An Overview of Kamala & Trump's Plans for US Manufacturing

The revitalisation of US manufacturing that many are hoping for across the nation and world will not be possible without a strong governmental strategy. 

The sector needs investment, support and guidance to find its place in a new world, dominated by emerging technologies and immense competition. 

Today is the US election, an election which will not only decide the President but the strategic trajectory of US manufacturing. 

Harris and Trump have radically different plans, plans that will impact the sector in profoundly different ways. 

Here's a brief overview by Manufacturing Digital of what those plans are and how they are likely to impact US manufacturing, to take a look at before you vote and after.

Trump’s manufacturing plan: tariffs & tax cuts

Trump's manufacturing strategy focuses on tax cuts and tarrifs. 

He has proposed imposing high tariffs on foreign imports, with a specific focus on Chinese goods. 

These could be up to 20% on all foreign goods, and between 60% to 100% on those from China.

The strategy behind this is that by raising the price of foreign goods US goods will become more competitive, thereby boosting domestic demand and bringing manufacturing jobs back to the US. 

Trump also advocates for corporate tax cuts as a way to lower operational costs for American companies, building on the tax cuts he enacted as president in 2017. 

This is again to encourage manufacturers to invest domestically rather than to seek cheaper alternatives abroad.

What the impact may be

There's potential for this strategy to generate a short-term surge in manufacturing jobs and output, as operating in the US becomes more profitable for companies. 

However experts warn that in the long term Trump's high tariffs will increase manufacturing costs for imported materials, raising domestic consumer prices and production costs. 

For manufacturers in the automotive or electronics verticals that rely on foreign components, they are likely to face higher expenses which will reduce their global competitiveness.

Trump's plan is also predicted to massively increase the national debt. His policies according to estimates could add as much as US$15.55 tr to the debt over the next decade, primarily due to lost tax revenue from his corporate tax cuts and increased defense spending.

Annual deficits could end up growing from 6.5% to nearly 10% of GDP by 2035.

Trump's tax cuts while motivated by the desire to stimulate economic activity also come with notable downsides. Studies indicate they provide limited benefits to manufacturers, as many companies use the savings for stock buybacks rather than to invest in domestic manufacturing facilities. 

On the whole Trump's long-term tariff and tax cut plan could result in a less globally competitive US manufacturing sector.

However this may be deemed a necessary sacrifice to drive domestic growth, despite the potential impacts on relationships with trade partners and production costs. 

As automation continues to replace many traditional manufacturing roles, there's also the argument that bringing manufacturing jobs back to the US will be less about economic competitiveness and more about investing in vital workforce digital skills.

Harris’s manufacturing plan: strategic investment & tax reform

Harris's plan builds on the policies of the Biden administration, including the Inflation Reduction Act and CHIPS Act that invested billions in renewable energy and semiconductor manufacturing. 

She seeks to prioritise advanced manufacturing, green steel and AI to secure the US's competitive edge in global markets, proposing an additional US$100bn of federal support. 

Instead of implementing tarrifs, Harris's plan focuses on closing tax loopholes and raising corporate taxes for large multinational corporations to tackle tax avoidance.

Ultimately she seeks to revitalise US manufacturing by making the US a leader in high-tech and sustainable industries.

Her approach aligns with current federal investments aimed at reducing reliance on Chinese supply chains, seeking to accelerate growth in critical industries through government support.

What the impact could be

Harris's plan is more focused on investing long-term in manufacturing infrastructure and lending critical governmental support to vital future industries. 

However while her plan may boost technological and construction innovation, it's uncertain if it would increase manufacturing jobs in the short term.

Harris's plan is more fiscally conservative, and would increase the annual deficit by a far smaller amount than trump, estimated at around US$550 billion.

This would be funded largely through targeted tax reforms on corporations and high-income earners​.

Her approach may however result in higher interest costs, and there's scepticism over it's potential to truly bring back manufacturing jobs. 

Both plans have the potential to dramatically influence public investment and private sector confidence, which will shape the realities of US manufacturing. 

We'll see the realities of one of these plans unfold very soon.

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