Advocates for tariffs argue that higher trade barriers will lead to the return of manufacturing jobs to the United States. However, according to Jitania Kandhari, Deputy CIO and Head of Macro & Thematic Research at Morgan Stanley Investment Management, and Saumya Jain, Vice President of Emerging Markets Equity, the U.S. manufacturing sector remains fundamentally uncompetitive. While China's share of U.S. imports has decreased, it continues to dominate in critical goods such as rare minerals and electric-vehicle batteries.
Kandhari and Jain state that "the debate is still framed in outdated country versus country terms, while in reality, supply chains stretch across sectors that traverse dozens of borders. Those chains may bend, but they will not break." They suggest that markets need a clearer understanding of the difference between the perceived and actual effects of tariffs.
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