Bringing Jobs Back To The U.S.

Good Morning Ladies and Gentlemen

”Our species can only survive if we have obstacles to overcome. You remove those obstacles. Without them to strengthen us, we will weaken and die.”

Captain James T. Kirk

I believe it is time to examine the likelihood of President-elect Trump’s promise to bring manufacturing jobs back to the U.S. Many people seem to have a somewhat simplistic view of this issue, but I think it deserves a more in-depth analysis. I am in the process of exploring this topic and beginning to develop some initial thoughts on the potential outcomes of this promise, which I would like to share with you today. But first, let us have a look at what happened to the U.S. inflation rate in December 2024.

U.S. Inflation Rate

U.S. inflation experienced an increase in December, rising by 2.9% compared to the same month in the previous year, marking an uptick from 2.7% recorded in November. Despite this rise, financial markets may take some solace in the fact that the inflation rate aligns with prevailing expectations, and notably, core inflation has shown a slight decline, falling unexpectedly from 3.3% to 3.2%.
Had inflation breached the 3% threshold, renewed apprehensions regarding interest rate hikes would likely have emerged. Nonetheless, and for the time being, there remains optimism that the Federal Reserve may implement moderate interest rate cuts throughout the year. Furthermore, U.S. producer price inflation was reported to be lower than anticipated as well. Considering the base effect, it is reasonable to project that the December inflation figure may represent a peak for the months to come.
My personal expectation is that the inflation rate could taper to approximately 2% from January to April.

Big Promise

President-elect Donald Trump articulated a commitment to revitalising the U.S. job market by implementing or increasing tariffs on (industrial) goods and services imported from foreign nations. This policy approach is designed to incentivise corporations, especially those that are U.S.-based but have established production operations abroad under more advantageous economic conditions, such as in the automobile industry, to invest in new manufacturing facilities within the United States. The overarching objective is to facilitate the return of jobs to the American workforce and stimulate domestic economic growth.

In Theory

In theory, this approach may be worth exploring. In practice, we might observe some companies relocating their manufacturing or production facilities back to the U.S. However, rather than employing human workers, these facilities are likely to utilise the latest state-of-the-art industrial robots for assembling cars and other products. Robots already play a significant role in Tesla’s production processes, and Elon Musk is a strong advocate for their use. Last year, he announced the additional introduction of 1,000 Tesla Bots within Tesla; the robots are also known as Optimus. These humanoid, general-purpose robots are based on Tesla’s AI technology. Additionally, Amazon, for example, currently “employs” over 200,000 robots alongside approximately 1.5 million human workers.

Unfortunately

Individuals who lost their jobs in manufacturing over the past decade are unlikely to regain those positions. While they may find employment in other industries, manual jobs in manufacturing are increasingly being replaced by industrial robots, regardless of whether production facilities return to the U.S. or not.

However

Relocating industries is a costly and time-consuming process, and if tariffs are being increased before the alternative production site is ready to produce any given product at the same or lower price, a surge in inflation does not seem unlikely.

Finally

Let me finish with another quote by Captain James T. Kirk. “One of the advantages of being a captain, Doctor, is being able to ask for advice without necessarily having to take it.”

Ladies and Gentlemen

As always, please share your opinion with me, but please do not forget (instead of hitting the reply button) to send your messages to smk@incrementum.li

Many thanks, indeed!

I wish you an excellent start to the day and weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li