The current state of American manufacturing is far from as bright as expected. The latest data from the Bureau of Labor Statistics shows that the manufacturing sector cut 63,000 jobs, marking a heavy end to this year.

The situation is even worse. The December manufacturing index released by the Institute for Supply Management was only 47.9, marking the tenth consecutive month of contraction—new orders are particularly weak, while production costs remain at historic highs. The Federal Reserve's Beige Book and regional Fed survey reports repeatedly record the same phenomenon: faced with weak markets, rising costs, and shrinking profits, manufacturers are postponing hiring and investment plans.

Hard data on capacity and output are equally grim. Throughout the fall, both indicators showed a downward trend. In plain terms, the best the industry can do is stagnate, far from the manufacturing revival people are expecting.

**Global Supply Chains Are the Root Cause**

Why is this happening? The fundamental issue lies in the fact that modern American manufacturing is inherently dependent on international trade. Data from the National Association of Manufacturers illustrates this well: 91% of manufacturers use imported raw materials in production in the U.S., accounting for about half of the country's annual import goods. High-end industries such as semiconductors, aerospace, and medical devices are especially reliant on global supply chains and cutting-edge components. In other words, this is a large-scale, highly globalized industry system.

**The Double Dilemma of Tariff Policies**

Widespread tariff measures impact domestic manufacturing from multiple angles. First is the rising cost—it's difficult for companies to avoid even when purchasing American-made products. Tariffs on steel, aluminum, and copper have driven up prices for these key materials in the U.S., far above global benchmarks. The same applies to parts and equipment.

For companies with transnational production bases, the situation is even more complex. These firms are often forced to pay high tariffs on parts and equipment shipped back from their overseas factories, then reprocess and assemble them in the U.S. This originally efficient global supply chain cannot be quickly—or even at all—reconfigured. The result? U.S. manufacturers pay much higher prices for the same inputs compared to foreign competitors, directly reducing the attractiveness of investing in the U.S. and decreasing the competitiveness of American goods domestically and internationally. Ironically, these exported goods also face retaliatory tariffs from trade partners.

**Policy Uncertainty Makes Things Worse**

More serious than the level of tariffs themselves is the chaos in how they are implemented. Manufacturers might adapt to a permanent, uniform high tariff, but they face constantly changing policies. Just last year, U.S. tariff laws were amended 50 times. This ongoing volatility, combined with the omnipresent threat of tariffs, has brought trade policy uncertainty to unprecedented levels. Even before tariffs are actually implemented, this uncertainty has already affected companies' hiring decisions, capital expenditure plans, supply chain arrangements, and sales strategies.

The complexity also brings hidden costs. Tariff measures on a large number of imported goods have increased from 3 in 2017 to 20 now. Calculating the precise tariff for a single product, once a relatively straightforward process, has now become so complex that even experienced customs officials can be confused, and errors can lead to hefty fines.

This uncertainty forces companies to wait for clearer policy signals, delaying major operational decisions.

**Building New Supply Chains Takes Time and Cost**

Global supply chains have taken decades to develop. Reshaping them takes even longer and is more costly. In this process, the path to reviving American manufacturing is bound to be fraught with challenges.