Cover Story: Trump’s Industrial Revival Plan Faces Hurdles, Including His Policies

Just after a breakthrough in U.S.-China trade talks on May 12, President Donald Trump claimed significant progress, emphasizing U.S. economic resurgence and reshoring of critical industries. He boasted that companies like Apple may further increase their U.S. investment plans, following up on its prior $500 billion, four-year pledge. Apple owns a new Texas factory and other expanded U.S. operations, but remains vulnerable to tariffs as most of its manufacturing is overseas. Apple's shares fluctuated with tariff threats, losing over $100 billion in value when Trump suggested a 25% tariff on products not made domestically. [para. 1][para. 2][para. 3][para. 4]

Reshoring isn’t limited to Apple. Nvidia, in partnership with Taiwanese firms Foxconn and Wistron, and TSMC, plans major AI-focused installations in the U.S., with $500 billion committed over four years. Changes in export controls, including Trump’s scrapping of Biden-era AI chip restrictions, further boosted Nvidia’s stock, particularly after a large Saudi order of advanced GPUs. [para. 5][para. 6]

Pharmaceutical giants have responded to Trump’s push for direct U.S. investment: Roche pledged $50 billion and 12,000 jobs, Novartis $23 billion for plant upgrades, Eli Lilly $27 billion for new factories, and Germany’s Merck $1 billion now plus $8 billion by 2028. Multinationals like IBM, Johnson & Johnson, and Stellantis are among others announcing new U.S. investments. Foreign governments pledged an additional $4.2 trillion in U.S. investments. [para. 7][para. 8]

Trump’s administration now applies high tariffs to strategic sectors to encourage reshoring, and moderates tariffs elsewhere to keep trade flowing. Despite renewed focus and incentives, the U.S. manufacturing reshoring trend has slowed, with 2024 output rising just 1% versus 30% annual growth in 2020-2022. Labor shortages, cost competitiveness, and operational resilience are the key barriers, with many companies now evaluating reshoring through a cost-benefit lens. [para. 9][para. 10][para. 11][para. 12]

Experts also acknowledge the role of Chinese firms in future U.S. supply chains, noting potential benefits from joint ventures and know-how exchanges, particularly in sectors like medical devices and advanced chemicals. [para. 13][para. 14][para. 15]

The Biden-era CHIPS and Science Act, with its $52.7 billion intended to supercharge U.S. semiconductor manufacturing, faces uncertainty under Trump, who criticized the approach and prefers tariffs to subsidies. Implementation of CHIPS grants has lagged, with delays, slower-than-expected fund disbursement, and uncertainty leading companies like Intel and Wolfspeed to pull back. The Trump administration seeks to consolidate investment channels and cut red tape, but some analysts warn the end of CHIPS tax credits could deter long-term investment. [para. 16][para. 17][para. 18][para. 19][para. 20][para. 21][para. 22]

TSMC, the world’s largest chipmaker, announced an additional $100 billion for U.S. expansion, but its Arizona fabs lost $460 million in 2024, due to small scale, weak local ecosystems, and high costs. Most U.S. semiconductor expansion, experts argue, is client-driven, not tariff-driven. [para. 23][para. 24][para. 25][para. 26][para. 27][para. 28][para. 29]

In autos, Trump implemented a sweeping 25% tariff on imports and components, but the lack of subsidy support hampers new U.S. automotive investment. Automakers like Ford and GM project multi-billion-dollar hits from tariffs. Some, like BMW and Mercedes, are expanding local production, but higher U.S. wages and automation curb job creation. Despite a push for EV supply chains, Trump’s suspension of certain subsidies threatens recent battery investment gains, while U.S. EV demand growth lags China and Europe. [para. 30][para. 31][para. 32][para. 33][para. 34][para. 35][para. 36][para. 37]

Trump’s pivot to fossil fuels and coal has unsettled clean energy investment and demand forecasts, even among U.S. firms like Clarios, and spurred caution among Chinese and global solar and battery companies, especially if IRA tax credits are restricted. Building clean-energy factories in the U.S. remains costlier than abroad, with uncertain policy further discouraging investment. [para. 38][para. 39][para. 40][para. 41][para. 42][para. 43][para. 44][para. 45]

Persistent manufacturing bottlenecks remain: past "reshoring" displays, such as Foxconn’s Wisconsin plant, failed to deliver promised jobs and investment. About 40% of major manufacturing projects announced since Biden’s incentives began have been delayed or canceled, deterred by policy instability, costs, and insufficient demand. U.S. manufacturing is also held back by fragmented supply chains, slow permitting, high labor costs, and a cultural deficit versus East Asian counterparts. Labor shortages, particularly in skilled manufacturing, are projected to worsen without systemic reform. [para. 46][para. 47][para. 48][para. 49][para. 50][para. 51][para. 52][para. 53][para. 54][para. 55][para. 56][para. 57]

In summary, Trump’s industrial strategy mixes aggressive tariffs for strategic sectors, efforts to lure investment, and retreat from clean energy subsidies. These policies have energized some headline investments but face significant bottlenecks in execution, labor, capital, and competitiveness—challenges that cast doubt on the prospects for a true U.S. manufacturing revival. [para. 58]