Tariffs hurting domestic manufacturing

WASHINGTON — Jay Allen is a fan of US President Donald Trump, and voted for him on the belief that the Republican would cut taxes and trim regulations, helping his manufacturing business in northeast Arkansas.

However, the tariffs at the core of Trump's economic agenda have wreaked havoc on his company, Allen Engineering, which makes industrial equipment used to install, finish and pave concrete. The import taxes have raised the costs of engines, steel, gearboxes and clutches made abroad that Allen needs to build power trowels that can sell for up to $100,000 each.

Allen's experience embodies a growing body of evidence that the tariffs that the administration said would help factories in the United States are, in fact, squashing many of them. The problem could get worse as the administration scrambles to craft new tariffs to replace the emergency import taxes that the Supreme Court ruled illegal last month.

Allen said he ran his company at a loss in 2025 because of tariffs. His payroll has fallen to 140 workers from a peak of 205. To get by this year, he has hiked prices by 8 to 10 percent, even though that might mean fewer sales.

"What's really sad is the unintended consequences of his tariffs are hurting manufacturing in our country," Allen said. "Unfortunately, the working-class people are getting squeezed."

The administration's core rationale for tariffs has been that they would force more factories to open in the US and would generate enough revenue to close federal budget deficits. But that has not materialized.

Factories continue to shed workers, with 98,000 manufacturing jobs lost during Trump's first 12 months back in the White House. US companies that foot the bill for tariffs are now suing the administration for more than $130 billion in tariff refunds. Meanwhile, the federal deficit is projected to climb over the next decade.

Govt's account

The White House maintains that construction spending is high, more workers are being hired to build factories, new investments are being made, and labor productivity in manufacturing is increasing — which could eventually fuel a factory revival.

"It takes time to get production online, and therefore it will be some more time before we fully materialize the benefits of the president's policies," Pierre Yared, acting chairman of the White House Council of Economic Advisers, said in an email.

Based on orders, proclamations and other statements, the administration has taken more than 50 actions on tariffs so far.

The flurry of announcements, reversals, exemptions and legal challenges has made it difficult for smaller manufacturing companies to plan.

Joseph Steinberg, an economist at the University of Toronto, said research shows that under the best-case scenario, "it would take a decade for manufacturing employment to rise above where it was before tariffs were enacted".

However, Steinberg said "the current situation is nothing like the 'best case'", since US trade policy is unsettled and that leaves companies reluctant to expand.

About 98 percent of US manufacturing establishments have fewer than 200 workers, according to Census Bureau data, and do not have the kind of name-brand recognition or lobbying heft to minimize the damage from tariffs that big players such as Apple and Ford possess.

The Association of Equipment Manufacturers reported last month that the US' share of global manufacturing severely lags behind China's. The group has urged tax credits to offset the expense of tariffs, and specifically called for tariff relief on raw materials and parts that cannot be acquired domestically at scale. (source:Xinhua)