Foreseeable Growth of U.S. Manufacturing Jobs under Trump's Tariff Policies Doubtful, According to Wells Fargo Analysts' Assessment
Wells Fargo economists question the effectiveness of tariffs in re-shoring manufacturing jobs in the US, stating that such a process would likely take 'many years' and cost a substantial amount.
In a new analysis, the economists, including Sarah House, Nicole Cervi, and Aubrey Woessner, argue that price increases and policy uncertainty could hinder US firms' ability to expand their payroll.
The analysts suggest that as downstream industries face increased costs, they must choose between absorbing the costs, passing them onto consumers, or a combination of both. These options are not conducive to employment growth, according to their assessment.
Reshoring manufacturing jobs would require significant capital investment to overcome labor cost differentials with other countries, the report suggests. The analysts estimate a minimum of $2.9 trillion in net new capital investment to return manufacturing employment to its historic peak. However, they regard this estimate as a lower-bound, noting that the build-out of new capacity would likely take several years and necessitate further increases in capital intensity and inflation.
Apart from capital requirements, lower fertility rates and a recent reduction in immigration could contribute to labor shortages in the manufacturing sector.
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