A new study released by the National Association of Manufacturers (NAM) warns that the United States could lose nearly 6 million jobs and put more than $1.1 trillion in GDP at risk if Congress does not act to keep in place the pro-manufacturing tax policies established in the 2017 tax reform (Tax Cuts and Jobs Act, or TCJA) pushed by then-President Donald Trump. According to this analysis, conducted by professional services firm EY, manufacturing would be the sector most affected if these provisions are not renewed before the end of 2025.
The possible end of the tax cuts has set off alarm bells on several fronts in the U.S. economy. According to the report, the loss of those 6 million jobs would also imply 540 billion dollars less in workers’ compensation and a setback of 1.1 trillion dollars in the national GDP. For the manufacturing sector in particular, it is projected that 1.1 million jobs could disappear, accompanied by a $284 billion decrease in this sector’s contribution to GDP and a $126 billion loss in wages within this industry.
A call for immediate action
Jay Timmons, president and CEO of the NAM, emphasized in the release that renewing pro-growth tax policies must be a top priority of the new legislature in Congress and the presidential administration. “The time to act is now. Millions of American workers depend on the manufacturing sector to continue to drive the nation’s economy,” Timmons said. In his view, the 2017 tax cuts were “rocket fuel” for the global competitiveness of U.S. industry as, following their passage, manufacturing companies invested more in facilities, equipment and human capital.
Timmons warned that, if the tax provisions were not preserved, companies in the sector could postpone investment and hiring decisions in the face of an uncertain outlook. The most recent precedent came in 2017, when Congress passed the TCJA at the end of that year and many of the positive effects-such as growth in capital spending and job creation-began to be felt through 2018. According to the study, manufacturing capital investment grew 4.5% in 2018 and 5.7% in 2019, far outpacing the meager 1.4% recorded in 2017. In addition, 267,000 new jobs were created in 2018, the best year for the sector in two decades.
Social and economic implications.
The report stresses that manufacturing has been the “engine” of the national economy, generating nearly 13 million jobs and driving innovation in all 50 states. Therefore, it is not only the damage to U.S. international competitiveness that would be of concern, but the direct implications for families, especially middle-class families, who depend on these quality jobs.
The warning also includes the setback in research and development (R&D): after the expiration of the immediate deduction for R&D expenses in 2022, growth in this area has been losing traction in the United States, while regions such as the European Union and China are already showing faster progress in research investment. Also, other key aspects of reform, such as the 20% pass-through business deduction and individual tax rates, are set to expire at the end of 2025.
Congressional Pronouncements
Republican leaders in the Legislature have come out in favor of preserving Trump’s 2017 tax cuts. House Speaker Mike Johnson (R-LA) called the potential expiration of the TCJA the “biggest tax hike in history” and stressed the need to maintain the strength of local manufacturing. For his part, Jason Smith (R-MO), chairman of the Ways and Means Committee, assured that almost 6 million jobs are at stake and affirmed that Republican legislators have been preparing for almost two years to push for an economic package that “makes American manufacturing great again.”
From the Senate, Mike Crapo (R-ID), chairman of the Finance Committee, stressed the importance of giving long-term certainty to businesses to sustain growth. Steve Scalise (R-LA), House Majority Leader in the Lower House, added that Trump’s return to the White House and Republican majorities should expedite passage of a bill to secure these tax benefits and prevent investment flight.
The voice of industry and small business
Kathy Wengel, executive vice president at Johnson & Johnson and chair of the Board of Directors of the NAM (National Association of Manufacturers), defended that a competitive tax policy is essential to continue investing in cutting-edge technology and generate jobs with attractive wages. In the same vein, Ketchie owner and former chair of NAM’s Small and Medium Manufacturers Group, Courtney Silver, recalled that small manufacturing companies are particularly vulnerable: tax increases have already begun to affect investment in machinery, interest in expansion projects and global competitiveness.
For the NAM, the message is clear: slowing the scheduled changes in 2025 and reversing some of the expirations that have already occurred would be crucial to protecting U.S. manufacturing and avoiding what Timmons called “an economic disaster”. With the clock ticking and uncertainty looming, manufacturers and policymakers are converging on the urgency of a decision that could define the strength of U.S. jobs and competitiveness for years to come.
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