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President Donald Trump can hope that his tariffs in the United States will start a renaissance in production, but according to experts, reality is not so easy.
The President announced extensive tariffs on Wednesday, including a delivery of 10% along the entire board. It also aimed at certain countries with steep tariffs, such as 34% in China, 20% for the European Union and 32% for Taiwan.
Trump said, “Jobs and factories will come back.”
“We will end our domestic industrial basis, we will open foreign markets and resolve foreign trade barriers, and ultimately more production will be a stronger competition at home and will mean prices for consumers,” he said during his press conference.
The United States has lost around 6 million jobs in the past four or five decades when companies have released the business activities overseas, especially because the business could be managed cheaper elsewhere, said Harry Moser, President of the non -profit test system initiative.
He said the tariffs were a good start to overcome this problem, but dealing with a strong dollar and the development of the workforce was the best solution.
Moser said he preferred lower taxes than those who had announced Trump.
“Smaller would be easier to defend, but still enough to promote the new level and the foreign direct investment [foreign direct investment] About our ability to build and personnel factories, “he said.
He said he expects Trump's initial volleys to negotiate.
“As long as he convinces the other countries that he will continue to attack the problem until it is solved, they will come forward and maybe rise a little,” said Moser. “Perhaps you will lower your tariffs for our products. Perhaps you will encourage your companies to set factories here in the United States.”
Companies expect them to “proceed”
Nevertheless, there are a number of problems to overcome to bring companies back to the USA, including uncertainty in relation to tariffs and how long they will stay in place, experts said.
“In view of the unpredictable nature of the way forward and the long lead times to build up the industrial capacity, we expect most companies to be careful after this announcement,” said Edward Mills, Raymond James' Washington Policy Stary, in a note on Wednesday. “New capacities can be added if it is feasible, but without certainty about long -term politics, larger systems are more difficult.”
“These are investments, and as a businessman you have to justify and rationalize them,” said Panos Kouvelis, professor of supply chain, operation and technology at Washington University in St. Louis. “If there are considerable uncertainties, you could make some investments, but rather conservative because you want to see how it will work.”
Kouvelis' Research on Trump's targeted tariffs from 2018 showed that they had no major impact on the resumption or return of jobs to the USA. Finished goods were a mixed story depending on demand, he said.
The recent taxes are considered “fluently and moody” because they are based on the president's executive regulations and were not carried out on the congress, said Christopher Tang, at the UCLA Anderson School of Management.
If we do not solve the crisis of trust, the potential investments, the announced investments will not be made at a quick pace. It will slow down.
Manish Kabra
Societe General's head of the US stock strategy
“So many companies are not sure how they can redesign the supply chain if the trade policy is unclear, and also what happens four years later,” said Tang. “Because these are many, many billion dollars in investments, they cannot change in one stitch.”
Morgan Stanley's analyst, Chris Snyder, said he thinks tariffs are a “positive catalyst” for the improvement, but he does not expect that a massive wave of project will return to the USA at short notice. At the moment he is expecting small, fast turnaround investments that could increase production by about 2%, he said.
“When we talk to companies, there is a lot of uncertainty about which policy will be in three months,” he said.
In addition, the consumer's trust has scored a goal – and that will be a factor for the company's decision as to whether and when they will handle again, said Manish Kabra, head of the US stock strategy of Societe Generale. The Conference Board's monthly consumer confidence index reached a 12-year low in March.
“If you have a crisis of trust, the trust of global companies that have announced investments in the United States will pause,” said Kabra. “If we do not solve the crisis of trust, the potential investments, the announced investments will not take place at a quick pace. It will slow down.”
Rushing -newcomer could be “dangerous”
A lot has to happen before the production in the USA can reappear again, experts said.
“The United States are not ready to redesign. We do not have the infrastructure, we don't have enough workers, and we also have to examine how many Americans are willing to work in the factory,” said Tang. “If they hurry it, it could be quite risky and dangerous.”
He said he expects some companies to return due to Trump's tariffs, but for many there are still many obstacles. Managers are under pressure to show short -term results on quarterly results and the management of an American workforce could become complicated.
“There are so many regulations, so many laws, and the costs are also quite high, so the incentive is not high for them,” said Tang.
There must also be a significant investment in the training of the American workforce, said Moser.
Trump's tariff program “will fail if the nation does not start an increased recruitment and training program for qualified manufacturing staff and engineers,” he said. “We have to go from 'college for everyone' to 'a great career for everyone'.”
Morgan Stanley's Snyder said that if companies are ready to build their next project, they will now turn to the USA
“The United States is in the best position to get incremental factories than in the past 50 years,” he said. In addition, the wave of production that has occurred since the pandemic and the tariffs will give you more urgency to finish, he said.
What could be redesigned
According to Kabra from Societe Generale, companies have announced investments worth 1.4 trillion US dollars since the election. That results in around 200,000 new jobs, he said.
Hyundai has the list with its investment of 21 billion US dollars in US institutions, including a plant of 5.8 billion US dollars in Louisiana.
Automobile manufacturers are likely to be among the industries that will change, experts said. Trump has imposed an imported cars a tariff of 25% and also sworn to enable Tax key car parts.
Manufacturers of gas -powered cars have to weigh up their options because they already have a very optimized supply chain, said Kouvelis of the University of Washington.
“The gas -powered automotive industry is in difficulties with difficult -to -access supply chains and not enough incentive to do this,” he said.
Electric vehicles are a different story because they have fewer parts, with the most important battery, so that these companies are more likely to shift operations, he said.
“Everyone understands that the US market is lucrative and the competitors with an advantage [such as Chinese companies] More or less are kept away, “said Kouvelis.
Snyder also said that EVS is probably one of those in the USA, but because they will need more capacity. His thesis is that industries that have to be expanded – instead of closing in another country and move – that have to return to the USA, including industrial equipment and semiconductors, he said.
While semiconductors and pharmaceuticals were excluded from the tariffs, they may be able to target at a later date. Experts said they expect both industries to be new.
The manufacturers of semiconductors received the incentive to return after the Congress passed the chips act in 2022, which provided those who build the facilities at national level, financial support and tax credits. According to the Reshoring Initiative, the jobs announced most in 2024 were announced in the computer and electronic product industry.
“These are high-tech, high-end technology and a lot of automation. You don't need that many workers,” said Tang.
Only part of the supply chain could come back to pharmaceutical companies, said Kouvelis.
“The question is, where will you use the tariff? Will you apply to the final or chemicals? Because at the moment you want the chemicals and the active ingredients from China,” said Kouvelis.
However, the formulation and packaging can be carried out in the United States if this is sufficient to avoid tariffs, he said.
“If you want you to bring the entire supply chain with you, you have to be very aggressive how you apply tariffs to everything in the supply chain,” said Kouvelis.
Some pharmaceutical companies, including Eli Lilly And Johnson & JohnsonThe United States was already expanding before Trump took up his office.
Correction: Trump announced 32% tariffs on Taiwan. An earlier version incorrectly specified the percentage.
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