An unintended consequence of Donald Trump’s tariff-driven push to onshore manufacturing could be an acceleration of automation, potentially undermining the administration’s own goal of creating American jobs. Faced with higher US labor costs, foreign companies that do relocate production may choose to build highly automated “lights-out” factories that employ very few people.
Consider the dilemma for a European company facing a stiff tariff. The policy is designed to encourage them to build a factory in the US. However, to remain cost-competitive, they will need to offset the expense of American wages. The most effective way to do this is to invest heavily in robotics and artificial intelligence, designing a plant that relies on machines rather than human workers.
This creates a scenario where the onshoring of manufacturing does not lead to the mass job creation that is politically advertised. A new, state-of-the-art factory might be built in the US, but it could be run by a skeleton crew of technicians, while the assembly line work is performed entirely by robots.
This trend is already underway in manufacturing, but the pressure from tariffs could significantly speed it up. The German auto industry, for example, is a world leader in automotive automation. If its members are forced to build new plants in the US, they will undoubtedly bring their most advanced, labor-saving technology with them.
In this context, the warning from the VDA that tariffs could “burden… jobs in the US” takes on a new meaning. While they may be referring to the disruption of existing jobs, the policy could also preempt the creation of future ones. The push to bring manufacturing back may succeed, but the jobs of the past may not come back with it.
