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Revealed: What it means to be ‘Made in the USA’<\/p>\n
George and Lisa Winton of Suwanee, GA, discuss the foundation of the Winton Machine Company and what it means to be “Made in America.”<\/p>\n
New York-based manufacturer Gear Motions purchases the majority of its parts from U.S. suppliers, with roughly 4% of inputs imported from other countries.\u00a0\u00a0<\/p>\n
It\u2019s a small fraction, but with a 10% base tariff<\/a> in effect since early April, President and CEO Dean Burrows said his company, which specializes in custom cut and ground gears, will have to pass down those price increases to customers. That\u2019s not for lack of trying to find new suppliers.\u00a0\u00a0<\/p>\n \u201cWe have not been able to find a U.S. source that can make the product, and we have searched globally,\u201d Burrows said.\u00a0\u00a0<\/p>\n Tariffs are meant to fix that, with the Trump administration aiming to \u201creverse the decades<\/a> of globalization that has decimated our industrial base,\u201d according to an April White House press release.\u00a0<\/p>\n But reviving the U.S. manufacturing base would take years, and economists have doubts that President Donald Trump<\/a>\u2019s tariffs will be enough to bring it back to its former glory. Meanwhile, many U.S. manufacturers that rely on imports may be more likely to pass on tariff costs to consumers than reshore their supply chains.\u00a0<\/p>\n Nearly one-third<\/a> of U.S. manufacturers\u2019 intermediate inputs are imported from other countries, according to a 2022 report from the Commerce Department.\u00a0<\/p>\n \u201cIn the short run, it\u2019s going to hurt manufacturers. It\u2019s going to hurt the factory owners. It\u2019s going to hurt the workers,\u201d said Nancy Qian, an economics professor at Northwestern\u2019s Kellogg School of Management. \u201cAnd that’s on top of the pain the workers will feel when they go to the store and need to pay more for their imported (items).\u201d\u00a0<\/p>\n Why shifting to US suppliers isn\u2019t always an easy solution\u00a0<\/p>\n Trump\u2019s tariffs are meant to position the U.S. as a \u201cglobal superpower in manufacturing<\/a>\u201d by drawing in new factories and manufacturing investments.\u00a0\u00a0\u00a0\u00a0<\/p>\n \u201cThe president has said early and often that the best way to avoid tariffs is to just come here and produce,” Trump’s top trade adviser, Peter Navarro, told CNBC in early April. \u201cWe’re going to get to a place where America makes stuff again.\u201d\u00a0\u00a0<\/p>\n But moving supply chains to the U.S. can be costly.\u00a0\u00a0<\/p>\n Nearly two-thirds of 380 surveyed companies say building a new domestic supply chain would at least double their current costs, according to an April CNBC survey.<\/a> Sixty-one percent said it would be more cost-effective to relocate to a lower-tariffed country.\u00a0<\/p>\n \u201cIf the U.S. continues its focus on China, it will be successful in moving production out of China to some extent, but it won\u2019t move so much of it back to the U.S.,\u201d Qian said. \u201cThere are many other countries out there that can manufacture at costs lower than the U.S.\u201d\u00a0<\/p>\n Even if tariffs boost U.S. manufacturing, it\u2019ll take years for new factories to get up and running. That could leave U.S. companies searching for domestic suppliers struggling in the meantime.\u00a0\u00a0<\/p>\n Take 000Skin, a beauty company launched by Hannah Chang earlier this year. While 000Skin is based in New York, Chang has been sourcing the containers for her skin care products in China, where she says manufacturing capabilities are unmatched.\u00a0<\/p>\n \u201cI think people are not aware how much work and infrastructure even creating a plastic jar takes,\u201d Chang said.\u00a0\u00a0<\/p>\n But rising import costs from tariffs have thrown her for a loop. Chang has looked for alternative suppliers in the U.S., but says she has yet to find options that match the quality and price of what Chinese manufacturers can supply. She\u2019s considered shifting to a Mexican producer, but said it’s been difficult finding one willing to work with smaller businesses.\u00a0<\/p>\n \u201cI’ll probably just continue to look at China-based partners,\u201d Chang said, adding that she\u2019s considering raising prices to cover at least some of the 30% tariff rate.\u00a0\u00a0<\/p>\n Courtney Rivenbark looked into working with U.S. manufacturers when she created her apparel and jewelry brand, Coco Clem<\/a>,\u00a0in 2018.\u00a0<\/p>\n The high production costs turned her away, and she eventually pivoted to a partnership with a Chinese factory she said aligned with her ethical and environmental goals.\u00a0<\/p>\n \u201cChina is just very advanced with their machines and equipment and technology,\u201d Rivenbark said. \u201cThe whole supply chain exists in China \u2013 the knits, the yard, the GOTS (Global Organic Textile Standard) certified organic cotton yarn.\u201d\u00a0<\/p>\n After Trump announced new tariffs earlier this year, Rivenbark said she compared pricing from China with U.S. manufacturers. She said it would cost her three times more to create the same sweater in the U.S., and local manufacturers didn\u2019t have the technology to create certain garments in plus sizes. \u00a0<\/p>\n \u201cI would move (production to the U.S.) if the infrastructure was here,\u201d Rivenbark said. But \u201cit\u2019s just so much more expensive. … I\u2019m not really interested in moving it outside of China because of a potential short-term policy switch.\u201d\u00a0<\/p>\n How many factories, jobs are coming to the US?\u00a0<\/p>\n That\u2019s not to say tariffs aren\u2019t pressuring some businesses to increase their investments in the U.S.\u00a0Whether those moves will lead to a dramatic influx of manufacturing jobs is another question. \u00a0<\/p>\n Cra-Z-Art \u2013 a New Jersey-based manufacturer that produces toys, activities and school supplies \u2013 in March announced plans to grow production space by 50% to 1.5 million square feet to combat the cost of tariffs.\u00a0\u00a0\u00a0<\/p>\n Lawrence Rosen, chairman of Cra-Z-Art, said it\u2019s too early to say how many jobs the move will create, but the company is looking to use automation \u201cwherever possible\u201d to reduce direct labor costs.\u00a0\u00a0<\/p>\n \u201cI need to control my 102-year-old company\u2019s destiny by controlling its future and not relying on global tariffs when things could change daily,\u201d Lawrence said. \u201cBy manufacturing in the USA, we save on freight, we save with automation. … With automation, we can produce many of our products at a similar cost compared to increased costs with even 10% tariffs on freight.\u201d\u00a0<\/p>\n A White House website<\/a> claims Trump\u2019s policies have spurred trillions of dollars in new U.S. manufacturing investments\u00a0that are \u201cfueling job growth, innovation, and opportunity across every corner of the country.\u201d \u00a0<\/p>\n A\u00a0number of those investments were in the works before Trump took office. \u00a0<\/p>\n A $5 billion investment from automaker Stellantis, for instance, includes plans to restart an idled plant in Belvidere, Illinois,<\/a> to make trucks, a deal first announced in 2023<\/a>. While there were talks of delays in 2024, the company in January confirmed that it would stick to the 2027 opening agreed to in union negotiations years prior. \u00a0<\/p>\n And a spokesperson for German medical technology company Siemens Healthineers, another company listed on the website, told USA TODAY that several of the initiatives included in its $150 million investment<\/a> in new and expanded U.S. facilities have been underway for \u201cwell over a year,” although projects were accelerated to address rising economic and geopolitical uncertainty. \u00a0<\/p>\n Michael Strain, director of economic policy studies at the American Enterprise Institute, a conservative think tank, doesn\u2019t expect to see much reshoring tied to tariffs.\u00a0<\/p>\n \u201cFor a business to set up a factory in the United States, that\u2019s a 10-year investment or longer,\u201d Strain said. \u201cHow can a business possibly know whether or not that would be profitable if tariff rates are changing every week?”\u00a0<\/p>\n Some data suggests the domestic manufacturing industry has actually taken a hit from tariffs, with trade policy uncertainty prompting some companies to tighten their purse strings.\u00a0<\/p>\n Economic activity in the manufacturing sector contracted in May for the third consecutive<\/a> month to reach its lowest level since November, with both orders and output contracting, according to a survey<\/a> by the Institute for Supply Management. Meanwhile, the manufacturing sector lost about 8,000 jobs<\/a> between April and May despite an overall increase in employment, according to the Labor Department.<\/p>\n