Analysts at Capital Economics are confident that the tariffs imposed by US President Donald Trump will not stop the downturn in manufacturing in America. So, the efforts of the American leader could have been wasted. Time will tell!

According to Capital Economics experts, the aggressive trade agenda of the White House head could "bring some manufacturing jobs back to the country, although the scale of reshoring will be limited."

However, Donald Trump is convinced that his decision to impose high tariffs on trade partners will boost job growth in the domestic manufacturing sector. Nevertheless, the odds are low, the experts claim. They recalled that the three previous presidential administrations in the White House had repeatedly tried, but failed, to encourage the return of manufacturing jobs to the US. The latest attempt, based on expanded use of tariffs, is unlikely to change that.

Analysts believe that some manufacturing sectors, particularly automotive and pharmaceutical production, appear more suitable for reshoring. “They may get a boost from the tariffs,” Capital Economics notes. However, these industries do not compete directly with “ultra-low-cost manufacturing locations,” making a positive outcome unlikely.

As for another issue, pharmaceutical imports, these are mostly carried out by subsidiaries of American companies in countries like Ireland, Switzerland, and the Netherlands. A similar situation exists with automobile imports. “This means that relocating production to the US may face certain disruptions,” the firm emphasizes.

Current tax policy plays a significant role in keeping manufacturing outside of America. Taxes in the US are very high, unlike in many other countries. In such circumstances, business owners are in no hurry to set up manufacturing in America. Moreover, other countries often offer lower production costs and cheaper labor, which is highly beneficial to businesses.

According to Capital Economics specialists, Trump’s tariffs may result in some jobs returning to the US, but the overall scale of reshoring will still be limited. At the same time, manufacturing employment will remain well below the peak levels of the 1970s, the analysts conclude.