THE SHAPE OF THINGS TO COME

Infrastructure is in place for domestic manufacturing to increase with supply chains shortened. Will the boom continue, and could strategic placement of tariffs help?

- ANNE-FRANCES HUTCHINSON

After 20 years of struggles and setbacks, things are finally looking up for U.S. manufacturers. Bolstered in large part by expansive federal infrastructure investments and lessening financial pressures, the overall industry outlook for 2025 predicts a 4.2% increase in overall revenues and 5.2% growth in capital expenditures. The rise in CapEx is a vote of confidence for the sector's longawaited recovery.

When approached as a long-term remedy for the impact of globalization on the manufacturing sector, the President's "America First" agenda is likely to uplift domestic manufacturing, which will create more stateside infrastructure developers. Tariffs could lead to a surge in domestic investment and opportunities across the American manufacturing landscape, raising hundreds of billions in revenue. While many economists oppose this view, history shows that the longterm effects of tariffs can significantly boost manufacturing.

Consider the setting of import quotas on Japanese cars in during the Reagan years.

Detroit's automakers did not have the efficient production processes developed by Japan, and the competition posed an existential threat. At first, putting the brakes on auto imports raised prices by 5 to 10%, but it motivated Japanese car makers to invest heavily in production facilities in the U.S.; it wasn't long before they brought their supply chain, design, and research and development to our shores and the innovations that reshaped the entire domestic auto industry.

Over the four years of the quota program, the glut of foreign imports dropped, car prices fell, and American auto workers were back on the job.