The ‘Made in USA’ weighs 4.5% more in the pocket of factories

Experts warn that protectionism can be expensive for industrial states and workers in a decisive year for presidential race

The United States government is preparing a new wave of tariffs on imported products, which has generated intense debates between economists, entrepreneurs and political analysts. According to a recent analysis released by the Washington Center for Equitable Growth, new rates can pressure US factories up to 4.5%, affecting manufacturing sectors already weakened by structural challenges and pandemic.

The research points out that, despite President Donald Trump’s speech on protecting national industry and bringing jobs back, economic realities are beginning to reveal themselves more clearly. Chris Bangert-Edrowns, a center researcher and author of the analysis, warns that cost increases, even if they seem modest, can have serious consequences for companies operating with reduced margins. “There will be a cash crisis for many of these companies,” he said. “These changes can lead to salary stagnation if not dismissals and factories if costs become unsustainable.”

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Tariffs, announced as part of trade agreements with the European Union, Japan, Philippines, Indonesia and Britain, range from 15% to 50%. President Trump intends to formally apply them from Friday, expanding the scope of the protectionist policy that characterizes his style of governance.

Although Trump has promised measures to help reduce the budget deficit and revitalize traditional industrial cities, experts question if this will be enough to compensate for internal costs. In fact, the analysis suggests that negative impacts will be able to exceed the expected benefits, especially in states such as Michigan and Wisconsin – important presidential elections – where more than 20% of jobs are linked to sectors directly affected by tariffs, such as manufacturing, construction and mining.

Another worrying point is the impact on global supply chains. The manufacture of computers and electronic equipment, for example, depends strongly on imported components. More than 20% of the inputs used in the production of these goods are purchased abroad, which means that new rates can significantly increase the costs of the technological sector, including artificial intelligence, a topic in Trump’s recent discourses.

While the president argues that tariffs strengthen local industry, recent data suggest a less optimistic picture. In April, shortly after the first round of import taxes, the country lost 14,000 jobs in the industry. This loss raises doubts about the effectiveness of strategy, especially with the June employment report about to be released.

However, not everything indicates absolute pessimism. The US stock market demonstrated some relief by realizing that the announced tariffs were smaller than initially threatened in April. In addition, there is an expectation of greater commercial stability, although some risks remain. An Atlanta Federal Reserve Survey points out that companies tend to pass half of additional consumers costs, which can lead to increasing inflation and slower growth pace in the medium term.

“We have eliminated inflation,” Trump recently said before boarding an official trip. However, economists point out that, given the increase in global prices and pressure on productive chains, inflation control may be far from achieving.

The White House, in turn, maintains the positive tone, arguing that the new tariffs will pave the way for US companies to conquer external markets. “The” Made in USA “seal should resume its global rule under the government of President Trump,” said Kush Desai, managing spokesman.

Despite the official optimism, the reality on the factory floor seems to be different. For many entrepreneurs, the combination of high costs and commercial uncertainties represents an obstacle to recovery. With the increasingly integrated global economy, trying to isolate the domestic market through commercial barriers can end up resulting in setbacks that Trump can not even predict or control.

There is still a lot of uncertainty, but the world economy faces a new price

There are limits to analysis. Trump tariffs have been a moving target, and analysis considers only additional costs, not how these costs will be absorbed between foreign producers, national manufacturers and consumers. In addition, the legal basis of tariffs as an “emergency” law will be analyzed by a US Appeals Court on Thursday.

Treasury Secretary Scott Bessent said in an interview last week on Fox Business Network’s “Kudlow” program that countries were essentially accepting tariffs to maintain access to the US market. “Everyone is willing to pay a toll,” he said.

But what Bessent didn’t say is that American manufacturers are also paying much of that price.

“We are being pressured everywhere,” Jordan Manufacturing Co. president, Michigan, said Justin Johnson, president of Jordan Manufacturing Co. His grandfather founded the company in 1949.

The company, which manufactures parts used by Amazon warehouses, automotive companies and aerospace companies, saw the price of an essential raw material-steel coil-rising from 5% to 10% this year.

Trump imposed 50% tariffs on imported steel and aluminum. Jordan Manufacturing does not buy foreign steel. But by damaging foreign competition, Trump fares allowed US steelmakers to increase prices.

Johnson doesn’t blame them. “There is no hot -blooded capitalist that won’t increase your prices under these circumstances,” he said.

Trump says there is no inflation with tariffs, but companies see higher prices

Trump’s White House insists that inflation is not manifesting itself in the economy, issuing a report through the Economic Advisory Council this month, stating that the price of imported products fell between December last year and May this year. “These findings contradict the allegations that tariff fees would lead to an acceleration of inflation,” the report concludes.

Ernie Tedeschi, director of economics at Yale University Budget Laboratory, said the most accurate measure would be to compare import prices trends with themselves in the past and that CEA’s own numbers show that “import prices have accelerated in recent months.”

The latest estimate of Yale’s Budget Lab is that the tariffs would make the average family $ 2,400 less than it would have otherwise.

Josh Smith, founder and president of Montana Knife Co., called himself a voter of Trump, but said he sees fares about foreign steel and other products as a threat to his business.

For example, Smith has just ordered from Germany a $ 515,000 machine that sharpened the blades of his knives. Trump imposed a 10% tax on EU products, which is expected to increase to 15% with the trade agreement he announced on Sunday. Thus, Trump’s tax on the machine reaches $ 77,250 – enough for Smith to hire a novice worker.

Smith would enjoy the champhone rectification machines from an American supplier. But there is none. “There are only two companies in the world that make them, and both are in Germany,” said Smith.

There is also imported steel, which Trump is taxing at 50%. Until this year, Montana Knife bought the steel powder from Crucible Industries in Syracuse, New York. But Crucible declared bankruptcy last December, and its assets were bought by a Swedish company, Erasteel, which transferred production to Sweden.

Smith got around the tariffs buying the equivalent of one year of steel in advance. But from 2026, the special steel he will import from Sweden will be subject to a 50%tariff.

“The average American is not in my position, looking at the numbers and making daily decisions, like, ‘Hey, we cannot hire these people too much because we may have to pay this fare on this steel or this fare on this rectifier,” he said. “I want to buy more equipment and hire more people. That’s what I want to do.”

While large corporations and industries may have more flexibility to absorb or pass costs, small and medium -sized companies are living under constant tension. For them, each additional dollar represents a difficult choice between investing in the future or simply surviving.

In fact, what is at stake goes far beyond trade borders. It is a matter of trust in the economic system and political leadership. And as costs begin to appear, this confidence may be being put to the test – not only by the numbers, but by the daily reality of those who try to keep the business open.

With information from AP*