Trump’s Tariff Policies Unlikely to Increase US Manufacturing Jobs in the ‘Foreseeable Future’: Wells Fargo Analysts

Economists at the banking giant Wells Fargo think the Trump Administration’s tariff policies are unlikely to reshore a significant number of manufacturing jobs in the US for the “foreseeable future.”

Sarah House, Nicole Cervi and Aubrey Woessner argue in a new analysis that higher prices and policy uncertainty could impact US firms’ capability to expand payroll.

“As downstream industries face higher costs, they must decide whether to absorb them and accept lower margins, pass them onto customers via higher selling prices or a combination of the two. Neither avenue is supportive of employment growth.”

The economists say that reshoring manufacturing jobs would likely take “many years and come at high cost.”

“US labor costs are a hurdle. Labor cost differentials with the rest of the world require US manufacturing firms to be highly capital-intensive to compete in a global marketplace. Thus, an expansion in manufacturing employment would require significant capital investment.

In order for manufacturing employment to return to its historic peak, we estimate at a minimum $2.9 trillion in net new capital investment is required. While sizable, we view this estimate as a lower-bound. The build out of new of capacity would likely unfold over multiple years, with further increases in capital intensity and inflation requiring a higher amount.”

The Wells Fargo analysts also note that lower fertility rates and a recent reduction in immigration could negatively impact working-age population growth.

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