Reports of the death of U.S. manufacturing have been greatly exaggerated. The fallacy that trade killed manufacturing has long been a pretense for protectionism and industrial policy. But by historic standards and relative to other countries’ manufacturing sectors, U.S. manufacturing remains a global powerhouse.

Claims of “rapid deindustrialization” are misplaced and often based on the declining share of manufacturing value-added relative to the overall economy. Indeed, manufacturing’s share of the U.S. economy peaked in 1953 at 28.1 percent, whereas in 2015 manufacturing accounted for only 12.1 percent of GDP. However, in 1953, U.S. value-added in the manufacturing sector amounted to $110 billion, as compared to a record $2.1 trillion in 2015 - more than six times the value in real terms.

Trade critics also tend to conflate manufacturing employment with the condition of manufacturing. But declining employment in a manufacturing sector that produces record-setting output year-after-year is a sign of greater efficiency, which frees human resources for other, higher-valued added endeavors. In 2015 the stock of FDI in U.S. manufacturing surpassed $1.1 trillion, more than double the value of FDI in China’s manufacturing sector (and eight times the value in per capita terms).

On this page you will find Cato’s work related to the U.S. manufacturing sector, trade in industrial goods, and subsidies and other industrial policies that distort production decisions and affect supply and demand.

More on Manufacturing and Industrial Policy

Commentary

Trump Would Further Damage U.S. Manufacturing if He Restricts Steel Imports

By Daniel R. Pearson. MarketWatch. June 22, 2017.

The Danger of Invoking National Security to Rationalize Protectionism

By Daniel J. Ikenson. China-US Focus. May 15, 2017.

Is Manufacturing Employment the Only Thing That Counts?

By Daniel R. Pearson. Morning Consult. March 2, 2017.

Cato Studies

Global Steel Overcapacity: Trade Remedy “Cure” Is Worse than the “Disease”

By Daniel R. Pearson. Free Trade Bulletin No. 66. April 11, 2016.

The Export-Import Bank and Its Victims: Which Industries and States Bear the Brunt?

By Daniel J. Ikenson. Policy Analysis No. 756. September 10, 2014.

License to Drill: The Case for Modernizing America’s Crude Oil and Natural Gas Export Licensing Systems

By Scott Lincicome. Free Trade Bulletin No. 50. February 21, 2013.

Articles

An Economic Critique of Corn-Ethanol Subsidies

Jerry Taylor. Federal Reserve Bank of St. Louis: Regional Economic Development. Vol. 5. No. 1. 2009.

Outsourcing Benefits Michigan Economy and Taxpayers

Daniel Griswold. Mackinac Center for Public Policy: Policy Brief. September 16, 2004.

Public Filings

Perspectives on the Export-Import Bank of the United States

By Daniel J. Ikenson. Testimony. June 2, 2015.

Trade Promotion Agencies and U.S. Foreign Policy

By Daniel J. Ikenson. Testimony. May 19, 2015.

Manufacturing in the USA: How U.S. Trade Policy Offshores Jobs

By Daniel J. Ikenson. Testimony. September 21, 2011.

Cato Reviews & Journals

Events

Dealing with China’s Steel Overcapacity

Featuring Daniel R. Pearson and Daniel J. Ikenson. October 5, 2016. Policy Forum.