Can American manufacturing be made great again?

December 5, 1791, is an important day in the United States’ economic history.

On this day, Alexander Hamilton, then the first Secretary of the Treasury, submitted what would become his magnum opus: the Report on Manufactures before the Congress. It was Hamilton’s blueprint for turning the United States — an agrarian economy at that time — into a modern industrial powerhouse.

That is because Hamilton believed that economic strength was as vital to America’s sovereignty. While Thomas Jefferson dreamed of a nation of farmers, Hamilton envisioned a powerful manufacturing sector, with factories, innovation, and a strong federal government backing it all. He proposed protective tariffs, industry subsidies, and infrastructure development to make America the manufacturing powerhouse of the world. 

Nearly 200 years after Hamilton’s ambitious vision, the United States did rise to become the world’s undisputed manufacturing superpower. But the climb was followed by a sharp descent. 

Now, in 2025, American manufacturing is back at the center of the national conversation. The new administration has made reviving domestic manufacturing a cornerstone of its trade and economic policy. And it is working. Case in point: Hyundai’s recent record $20 billion investment in US manufacturing. 

In fact. It’s not just Hyundai in the last few months, numerous companies have announced investments in manufacturing in the US. 

In this issue of CrossDock, we take you through the journey of America’s manufacturing sector – its rise and fall. We break down the reason behind recent investment trends in the manufacturing sector. Additionally, we delve into the most pressing question: Can American manufacturing be made great again?

To answer this all, let’s first go back to the 1960s when American manufacturing prowess was unmatched. 

Swinging Sixties

In the 1960s, America was experiencing a significant cultural and political transformation. Young men and women dressed in bell-bottom jeans, sporting wavy long hair, took to the streets, protesting against wars. It was also a time when the Civil Rights Movement gained substantial momentum. In addition, during this period, the United States was engaged in a Cold War against the USSR and successfully put a man on the moon.

Beneath all this social and cultural upheaval, America was quietly operating the most powerful industrial machine the world had ever seen. In this golden era of U.S. manufacturing, factories spanned from coast to coast, boosting both the economy and middle-class employment. By the mid-1960s, nearly 17 million Americans worked in the manufacturing sector, and it contributed close to 28% of the nation’s Gross Domestic Product (GDP).

Interestingly, the United States wasn’t just producing goods for itself — it was creating for the world.

Take the automobile industry, for example. In the 1960s, Detroit stood as the undisputed epicenter of the global automobile industry. According to data from the Economic Policy Institute, the U.S. produced 12 million vehicles in 1965 — nearly half of the world’s total output. Japan, second in the list, produced just 1.9 million vehicles that year. 

It wasn’t just cars. 

Steel mills in Pittsburgh were forging the metal that shaped skylines. Boeing was assembling jetliners that stitched countries together through commercial flights. And IBM’s computing breakthroughs were starting to transform the tech world. Made in America wasn’t just a label. It soon became a statement of capability, innovation, and industrial strength. 

This trend continued into the next decade as well. According to the U.S. Bureau of Labor Statistics, in the 1970s, at its peak, the manufacturing sector employed 19.5 million Americans.

But the dominance didn’t last long. 

Offshoring 

By the late 1970s and into the 1980s, American manufacturing began to lose steam. A mix of rising labor costs, global competition, and shifting economic priorities slowly eroded the industrial base. 

The U.S. government began embracing free-market policies that favored deregulation, tax cuts, and global trade — a shift that accelerated under President Ronald Reagan in the 1980s. 

Reagan’s administration prioritized open markets and free trade, reducing support for domestic industries and weakening labor unions. At the same time, companies, under pressure to cut costs and boost shareholder returns, found it easier — and more profitable — to move manufacturing abroad.

This led to a wave of offshoring, where companies moved production to countries with cheaper labor and fewer regulations. At first, many looked to Japan and Taiwan, where factories grew fast and costs were lower. Later, more companies shifted to China, Mexico, and Southeast Asia, where large-scale manufacturing was even more affordable. What started as a way to save money soon became common practice, and many American towns that once relied on factory jobs began to feel the impact.

The results were instant. The US manufacturing employment fell from nearly 20 million jobs in the 1970s to 17 million jobs in 1985, according to Bureau of Labor Statistics data. And the contribution of the manufacturing sector to the overall GDP fell from 24% in 1970 to 19% in 1985, as per the Bureau of Economic Analysis. 

While U.S. manufacturing was shrinking, another country in Asia was just getting started. China had recently opened up its economy, and before long, it was turning into a global manufacturing hub. You really can’t talk about the decline of American manufacturing without mentioning China, so let’s take a look at how it became the world’s factory.

China’s Entry 

Today, China is the world’s largest manufacturer, accounting for nearly 30% of global manufacturing output, according to the United Nations Statistics Division. It produces more goods than the United States and Germany combined — from electronics and machinery to textiles and steel. 

But just a few decades ago, China was nowhere near the center of global trade. In the 1970s, it was an agrarian economy recovering from years of political turmoil and protectionist policies. 

However, that began to change in 1978, when Deng Xiaoping launched sweeping economic reforms and opened China’s doors to the world. 

The goal was clear: modernize the economy, attract foreign investment, and pull millions out of poverty. To do that, China began lowering trade barriers, setting up Special Economic Zones (SEZs), and encouraging joint ventures with foreign firms. But it needed global partners — and that’s exactly where the United States came in.

It was President Richard Nixon’s visit to China in 1972 that laid the groundwork for diplomatic and economic ties between the two countries.

And in 1979, under President Jimmy Carter, the U.S. formally established diplomatic relations with China and signed a trade agreement that gave Chinese goods access to American markets. 

Later, under President Ronald Reagan, these ties deepened — Reagan’s administration encouraged U.S. businesses to explore opportunities in China, laying the foundation for early offshoring and joint manufacturing projects.

But, China’s big leap came in 2001, when it joined the World Trade Organization (WTO). This marked a turning point. The U.S. and the European Union strongly supported China’s entry, believing it would lead to deeper economic integration and encourage market reforms. 

With WTO membership, China gained greater access to global markets, and companies gained greater access to China’s vast labor force and industrial capacity. Foreign investment surged, exports exploded, and within two decades, China had transformed into the “world’s factory.”

The numbers tell the story: in 2001, China made up just 8% of global manufacturing output; by 2010 it became the world’s largest manufacturing nation with output exceeding $3 trillion in 2016 compared to $2.2 trillion for the U.S. Between this time period America’s share of global manufacturing value added dropped sharply from 28% to 16%. 

First Term 

Many U.S. presidents — including Bill Clinton, George W. Bush, and Barack Obama — had spoken about the need to strengthen America’s manufacturing sector. But it was during Donald Trump’s first term in 2017 that the issue took center stage, becoming a cornerstone of his economic agenda and political messaging.

Once in office, Trump took a more protectionist approach to trade. He imposed tariffs on imported steel and aluminum, and most notably, launched a trade war with China, slapping tariffs on over $350 billion worth of Chinese goods. 

The idea was to make imported goods more expensive and give domestic manufacturers a competitive edge. His administration also renegotiated NAFTA, replacing it with the USMCA (United States–Mexico–Canada Agreement) in hopes of encouraging more regional production.

Did the tariffs and trade war make a difference for American manufacturing?

Yes, it did. 

For example, between 2017 and 2019, U.S. manufacturing employment rose by about 480,000 jobs, reaching 12.8 million workers by late 2019 — the highest level in over a decade. 

Manufacturing output also ticked upward. In 2017, total industrial production in the U.S. grew by 3.6%, followed by a 3.9% increase in 2018, reflecting a modest rebound in manufacturing during the early years of the Trump administration.

But the momentum was short-lived. In 2020, the COVID-19 pandemic hit, disrupting supply chains and sending shockwaves through the economy. By mid-2020, the manufacturing sector had lost nearly 1.4 million jobs, wiping out the gains made during Trump’s first three years. While employment partially rebounded by the end of his term, it fell short of pre-pandemic levels.

Interestingly, the subsequent Biden administration didn’t shift away from the whole “Make in America” initiative — if anything, they embraced it even more.

New Industrial Policy

If tariffs were the tool of choice during President Trump’s industrial policy push, President Biden took a different route. He turned to federal legislation — and a lot of it. 

Through a series of major laws, including the CHIPS and Science Act, the Inflation Reduction Act of 2022, and the Infrastructure Investment and Jobs Act, the Biden administration rolled out what amounts to nearly a trillion dollars in industrial policy investments. It’s one of the most ambitious manufacturing-focused agendas in recent U.S. history.

Each law was designed to rebuild a different part of America’s industrial backbone. The CHIPS Act focused on bringing semiconductor manufacturing back to U.S. soil, offering billions in subsidies to companies willing to build chip plants domestically. 

The Inflation Reduction Act aimed to turn the U.S. into a clean energy leader, with generous incentives for electric vehicles, batteries, solar panels, and more. And the infrastructure bill took aim at long-overdue upgrades to America’s roads, bridges, energy grids, and broadband — with a clear emphasis on using American-made materials wherever possible.

The results?

The Chips Act led to the launch of more than 80 new projects in 25 states, bringing the total projected investment in the industry to nearly $450 billion.

Manufacturing construction spending hit a record $223 billion in 2023, more than double the pre-pandemic average.

Despite the construction surge, manufacturing output (as measured by the Federal Reserve’s Industrial Production Index for Manufacturing) rose only 0.1% in 2023.

Trump 2.0

Now in his second term, President Trump is once again betting on tariffs to boost American manufacturing. He believes that with the tariffs and negotiations, factories and foundries across the U.S. will come back to life. And while many economists and trade partners have pushed back against the move, it’s already sparked a fresh wave of investment from various companies.

Since taking office in 2025, there’s been a flood of capital pouring into the U.S. across multiple industries. 

For example, in tech, Apple has pledged $500 billion, while TSMC is investing $100 billion to scale domestic chip manufacturing — a massive vote of confidence in America’s semiconductor future. 

In life sciences, Eli Lilly committed $27 billion, and Merck announced $8 billion in new investments for U.S.-based drug manufacturing. In clean energy and infrastructure, companies like GE Aerospace, GE Vernova, Clarios, and Eaton are expanding their footprint with billions allocated toward batteries, transformers, and aviation components. 

Logistics and shipping, too, are getting a boost — with CMA CGM investing $20 billion to strengthen U.S. shipbuilding and infrastructure. International automakers like Stellantis, Hyundai, Nissan, and Honda are considering or already shifting production to the U.S. to avoid new auto tariffs. 

On top of all the private investment, global money is starting to pour in too. Saudi Arabia plans to invest $600 billion in the U.S. over the next four years, while the UAE has promised major investments of its own. Taiwan is also stepping up, announcing its plan to invest significantly in U.S. manufacturing and production.

So, will tariffs solve the US manufacturing problem? Economic experts believe it’s much more complex than that. 

Divided opinions

Many economists argue that the idea of a country becoming rich by filling its land with factories is a thing of the past. Developed economies, they point out, have long since shifted toward other engines of growth — particularly services. In fact, that shift is central to the story of why the U.S. stopped being a manufacturing-led economy in the first place.

Today, services make up 86% of all non-farm jobs in the U.S., while manufacturing accounts for less than 8%, according to the Bureau of Labor Statistics. It’s not just about where people work — it’s also about how they spend. 

In the 1960s, around 50% of U.S. consumer spending went toward goods. Today, that number has dropped to just 33%. America has become a services superpower — thriving in finance, tech, healthcare, and media — not a factory-first economy.

Then there’s the practical side. Building a factory isn't like flipping a switch. Experts note that from site selection to permitting to actual production, it can take anywhere from 18 months to 5 years to get a new manufacturing plant fully operational. Add to that the rising costs of construction and labor shortages. 

For example, the National Association of Manufacturers estimates that up to 2.1 million manufacturing jobs could go unfilled by 2030 due to a growing skills gap and ongoing workforce shortages. If left unaddressed, this talent shortfall could cost the U.S. economy nearly $1 trillion every year in lost productivity and growth.

In the case of washing machines, tariffs aimed at boosting domestic production led to a short-term increase in U.S. manufacturing — but also caused washing machine prices to jump by nearly 12% in 2028, according to a report from the Federal Reserve.

And there’s a historical example too. Back in the 1930s, the U.S. passed the Smoot-Hawley Tariff Act, which raised tariffs on hundreds of imported goods. Instead of helping the economy, it triggered a global trade war, worsened the Great Depression, and led to a sharp drop in both U.S. exports and global trade. It’s a reminder that tariffs, if overused, can do more harm than good.

Final words

The world is changing fast, and with new allies and rivals emerging every day, it makes sense for the U.S. to keep the manufacturing of important goods closer to home — especially things like semiconductors, medicine, and energy equipment that are critical to the country’s safety and well-being. In uncertain times, having more control over supply chains isn’t just smart; it’s necessary.

But as the government pushes to bring manufacturing back, it also needs to make sure this doesn’t come at a cost to everyday Americans. If policies like tariffs end up raising prices or limiting competition, people will feel it in their wallets. The real challenge is finding the right balance — bringing key industries home without making things harder for consumers. 

This newsletter was written by Shyam Gowtham

Thank you for reading. We’ll see you at the next edition!