Senior Vice President for International Policy, U.S. Chamber of Commerce
October 06, 2023
National Manufacturing Day is a great day to celebrate the men and women who make things in this country — and a chance to remind the American people and our elected officials that American manufacturing is alive and well.
It’s also a good moment to consider how important manufacturing is to America’s success in international trade — and vice versa.
In sharp contrast to the “we don’t make anything here” refrain commonly heard in Washington, U.S. industrial production has risen by two-thirds in the past 30 years in inflation-adjusted terms. Manufacturing has bounced back from the pandemic recession and today employs 13 million Americans, with average earnings topping $33 per hour.
Trade is essential to the success of U.S. manufacturers. American exports of manufactured goods reached nearly $1.3 trillion in 2022, a sum representing nearly half the sector’s total output. In other words, nearly half of everything made in American factories is destined for consumers overseas.
That’s why American manufacturers have historically been among the biggest supporters of the push for more market-opening trade agreements. These trade agreements are designed to tear down the tariffs and other trade barriers that block U.S. exports, and they’ve delivered tremendous benefits for U.S. manufacturers and the workers they employ.
The U.S. has free-trade agreements with 20 countries representing just 7% of the world’s population, but these countries purchase about 49% of all U.S. exports of manufactured goods. This shows a good trade agreement can turn even small markets into big opportunities.
However, while other economies race to ink new deals, the U.S. has not entered an agreement with a new trade partner in a decade. The Biden administration has yet to embrace a market-opening trade agenda — not even widely-supported free-trade negotiations it inherited with the UK, our closest ally, or Kenya, a promising market in East Africa.
Meanwhile, the EU has 46 free-trade agreements with 78 countries, and East Asia is integrating its markets with massive trade pacts including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). These agreements mean better access to some of the world’s fastest growing markets — but not for American manufacturers. The result is a mounting disadvantage for U.S. manufacturers.
The U.S. needs to get back in the game on trade agreements. America’s ability to deliver on a “make it here, sell it everywhere” agenda for U.S. manufacturers depends on it.
On other fronts, there are steps the Congress can take today to advance the trade interests of U.S. manufacturers. The Chamber has urged Congress to pass the long-delayed Miscellaneous Tariff Bill (MTB). With a three-decade track record of success, MTBs temporarily suspend tariffs on select goods. The U.S. International Trade Commission leads a rigorous vetting process established by Congress to confirm that products proposed for tariff relief are not made in the U.S. or are unavailable in sufficient quantities to meet U.S. manufacturers’ needs.
MTBs enhance the competitiveness of American companies. Indeed, raising costs for U.S. manufacturers through the application of duties to inputs that are not available from domestic sources only hurts American workers and businesses.
Looking at the big picture, it’s clear U.S. manufacturers are benefitting from access to imported materials and components as well as the expansion in U.S. exports — especially to the markets where the U.S. has trade agreements in place.
In fact, consumers and businesses in those 20 countries purchased $691 billion of U.S. manufactured goods in 2021 — a sum representing 49% of all the exports produced by the 12.9 million Americans employed in manufacturing.
Do the math, and you’ll find trade agreement partner countries generate export revenue of $53,500 for each American factory worker. Compare this with the average annual earnings — including pay and benefits — of an American manufacturing worker: $95,990. How could manufacturers make their payrolls without the revenues they earn by exporting to these trade agreement partners? The short answer is, they couldn’t.
So, what’s the best way to celebrate Manufacturing Day? Dispense with the myth that Americans don’t make anything anymore. And move forward with a trade agenda to support U.S. manufacturers and the workers they employ.