Shortly before the November 2016 election, economic experts predicted that the economy would be plunged into disaster if Donald Trump were elected president. In fact, the exact opposite occurred. Since his inauguration, the American economy has come roaring back to new heights.
The economic boom has carried over into American manufacturing. All current signs indicate that the U.S. manufacturing industry could continue do to well domestically and globally in light of Trump's most recent economic policies.
Since January 2017, American manufacturing has continued to come back in ways never imagined by economic insiders. After years of this industry shrinking because of falling output, government regulations, and a smaller workforce, it continues to experience a resurgence that has not been witnessed since the Reagan administration.
In fact, even the harshest critics of the current administration admit that American manufacturing is booming right now because of the strong economy, a better quality of workforce, new tax policies that ease the burdens of manufacturers, and a lowering of both transportation and energy costs. While China is still the world's top manufacturing country in terms of output, the U.S. is quickly catching up with it now slightly falling short of countries like the U.K. and Switzerland.
Moreover, manufacturing in the U.S. continues to do well even while some economic indicators contradict its resurgence. For example, the U.S. dollar recently fell in value. Likewise, the stock market has become somewhat stagnant, indicating that investors are not that enthusiastic about the growing American manufacturing market.
Economic insiders also have a dismal outlook for the American economy in the near future. They bolster their claims by pointing out that the GDP in the U.S. has grown by a modest 4.1 percent, which is just short of the consensus estimate for the economy.
Despite this dismal forecast as well as the slowing stock market, President Trump still says that all of the data shows that the U.S. economy is in great shape. He argues that the current numbers are very sustainable and that the economy itself is experiencing something of a miracle lately with its stability and growth.
Trump's optimism belies the worries of some American manufacturers who fear what could become of their supply chains. Their foremost worry stems from the ongoing trade war, which began when Trump imposed tariffs on imported goods from a number of countries. The continued tariffs are raising the costs of supplies needed to make products manufactured in the U.S.
Further, the tariffs also raise the price of goods made from domestic supplies. For instance, the ongoing trade war has caused the price of American steel to rise exponentially. These costs are then passed onto the American consumer who faces paying higher prices for goods that were more affordable prior to the trade war.
Aside from the new tariffs imposed by the Trump administration, American manufacturers also have to worry about factors over which they nor the president have control. Some of the risks about which manufacturers must always be mindful when it comes to supply chain costs include:
They also have to be prepared for rare occurrences like containers falling off ships or trains. Even if the trade war ends, these other factors can pose serious detriments to their supply chain expenses.
If anything, the ongoing trade war combined with uncontrollable risks demonstrate why American manufacturers should avoid putting all of their proverbial eggs in the baskets of one or two suppliers. If they want to continue to enjoy the pace at which their industry is growing right now, they should partner with numerous suppliers that may be able to help them stave off higher costs if or when any or all of these risk factors come into play.
American manufacturing continues to experience a resurgence that has surprised many economic insiders. Despite its current boom, manufacturing may at some point experience a drop off particularly if the falling dollar and slowing stock market catch up to it. American manufacturers can protect their supply chain costs by preparing for factors that are sometimes beyond their control as well as the trade war that shows no signs of abating soon.
