The US manufacturing sector has faced a prolonged decline exacerbated by global competition and underinvestment. Goldman Sachs analysts argue that technological advancements like AI and robotics hold greater potential for revitalizing manufacturing productivity than tariffs. While President Trump's tariffs aim to bolster American production, they are unlikely to counterbalance the cost advantages of overseas manufacturing. The integration of AI in companies like Amazon and PepsiCo showcases the ongoing transformation within the sector, highlighting the necessity for innovation in addressing productivity stagnation.
A pickup in the pace of innovation remains the catalyst most likely to reverse the long-run stagnation in manufacturing productivity.
China will likely continue to grow its exports on the back of cost advantages and industrial policy support.
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