Nicholas Lardy is a non-resident senior fellow at the Peterson Institute for International Economics and a member of the Council on Foreign Relations, both Washington-based think tanks. He has studied the Chinese economy extensively, publishing several books on its growth and development since the late 1970s. His most recent, 2019\u2019s The State Strikes Back, posits a rollback of Beijing\u2019s economic reforms via renewed government intervention into the market.<\/p>\n
This interview first appeared in SCMP Plus<\/a>. For other interviews in the Open Questions series, click here<\/a>.The US has had a number of initiatives, most recently the Small Business Administration\u2019s \u201cMade in America\u201d, which aims to<\/strong> restore manufacturing jobs<\/strong><\/a> and win back market share from China. Is this feasible?<\/strong><\/p>\n No, I think the answer is no. Manufacturing jobs in the US as a share of total employment have been shrinking for about 70 or 80 years. The manufacturing share of output has not gone down as much, because productivity per worker has gone up. But the idea that we\u2019re going to restore manufacturing jobs to any significant degree, I think, is very unlikely.<\/p>\n We\u2019ve already seen Trump put a huge emphasis on this, but manufacturing jobs in 2025 are shrinking, partly because of tariffs. The president had this idea, if you put on big tariffs, that manufacturing will return to the United States. Maybe some companies will start producing in the United States to avoid tariffs, but there are a lot of manufacturing companies in the United States that use imported inputs like steel and other things, and as the cost of those goes up, then these firms become less productive. They lose market share, and eventually they start laying off workers.<\/p>\n So you have two forces. Maybe some new firms will come in through reshoring or other sources that you mentioned, but you\u2019ve got to think about the existing manufacturers, what will happen to them. What\u2019s happening so far is they\u2019re shrinking. Employment is shrinking. So I think tariffs are not going to be a mechanism for bringing back a significant number of manufacturing jobs.<\/p>\n