COVID Pandemic Proves the Importance of Domestic Manufacturing

As a kid, I was taught the difference between manufacturing and service-based economies in middle school economics class. That was back in the 1970s, when the U.S. still considered domestic manufacturing important. We do not put so much emphasis on manufacturing anymore. Ours is largely a service-based economy. However, the COVID pandemic has brought manufacturing back to the forefront.

How important is domestic manufacturing? It is critically important. Anyone who has first-hand experience with product shortages knows this to be true. If you cannot get imports, you could find yourself in a world of hurt. Just ask American car manufacturers about all those automobiles they have sitting around waiting for imported parts.

A Shift Back to Goods

UBS’ Kelvin Tay recently told CNBC’s Squawk Box that the COVID pandemic hit the service sector hard. That should be no surprise. Companies have a challenging time providing services to customers who are locked away in their homes. On the other hand, durable goods and materials still remained strong at the peak of the pandemic.

That is also not hard to understand. Societies can get away with not paying for services. For example, you don’t have to pay someone to mow your lawn. You can do it yourself. But there are certain goods you can’t do without. You need food. You need toilet paper and other personal hygiene items. You need prescription drugs, OTC medications, and so forth. Furthermore, all of those products can be delivered right to your door.

What does all of this have to do with domestic manufacturing? Everything. How do imported goods get from the other side of the world to the U.S.? They are shipped. But shipping is a service, isn’t it? If shippers are not operating because they are stuck at home like everyone else, what happens to those imports? They dry up.

Hundreds of Thousands of Products

Vigilant Global Trade Services says there are more than 19,000 Harmonized Tariff System (HST) codes assigned to goods being imported into the U.S. This suggests some staggering numbers. It suggests that we import hundreds of thousands of finished products. And when it comes to parts, raw materials, and ingredients for manufacturing other products, the number is probably in the millions.

We are in real trouble if we cannot get our imports. That’s because we rely so heavily on exporting countries. How heavily? Government data shows that our nation’s trade deficit this past April (2021) was $68.9 billion. That means we imported nearly $70 billion more in goods and services than we exported. That is an awful lot.

Bring It Back Home

Politicians and bureaucrats love to stand behind mics and talk about solutions for reducing our trade deficit. The easiest solution of all is to implement policies that encourage companies to bring that stuff back home. As Pollyanna as that may sound, it will work.

Domestic manufacturing will reduce our reliance on imports. The more we can manufacture at home, the less we have to buy from elsewhere. It is not that hard to understand.

Of course, politicians will say that such a solution is an oversimplification of a much more complicated problem. The proper response to that is, ÔÇśnonsense’. Politicians love to complicate things because that’s what keeps them in power. They hate simple solutions that actually work. Anything that works puts the politician out of a job.

The COVID pandemic has wreaked havoc on economies worldwide. A contributing factor, at least in this country, is our significant lack of domestic manufacturing. Our economy is so heavily reliant on services that, if those services cannot be provided, we all suffer.


Sudarsan Chakraborty is a professional writer. He contributes to many high-quality blogs. He loves to write on various topics.