Tariffs are canceling out the tailwinds.

Greg Ip of the WSJ is one of my favorite economics writers, and you should always read what he writes. But in a recent post about manufacturing, I think he gets the main narrative wrong. Greg writes that America is in the middle of a “manufacturing revival”, which his headline writer calls a “stealth manufacturing boom”:

You won’t hear this from either critics or fans of President Trump’s tariffs, but there’s a manufacturing revival going on…Critics have focused on the fact that factory jobs have steadily slid since Trump took office last year…Unlike jobs, though, actual factory output has risen briskly, and may even be picking up speed. This stealth recovery, though, isn’t because of tariffs. Instead, credit goes to the most basic economic force of all: demand. The U.S. is good at making things that happen to be in big demand right now.

As a macro story, “AI boom cancels out tariffs” isn’t a bad description of the U.S. economy right now — including the manufacturing sector. But it’s just not right to say that the former is winning out when it comes to manufacturing.

Let’s look at the data. Here’s Greg’s evidence for the boom:

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