Trump wants tariffs. Harris wants science and data centers. How their economic plans would affect Virginia.

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Both Kamala Harris and Donald Trump want to increase American manufacturing jobs. 

Both also have plans that, if carried out, might result in some outcomes that voters aren’t counting on.

With Trump’s plan, that would mean higher prices for imported goods.

With Harris’ plan, that would mean more data centers — which, in the case of Virginia, might lead to more zoning controversies in Northern Virginia and more solar controversies in Southside. 

Let’s take a closer look.

Why manufacturing matters

We’ll begin with why we’re even talking about manufacturing. After all, the sector only accounts for about 11.4% of the nation’s gross domestic product. That makes it only the third biggest sector of the U.S. economy, behind professional/business services and real estate, according to Visual Capitalist. However, manufacturing jobs generally pay well — 6.3% higher than private industry overall, according to the U.S. Department of Commerce. Manufacturing also occupies an outsized proportion of the national imagination, sometimes for gauzy nostalgic reasons, sometimes for more serious national security reasons. We also have a national political environment where some of the key swing states — Pennsylvania, Michigan, Wisconsin — have a long manufacturing tradition. If the key swing states were Alaska and Hawaii, we might be talking about an entirely different set of issues.

Manufacturing also is more important in the western part of the state than elsewhere. In the Roanoke Metropolitan Statistical Area, manufacturing accounts for 10% of the jobs, according to the U.S. Bureau of Labor Statistics. In the Lynchburg MSA, 13.5%. In the Bristol-Kingsport MSA, 17%. In none of those places is manufacturing the biggest industry sector (although it’s a close second to trade/transportation in Bristol, a more distant third in Roanoke and Lynchburg). Still, it’s an important sector, so what the candidates have to say about it matters.

What the record shows

I examined this in-depth in a previous column. Manufacturing jobs grew slowly when Trump was president (out of fairness, we shouldn’t measure job losses during the pandemic). They’ve grown faster under Joe Biden, but much of that was recovering from the pandemic. If we only measure job growth above pre-pandemic levels, then manufacturing has grown more slowly under Biden. Here’s the big picture to keep in mind: Manufacturing has been slow under every recent president, Democrat or Republican. Manufacturing jobs peaked in May 1979 at 19,509,000 under Jimmy Carter, bottomed out in December 2009 at 11,475,000 under Barack Obama as we came out of the Great Recession, and have been growing slowly ever since (with the exception of the pandemic). As of August, the number stood at 12,450,000, according to the Federal Reserve. Nor is anyone projecting much growth in manufacturing. The Bureau of Labor Statistics actually predicts that manufacturing jobs will decline between 2023 and 2033.

Why is manufacturing growing slowly, at best? Lots of reasons. Automation is one. We also need to remember why many manufacturing jobs have gone overseas in the first place: Foreign labor is cheaper. That brings us to the economic conundrum that presidential candidates face when they try to promise a manufacturing renaissance: We could have plenty more manufacturing jobs — if we were willing to pay more for those manufactured products. The record suggests that neither party has had much luck challenging some basic economic facts.

Trump wants tariffs

The centerpiece of Trump’s plan is tariffs — essentially, a tax on imports. This has been a debate we’ve been having since the founding of the republic. Should we tax imports as a way to raise the price of imported goods — and make it more financially advantageous for domestically produced goods? If you’ve seen or heard the musical “Hamilton,” you got a taste for this: Alexander Hamilton favored tariffs as a way to boost domestic manufacturing. Thomas Jefferson opposed them because he felt they’d hurt farmers. That also highlights some regional differences in the response to tariffs — industrial states generally liked them, farm states generally didn’t (because they exported a lot of their harvests and didn’t want to get hit with retaliatory tariffs).

When Trump was president, he imposed tariffs on 14% of imported goods. This time around, he wants tariffs on 100% of imports. Harris calls this a tax, Trump says it’s not. The economic reality is that businesses are always going to pass expenses on to customers — this traditionally has been one reason why Republicans argue against higher taxes on businesses, on the theory that customers will wind up paying higher prices as a result. A study by the Tax Foundation (not a group disposed to like taxes) concluded that Trump’s tariffs were the equivalent of $800 billion worth of new taxes, “amounting to one of the largest tax increases in decades.” The Tax Foundation goes on to say of Trump’s plan: “We estimate that if imposed, his proposed tariff increases would hike taxes by another $524 billion annually and shrink GDP by at least 0.8 percent, the capital stock by 0.7 percent, and employment by 684,000 full-time equivalent jobs.”

Why would a Republican support something that’s essentially a tax? The theory behind tariffs is that if the price of imported goods goes up, then American companies making the same thing will be able to sell their products at a cheaper rate — and that will help American jobs. Or, as a modification of that, high tariffs will encourage companies to “reshore” production to the U.S. We’ve certainly seen a push to reshore some manufacturing since the pandemic, although that seems more keyed to shortening supply chains than tariffs. 

Trump has pointed out that Biden has kept some of his tariffs in place, so Democrats must not object to them too much. One celebrated example has been solar panels. U.S. production of solar panels has quadrupled over the past two years, according to a report by the Solar Energies Industries Association and the data analytics firm Wood McKenzie. However, that report says tariffs aren’t what made the difference; instead, it was the Democratic-sponsored Inflation Adjustment Act. Statista reports that employment in the solar manufacturing sector in the U.S. actually declined under Trump (from 38,121 in 2016 to 31,050 in 2020) and has stayed flat under Biden. In any case, this summer, a solar company announced plans to start manufacturing solar panels in Bedford County, a project that would create 104 jobs.

The degree to which tariffs work or don’t work is a topic that could occupy economists for hours of debate. On a broad level, they work if it’s possible to produce that product domestically at a lower price than foreign competition. Otherwise, they don’t. For instance, a tariff on coffee will simply raise the price of your morning coffee; we can’t grow coffee here, with the exception of Hawaii and a smidge of California. A tariff on some manufactured product might — or might not — persuade that company to locate a plant in the United States instead. 

One question is how quickly companies could respond to tariffs. Trump says he wants a tariff on foreign-made cars. Georgia courted Hyundai for years before it announced in 2022 that it would build a new plant near Savannah (bypassing a site in Pittsylvania County). That plant is now projected to open later this year, so that’s about three years from announcement to launch. That decision was based on Hyundai’s assessment of the American market for its vehicles; how long would it take companies to make similar decisions in the wake of tariffs? And how fast could they — would they — move? The popular trope is that business moves faster than government, and in some ways business does. But when it comes to major corporate decisions, such as building new factories, business may move a lot slower than those pushing tariffs might like. The danger is they simply wait to see what a future government does, while Americans pay higher prices in the meantime.

Harris wants more artificial intelligence

One key difference between Trump and Harris is that he’s focused on more traditional industries while Harris’ recently released fact sheet on manufacturing policy focused on what she calls “industries of the future.”

Here’s the key paragraph: Harris supports “modernizing and reducing emissions in steel and iron production, developing biotechnology that can help produce critical medicines and new sustainable materials, investing in Artificial Intelligence (AI) innovation and building new data centers for AI, expanding clean energy manufacturing and innovation, revitalizing America’s semiconductor industry, investing in aerospace, autos, and other forms of transportation, and producing industrial tools and machines critical to our national and economic security.”

The pharmaceutical portion of that might be of interest to the Richmond-Petersburg area, which is working on building a pharmaceutical sector. However, here’s what gets my attention: the reference to “building new data centers for AI.” Northern Virginia is already the nation’s data center capital, much to the chagrin of some who live there. We’re also seeing those data centers drive power demand in the state — data centers already represent about 24% of Dominion Energy’s power. (Disclosure: Dominion is one of our donors but donors have no say in news decisions; see our policy.) AI requires even more power. “On average, a ChatGPT query needs nearly 10 times as much electricity to process as a Google search,” Goldman Sachs reported this year. Earlier this year, the company forecast a 160% increase in power demand for data centers.

If some in Northern Virginia are unhappy with the current number, how unhappy will they be if someone wants to build more? Those data centers are also helping to drive the development of solar farms in Southside — and not everybody there is happy about those, either. Is the Harris voter in Prince William County inadvertently voting for a data center near them — and a solar farm near the Trump voter in Pittsylvania County? It would sure seem that way, although the reality is we are going to need more data centers, regardless of who is elected president, so it’s not as if voting for Trump is going to avoid that scenario.

Much of Harris’ plan also doesn’t deal directly with manufacturing, but the research that might precede manufacturing. It calls for a “significant investment” in research, particularly in “AI, quantum computing, blockchain, clean technology, biomanufacturing, semiconductors, and other key technology research areas.” Economically she might be right but, politically, that’s not likely to speak to the auto factory worker in Michigan. Grant writers at Virginia Tech might want to be ready to start typing, though. 

Does the president matter?

That might be a radical question. However, some of these larger economic trends roll on regardless of who sits in the Oval Office. Imports rose under both Trump and Biden. So did exports. So did the U.S. trade deficit, except for two years. It declined in 2019, when Trump was in office, and it declined in 2023, under Biden. So far, both of those appear to be one-year blips that didn’t represent any kind of trend. Will either Harris or Trump be able to accelerate the growth of manufacturing jobs in the United States in any appreciable way? We have no way of knowing what the future holds, but the past suggests the answer is “no.”