A gulf is opening up in the heart of American business as two industries championed as central to the country’s future — manufacturing and artificial intelligence — appear to be heading in different directions. Both AI and manufacturing have been in the spotlight in Washington through successive administrations. President Donald Trump this year said he’d do “whatever it takes to lead the world in artificial intelligence,” while he has championed stemming a decades-long slide in American manufacturing as a top goal.
But while AI is flourishing this year, manufacturing is entering an ever deeper slump.
“You have the software and services world accelerating, and becoming almost a monomania for the culture, at the same time that manufacturing remains flat or worse,” said Mark Muro, a senior fellow at the Brookings Institution. “The AI boom is kind of papering over some other parts of the economy that aren’t going well.”
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The Trump administration has embraced using a broad array of tariffs to protect U.S. manufacturers from foreign competition, marking the latest White House-led push after the Biden administration spent tens of billions of dollars boosting U.S.-made semiconductors and other projects. But so far, the sector is down 38,000 jobs since the start of the year, according to the Bureau of Labor Statistics.
The manufacturing slump comes as artificial intelligence has experienced an unprecedented investment boom, sending tech-company valuations into trillions of dollars. Visions of how AI could transform the business world have fueled a surge in microchips and cooling systems, along with the data centers to house and the energy to power all of it.
Some experts worry that the AI industry will employ too few workers once the hype dies down, because the data centers that power AI require relatively few workers to operate. There are also fears that a bursting AI bubble could hit an already-fragile economy.
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