Made in America—the manufacturing sectors with the best prospects

Much has been made of President Trump’s trade war and his stated goal of bringing back manufacturing to the United States. We see various reasons to be skeptical that the policy mix being pursued by the US government will result in a significant manufacturing industry-wide resurgence or “bring back” factories in sectors that have long since moved overseas. Nor will it produce a notable trend shift in terms of industries of the future choosing to produce in America rather than only doing the R&D and design work.

• The new US policy mix will likely reinforce, not disrupt, growth trends for US manufacturing. High-tech goods, pharma, and aerospace will be among the fastest growing segments over the next decade. These are industries where the US already has a strong position.
• We do not see President Trump’s policy—be it the trade war, deregulation, or tax cuts— advancing “reindustrialization”, but if any manufacturing is poised to benefit it is sub-sectors like these.
• The 2022 CHIPS and Inflation Reduction Acts poured billions into building factories in areas where the US was weak like high-end semiconductors and green tech. This effort continues to pay dividends and will be responsible, we believe, for a majority of reindustrialization over the next years. However, this was substantially different to the current tariffs-only approach. Solar panel manufacturing, investment for which only started flowing after the IRA, shows how tariffs on their own are unlikely to be a sufficient tool.
• We believe that any reindustrialization, be it broad or targeted to key sectors, will require a comprehensive industrial policy that includes investment and workforce development