Written by: Tim Roth | Edited by: Caroline Crowley
Written in March 2025. Due to the rapid changes in trade policy implementation of the current U.S. administration, the ideas discussed and statements made in this article may be out of date, resolved, or of no further issue at the time of publication.
If you’ve glanced at the latest headlines, you’ve seen that tariffs seem to be having their “will they, won’t they” moment. They certainly have left many wondering whether they’re a high-stakes bargaining strategy in international trade or if they’re here to stay. President Trump is pursuing a vision of an economically self-sufficient United States. This vision relies centrally on aggressive tariffs, low producer taxes, and domestic industrial revitalization. His goal is clear: to bring manufacturing back to American soil, reduce reliance on foreign production, and reclaim economic independence.
Despite his rhetoric about making the U.S. a global leader in artificial intelligence and automation, the president’s protectionist trade policies actively undermine the technologies that could actualize his vision. While AI-driven automation could, in theory, alleviate some of the market constraints like labor shortages and high domestic production costs, Trump’s sweeping tariffs on semiconductors and critical raw materials threaten to destabilize the very industries he hopes to empower. The result is an economic paradox in which the current administration’s policies push for reshoring while simultaneously making it significantly more implausible. So are we missing something, or is President Trump implementing tariffs that go against his American utopia?
A possible explanation for the strategy is that the president is nostalgic for a time when the U.S. was less reliant on global trade; a time when income tax was nonexistent and tariffs were a primary source of government revenue; a time when the US was “at its richest.” However, his nostalgia ignores key economic shifts that have reshaped the manufacturing sector. The idea of a self-sufficient America might appeal to economic nationalists, but it faces multiple obstacles. Labor costs in the U.S. are significantly higher than in countries like China, making domestic production inherently less competitive. Additionally, decades of offshoring have caused a lack of domestic expertise in high-tech manufacturing, particularly in semiconductor production. The challenge is further compounded by a steadily shrinking workforce and the lingering effects of the COVID-19 pandemic, which forced many skilled workers into early retirement or pushed them to only consider hybrid-style employment. Young people have been pursuing further education rather than entering the workforce, ultimately leaving firms within those industries to helplessly look for people to fill their high-skill jobs. Even if labor was abundant and affordable, the U.S. still lacks the raw materials necessary to produce many of the high-tech goods it aims to reshore. In particular, it lacks the rare earth metals essential for semiconductor and AI hardware production, meaning manufacturing input costs would rise significantly through the implementation of import tariffs on China.
Against this backdrop, industrial automation enabled by robotics and AI-powered computer modelling presents a potential solution. The U.S. maintains a global edge in AI research and development, with firms like Amazon, Tesla, and Intel leading the charge in robotics and automated manufacturing. AI has the capacity to offset labor shortages, reduce dependence on human expertise, and drive down production costs by improving efficiency. If leveraged correctly, AI could allow the U.S. to overcome many of the constraints that have made reshoring infeasible in the past. However, the irony of Trump’s economic strategy lies in the fact that his own policies pose some of the most significant obstacles to AI expansion.
The recent tariffs, particularly those imposed on imported semiconductors and the materials needed to produce them, raise costs for domestic firms that rely on advanced computing hardware. AI infrastructure, such as robotics and data centers, is fundamentally dependent on high-performance chips, many of which are manufactured in Taiwan and China. By imposing tariffs on these essential components, Trump is inadvertently making it more expensive for U.S. companies to develop and implement AI-driven automation. Higher input costs mean that automation becomes less accessible, in turn, weakening the very foundation of his reshoring strategy. Without affordable semiconductors, AI adoption slows, manufacturing remains costly, and the dream of a self-reliant industrial economy drifts further out of reach.
The economic contradictions don’t stop there. The U.S. also depends heavily on China for rare-earth minerals and metals crucial for producing semiconductors, batteries, and other critical AI technologies. A trade war with China not only raises the prices of these raw materials but also incentivizes China and other global players to accelerate their own AI development, reducing American influence in the field. Meanwhile, Trump’s opposition to the CHIPS Act, which was designed to boost domestic semiconductor production, further stifles the U.S.’s ability to compete in the AI arms race. The same industry he seeks to protect is hamstrung by a combination of high tariffs, supply chain disruptions, and a lack of federal support.
These contradictions extend beyond economic theory and into the real-world strategic positioning of American technology firms. Companies like NVIDIA, Microsoft, and Intel are already expanding their data center investments outside the U.S., partially in response to the increasing costs associated with domestic data center expansion. If tariffs make it more expensive to operate within the U.S., corporations will simply look elsewhere, undermining the reshoring effort. At the same time, Trump’s shift in sentiment towards Taiwan—prompting the essential partner in semiconductor manufacturing to “pay up” for US defense and threatening tariffs on said semis—risks further destabilizing supply chains essential to the AI market.
“What if tariffs are just a threat used to bargain?” you might ask. In that case, President Trump’s idea of making U.S. allies “pay up through tariffs” and never-ending bargaining with trade partners could result in diplomatic and economic fallout. This fallout would ultimately leave the U.S. isolated, less competitive, and untrustworthy within the global economy. Similarly, Trump’s big words and unpredictability may cause many U.S. firms to reassess their expenditure plans. As current global leaders in the AI industry and the backbone of the U.S. economy, these firms could hold off on investment, spending, or expansion simply because of the uncertainty around the costs of medium and long-term projects due to policy uncertainty.
Ultimately, President Trump’s vision for an independent U.S. economy remains entangled in the contradictions of his policies. On one hand, AI-driven automation offers a pathway toward reshoring by reducing dependence on human labor and improving efficiency. On the other, broad tariffs on semiconductors and AI-related imports increase costs for domestic firms, slow the adoption of automation, and weaken the competitiveness of U.S. technology companies. For reshoring to be a realistic goal, economic policy must address labor shortages, secure access to key raw materials, and encourage AI adoption—as opposed to making it more expensive and externally dependent. Without these adjustments, the policies designed to restore America’s industrial strength could end up pushing the country further behind in the global AI and manufacturing race.
