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Many American business leaders assumed President Donald Trump was making empty threats to impose tariffs on Canada, Mexico, and Chinathat these were mostly negotiating ploys. They were wrong.On Tuesday, the Trump administration imposed a 25% tariff on imports from Canada and Mexico, and an additional 10% tariff on China. A global trade war is now fully in effect, as Canada retaliated immediately; Mexico will announce its own retaliatory tariffs on Sunday. Investors are concerned about the future of the global economy. The stock market has already gone into its steepest decline this year. For Americans, these tariffs are going to make goods more expensive at a time when many are already feeling financially strapped. Companies are going to pay more for goods overnight, and will have no choice but to pass on these costs to consumers.On Truth Social, Trump made it seem like there was a simple fix to this problem. IF COMPANIES MOVE TO THE UNITED STATES, THERE ARE NO TARIFFS!!! he posted. But nobody Ive spoken to in the business community thinks this is a reasonable response.Workers produce consumer lithium battery products in Haian, Jiangsu province, China, on March 4, 2025. [Photo: CFOTO/Future Publishing/Getty Images]Fifty years ago, America was indeed a global manufacturing hub. But since the 1980s, the U.S. government has supported the globalization of the economy with free trade agreements. This allowed China, and other countries in Asia, to start building factories that make everything from clothing and furniture to iPhones. In return, Americans got access to an abundance of cheap products.Theres been a lot of debate about whether this half-century effort to flood the U.S. with cheap merchandise was entirely a good thing. Yes, it democratized access to more affordable consumer products, but it also opened the door to overconsumption, which has been a blight on the environment. Over the past few decades, some companies have focused on bringing manufacturing back to the U.S., because it is more sustainable and produces higher-quality products.A workshop in Huzhou, Zhejiang province, China, produces textiles for export to Europe, on March 3, 2025. [Photo: CFOTO/Future Publishing/Getty Images]In the fashion industry, for instance, labels like American Giant and Buck Mason have tried to build supply chains from scratch. But its been a slow, laborious process. It took the founders of each brand roughly two years to identify the handful of factories in the U.S. that still had the capacity to manufacture clothing, and had workers who could cut and sew the garments they wanted to make. Given the higher cost of labor in this country, these brands are significantly more expensive than those produced overseas. An American Giant sweatshirt costs $138, while Buck Mason T-shirts cost $45.The apparel supply chain in the U.S. has been completely hollowed out, says Bayard Winthrop, founder and CEO of American Giant. Youve got to be a little crazy to try to make clothes in this country from scratch.The struggles these brands have experienced reveal just how hard it is to bring manufacturing back to these shores in the face of a tariff. In the fashion industry this would involve setting up factories and buying industrial manufacturing equipment, which itself is now made overseas. Very few companies have the money to invest in that kind of infrastructure. In other countries, governments have been instrumental in funding and building manufacturing hubs.It would take years to set up factories here. Theres also the question of training an army of workers who understand both the delicate craft of making garments and how to operate industrial machinery. But its unclear where we would even find these workers. Unemployment is at a record low, Jon Gold, VP of supply chain and customs policy at theNational Retail Federation,told me during a recent interview. Where are we going to find workers to do those jobs?The National Retail Federation, which represent millions of retail establishments, has been lobbying against tariffs. As Gold speaks with members, he says its abundantly clear that it will not be possible to simply set up supply chains in the U.S. overnight. Many arent even bothering to try; instead, they are considering moving away from factories in China and Mexico and into countries that havent yet been hit by tariffs. Steve Madden, for instance, is trying to tap factories in Cambodia, Vietnam, and Brazil. Solely relying on tariffs to bring manufacturing to the U.S. has never worked in the past, Gold says. And its unlikely to work now. The result will mean a lot of pain for U.S. companies and consumers.
