The global economy is on edge as United States President Donald Trump’s July 9 deadline looms for the imposition of double-digit tariffs on most trading partners.
On Monday, Trump announced tariffs on 14 countries, ranging from 25 to 40 percent. The targeted countries include close US allies like Japan and South Korea, as well as Laos, Myanmar, Bangladesh, Cambodia, Tunisia, South Africa, Malaysia, Kazakhstan, Thailand, Indonesia, Serbia and Bosnia and Herzegovina.
And with only a few trade deals in place, his administration is expected to announce the imposition of new levies on many more countries. Trump and Treasury Secretary Scott Bessent on Sunday said those new tariffs would come into effect on August 1.
Trump’s initial April 2 “Liberation Day” announcement of across-the-board tariffs on countries around the world sent markets into a tailspin. Trump relented – temporarily – announcing a 90-day cessation on higher tariffs, while imposing a 10 percent baseline levy on all trading partners.
Now, some experts fear that higher tariffs, if imposed after July 9, could push the global economy into a recession.
Along with reducing the trade deficit, Trump’s argument for tariffs is that they will boost US manufacturing and protect jobs. He says tariffs will encourage US consumers to buy more US-made goods, increase the taxes raised and enhance investment in the US.
But what is the current state of manufacturing in the US, and how has it fared in recent months amid the economic churn stirred by Trump’s policies?
Where are we now?
In a bid to revitalise US industry, Trump announced a $14bn investment on May 30, brokering a partnership between US Steel and Nippon Steel tipped to create 70,000 jobs, according to the White House.
The Trump administration has also highlighted investments announced by automakers, tech firms and chocolate companies, among others, as evidence of the return of manufacturing to US soil.
According to the US Bureau of Economic Analysis, manufacturing contributed $2.9 trillion to the economy in the first quarter of 2025, a 0.6 percent increase from the corresponding period in 2024. That places it behind only finance, professional and business services, and government as the largest sectors contributing to the US economy.
However, building that manufacturing base back to the heydays of the sector, when it dominated the US economy, will not be easy, caution many experts. They point out that the US is today missing many of the essential elements of a robust manufacturing framework, including skilled labour, government support and technology.
Manufacturing accounted for more than 25 percent of gross domestic product (GDP) in the 1970s, but that came down to 13 percent by 2005. Its share has since dropped further, to about 9.7 percent in 2024.
Finance, insurance, real estate, rental and leasing value added as a percentage of GDP was 21 percent in 2024, followed by professional and business services (13 percent) and government (11 percent).
US manufacturing falls for a fourth month
The Institute for Supply Management (ISM) Manufacturing Index, also known as the purchasing managers’ index (PMI), is a monthly indicator of economic activity based on a survey of purchasing managers at manufacturing firms nationwide. It serves as a primary indicator of the condition of the US economy.
The PMI measures the change in production levels across the economy from month to month. A PMI above 50 indicates expansion, while a reading below 50 indicates contraction.
In June, it registered 49 percent, marking a fourth consecutive month of contraction, though the rate of decline has slowed.
At the start of 2025, the PMI was in expansion territory – 50.9 percent in January and 50.3 percent in February, before slipping below 50 in March.
Nine manufacturing industries reported growth in June, while six industries reported contraction.
According to the Reuters news agency, economists say the lack of clarity on what happens after July 9 has left businesses unable to make long-term plans.
How many people does manufacturing employ?
According to the US Bureau of Labor Statistics, in June 2025 there were some 12.75 million people employed in the manufacturing sector in the US.
Employment in manufacturing has increased from five years ago – in June 2020, some 11.95 million people were employed.
However, current employment levels are still far below the peak of nearly 20 million people hired in manufacturing jobs in the late 1970s, reflecting the long-term decline in the sector’s contribution to employment in the US.
US manufacturing job openings increased in May – 414,000, up from 392,000 in April – but actual hiring declined, hinting at uncertainties in the labour market over the Trump administration’s tariff policies.
US manufacturing compared to the rest of the world
The US has seen a decline in its share of global manufacturing, while China has taken over as the largest manufacturing country by value-added.
China contributed $4.8 trillion to the global GDP through manufacturing in 2022, followed by the US at $2.7 trillion that year.
Still, the US remains a major player and adds more manufacturing value than the third-, fourth-, fifth- and sixth-largest countries combined. And it does so with far fewer workers than its competitors.
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