U.S. manufacturing is facing a decline due to heightened competition from China and a general slowdown in productivity. Analysts from Goldman Sachs suggest that tariffs imposed to encourage reshoring will not sufficiently reduce supply chain and labor costs. Instead, they advocate focusing on automation and artificial intelligence as primary drivers for improving manufacturing productivity. Recent data also reveals a slowdown in U.S. manufacturing, with a drop in new orders for durable goods and a concerning decline in the Manufacturing PMI, indicating broader challenges within the sector.
A pickup in the pace of innovation—potentially from recent advances in robotics and generative AI—remains the catalyst most likely to reverse long-run stagnation in manufacturing productivity.
Manufacturers should look to automation and the ever-more-accessible artificial intelligence as their best chance for boosting domestic manufacturing, rather than relying solely on tariffs.
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