Costs are rising, jobs are disappearing US entrepreneurs warn: Trump's tariffs are hampering growth and investment
Machinery manufacturers are facing sharply higher costs while jobs are being lost. Despite glimmers of hope in the construction sector and tax relief, the future of the industry remains uncertain as the government's trade strategy makes investment difficult.
19.03.2026, 05:30
19.03.2026, 05:38
dpa
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- US entrepreneurs warn: The tariffs that Trump claimed would help US companies are actually driving many of them out of business.
- The problem could get worse as the government rushes to draft new tariffs to replace import duties imposed under an emergency law that the Supreme Court ruled unlawful in February.
- Trump's main argument for tariffs was that they would lead to more manufacturing plants opening in the US and generate enough revenue to balance the federal budget deficit.
- This has not happened: in the first twelve months since Trump's return to the White House, 98,000 manufacturing jobs have been lost.
Jay Allen is a supporter of Donald Trump and voted for him in the belief that the Republican would cut taxes and loosen regulations. This, Allen hoped, would benefit his company Allen Engineering in the north-eastern US state of Arkansas, which manufactures industrial machinery for laying, processing and sealing concrete.
However, the tariffs at the heart of Trump's economic agenda have hit Allen hard. The import tariffs have driven up the cost of German-made motors, steel, gearboxes and couplings, among other things, which Allen needs to manufacture troweling machines for sales prices of up to 100,000 dollars each.
Allen's experience shows: The tariffs that Trump claimed would help US companies are actually driving many of them out of business. The problem could be exacerbated as the government rushes to draft new tariffs to replace the import duties imposed under an emergency law that the Supreme Court ruled unlawful in February.
According to Allen, his company reported a loss in 2025 because of the tariffs. His workforce shrank from a high of 205 to 140 employees. To make ends meet this year, he raised prices by eight to ten percent, even though this could mean lower sales. "What's really sad is that the unintended consequences of tariffs are hurting the manufacturing industry in our country," says the entrepreneur. "Unfortunately, people in the working class are coming under more and more pressure."
Number of jobs in the manufacturing sector is falling
Trump's main argument in favor of tariffs was that they would lead to more manufacturing plants opening in the US and generate enough revenue to balance the federal budget deficit. This has not happened: in the first twelve months since Trump's return to the White House, 98,000 manufacturing jobs have been lost.
US companies that had to pay the tariffs are suing the Trump administration for refunds amounting to more than 130 billion dollars. At the same time, the budget deficit is forecast to increase over the next ten years.
The White House states that spending in the construction sector is high, more workers are being hired to build factories, new investments are being made and productivity in the manufacturing sector is increasing - which could ultimately lead to a revival of the manufacturing industry. "It takes time for manufacturing to ramp up, so it will be a while before the full benefits of the President's policies are realized," said Pierre Yared, Acting Chairman of the White House Council of Economic Advisers.
Construction activity on the rise - thanks to Biden's subsidy program
Some of the bright spots in the construction industry cited by the White House appear to be the result of programs launched by Trump's predecessor Joe Biden. Spending on the construction of production facilities has been increasing since 2022 in anticipation of government support through Biden's "CHIPS and Science Act", which provided extensive subsidies for factories to manufacture computer chips. The Act was a major contributor to a historic increase in spending on the construction of manufacturing facilities, according to Skanda Amarnath, Managing Director of think tank Employ America.
Spending on building manufacturing facilities has declined during Trump's presidency, but the pace remains relatively high mainly due to continued work on Biden-era projects in Arizona, Texas and Idaho, Amarnath says.
He also analyzed interviews that regional central banks had conducted with companies. The statements do not indicate a general upswing due to Trump's tariffs in the manufacturing sector. "You don't get the impression that a new manufacturing renaissance is underway," says Amarnath.
Uncertainty scares off investors
In executive orders, proclamations and other statements, Trump has so far announced more than 50 tariff policy measures - not to mention the tariff threats that he regularly makes on social media or in conversations with journalists but has not yet officially implemented. The flood of announcements, U-turns, exemptions and legal challenges has made planning difficult for smaller manufacturing companies. Allen Engineering, for example, imports its 75 hp diesel engines from Germany. Production in the USA would require an investment of 20 million dollars - an enormous risk as long as the customs situation remains unclear.
Will engine manufacturers really "spend that much money to move production from Germany to the US if they don't know what the situation will be in three years' time?" asks Allen. "I don't know who will be in the White House then and what the attitude to these tariffs will be."
Joseph Steinberg is an economist at the University of Toronto. According to him, studies show that in the best-case scenario, it would take a decade for employment in the manufacturing sector to rise above the level it was at before the tariffs were introduced. However, according to Steinberg, "the current situation is by no means a best-case scenario", as US trade policy is uncertain and companies are therefore hesitant about expansion plans.
Mechanical engineering calls for balance
The US Association of Machinery Manufacturers reported in February that the USA's share of global manufacturing was lagging well behind China. The association called for tax credits to offset tariff costs and, in particular, tariff exemptions for raw materials, parts and components that cannot be procured domestically in sufficient quantities.
The steel tariffs in particular are a cause for concern. Trump introduced them in March 2025 and raised them to 50 percent in June. They were not affected by the Supreme Court's decision. According to Trump, they were responsible for US steel mills making profits again. But they hurt companies that use this steel, such as Calder Brothers in the US state of South Carolina, which manufactures machines for asphalt construction.
"The steel tariffs were the first thing I noticed," says company boss Glen Calder. "The market price simply skyrocketed. And has stayed at this high level."
China's trade surplus is growing
Part of Trump's efforts to boost manufacturing has been to help US companies compete with China. But the US trade deficit in manufacturing rose again last year under Trump. At the same time, China's trade surplus with the rest of the world climbed to a record 1.2 trillion dollars.
This trend reveals one of the major problems with Trump's tariff strategy, says Lori Wallach, head of the Rethink Trade program at the non-governmental organization American Economic Liberties Project. Instead of confronting China as a united group, Trump decided against working with partners. US manufacturers are at a disadvantage, Wallach said, because there is no coalition of countries that can impose sanctions for unfair labor practices, currency manipulation or subsidies. "This administration's general reluctance to cooperate internationally means it is trying to do everything on its own."
