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The promise to "bring back" manufacturing to the United States has been a recurring theme in President Donald Trump's speech. However, a report from consulting firm Oxford Economics shows that the reality is more nuanced: there will not be a widespread resurgence of factories in all sectors.Rather, growth will be concentrated in those sectors where the country already has a solid and competitive base.
The sectors best positioned to expand in the next decade are high-tech, pharmaceuticals, aerospace and defense. technology, pharmaceuticals, aerospace and defense.. These are capital- and knowledge-intensive industries with established value chains, access to financing and constant innovation. In addition, these are sectors in which the U.S. maintains a global leadership position, which makes it easier to take advantage of public policies and trade agreements.
Recent experience confirms this: large international aircraft orders, advances in biotechnology and the growth of demand in semiconductors show that the future lies in these highly complex industries. the future lies in these highly complex industries..
In contrast, labor-intensive and low value-added labor-intensive and low value-added activities, such as textiles, furniture or wood, are unlikely to return.such as textiles, furniture or wood, are unlikely to return. The main obstacle is labor costs: manufacturing in the U.S. is up to 20 times more expensive than in the U.S. up to 20 times more expensive than in countries such as Vietnam. In addition, there is a shortage of skilled manufacturing workers, a challenge that cannot be solved with tariffs or tax reductions alone.
Even if some operations were to return, they would probably do so in highly automated versionsThis would limit massive job creation, one of the major policy objectives behind "reindustrialization".
The report also stresses that tariffs alone are not enough to boost manufacturing. to boost manufacturing. The real difference has been made by laws such as the CHIPS Act Act and the Inflation Reduction Actwhich pumped billions into semiconductor, battery and clean energy factories. These incentives triggered an investment boom in new plants, something that tariffs alone never did.
However, recent changes in Congress -such as the reduction of tax benefits for renewable energy and electric vehicles- cast doubt on the continuity of this momentum. cast doubt on the continuity of this momentum.. This leaves sectors such as solar and wind in a more uncertain terrain, despite having shown great dynamism in recent years.
The picture is clear: U.S. manufacturing U.S. manufacturing will not return to what it was in the past, but it does have a promising future in the most advanced areas.but it does have a promising future in the most advanced areas. To capitalize on this, it will be key to move toward a comprehensive strategy that combines sustained investment, technological innovation and talent development. sustained investment, technological innovation and talent development..
Companies already operating in sectors such as technology, healthcare, aerospace and defense, and those that provide services or inputs to these industries, will be best positioned to take advantage of the opportunities of the next decade. will be better positioned to take advantage of the opportunities of the next decade..
You can read the full Oxford Economics report here.
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