America Is in the Middle of a Stealth Manufacturing Boom

Factory jobs are down, but factory output has risen briskly. Credit goes not to tariffs, but to the most basic economic force of all: demand

By Greg Ip. Excerpts:

"Since January 2025, manufacturing jobs have indeed fallen by about 100,000 workers, or roughly 0.6%. In the same period, though, manufacturing production rose 2.3%, and manufacturing shipments, unadjusted for inflation, climbed 4.2%."

"several sectors that where domestic production was strong, so were imports. Where production was down, so were imports."

"domestic production of computer and electronic products last year was up 7.7%. (All its figures are from the fourth quarter compared with a year earlier.) But imports in this sector were up even more, by 40.5%."

"Behind this: an artificial intelligence revolution"

"Aerospace and transportation equipment (which excludes trucks and cars) also boomed last year, with domestic output up 28%."

"Now consider motor vehicles and parts, around which Trump erected steep tariff barriers. Imports duly fell 14%. But domestic output also dropped 3%. In furniture and related products, imports were down 22% while domestic output fell 3%. Relatively high interest rates last year were likely a factor."

"Production of primary metals, including steel and aluminum, did benefit from tariffs which are now as high as 50%. Production rose, and imports fell. With prices well above global levels, capacity utilization, profits and investment should all rise. But Trump’s first-term tariffs didn’t yield sustained prosperity. Even now, primary metals production is more or less back to 2023 levels"

"Food and beverages contribute the largest share of domestic manufacturing output at 18%."

"Foreign competition isn’t that consequential. And production last year was basically flat."

"production can rise simply because existing factories are ramping up capacity. But durable improvement requires investment in new capacity, which is visible in semiconductors, pharmaceuticals and aerospace. If tariffs have led to new investment, the effect on production might not show up for a while."