focus on jobs is entirely understandable. After all, job holders – and losers – vote. But should output be completely overlooked? Especially since, even though higher output doesn’t automatically translate into higher employment, it’s tough to get how jobs get created without production (unless they’re subsidized)?
At the same time, expanding output is far from the only evidence of domestic industry’s improving health – as I’ll make clear in Part 2.
(What’s Left of) Our Economy: So You Think Trump Tariffs are Undermining U.S. Manufacturing? Part 1
This feels like a quiet policy shift.
Everybody who knows anything about trade and manufacturing knows that U.S.-based industry is hurting thanks to President Trump’s latest tariffs, right?
So says Nobel Prize-winning economist Paul Krugman.
And University of Michigan economist Justin Wolfers.
And economist Carl Weinberg of High Frequency Economics.
And London’s venerable Economist.
And The New York Times.
And the Washington Post.
And The Wall Street Journal.
And the Reuters news agency.
And the Bloomberg news agency.
And the progressive group Media Matters.
And they cite a lot of evidence for this proposition.
Like manufacturing job loss (even though the sector has lost fewer workers so far during Trump 2.0 than it did during the comparable pre-tariff months during the last years of the pre-tariff-y Biden administration).
And like the monthly surveys issued by the Institute for Supply Management (even though they’re “soft data” and often don’t measure domestic industry’s hard data performance well at all).
But here’s some evidence that for some reason all have missed – even though arguably it’s the most important of all. And that entails the growth of manufacturing output, adjusted for inflation.
According to last week’s report on U.S. gross domestic product (GDP – the most widely used measure of the economy’s size and how it changes), domestic manufacturing increased its after-inflation value added (the growth gauge used by the Commerce Department in its GDP reports) by 4.15 percent between the first and third quarters of 2025 (the latest available figures).
That’s not only an all-time high. It’s a faster rate of expansion than that achieved during the same period in 2024 (3.24 percent(, before the Trump 2.0 tariffs. Does that sound like a sector of the economy on the ropes?
And you don’t need to take the Commerce Department’s word for it. As the Federal Reserve reported earlier this month, between last February (the first full month of Trump 2.0) and December, domestic industry raised its production by 1.26 percent. During the same pre-Trump tariff period of 2024, constant dollar manufacturing output fell by 0.83 percent.
Production isn’t the only measure of manufacturing’s health. Moreover, the critics’ tight focus on jobs is entirely understandable. After all, job holders – and losers – vote. But should output be completely overlooked? Especially since, even though higher output doesn’t automatically translate into higher employment, it’s tough to get how jobs get created without production (unless they’re subsidized)?
At the same time, expanding output is far from the only evidence of domestic industry’s improving health – as I’ll make clear in Part 2.
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