OPINION:
Few people noticed a recent report from the Census Bureau showing that after-tax profits from American manufacturers are booming.
That is great news for anyone who wants the U.S. to have a strong manufacturing base, well-paying blue-collar jobs and a diversified economy that can support our military.
Manufacturers’ profits jumped in the second quarter of this year, rising $64.2 billion, or 21.7%, from the first quarter. The annual increase was a whopping $143.8 billion, a full two-thirds more than the second quarter in 2025.
It helps explain why the manufacturing sector, which had been hemorrhaging jobs for three straight years, is now adding jobs.
This success stems primarily from the Trump administration’s tax and regulatory reforms, led by the One Big Beautiful Bill Act. That legislation provided powerful incentives to bring manufacturing back to America.
It made 100% bonus depreciation permanent for machinery and equipment, restored immediate expensing for domestic research and development instead of the previous five-year amortization schedule, and increased the amount of machinery and equipment that can receive a tax deduction when put into service.
It also created a 100% first-year write-off for “qualified production property,” such as certain new U.S. factory space used for manufacturing or refining, which previously had depreciation schedules lasting up to 39 years.
The legislation also restored some interest deductions and made permanent a more generous interest deduction limit, which particularly helps manufacturers finance equipment and facility expansion. It increased the advanced manufacturing investment credit for qualifying semiconductor production assets.
Yet regulatory reform is perhaps the unsung hero of the Trump administration, which has repealed 120 rules for every new one implemented. That has had an outsized impact on manufacturing, where regulatory costs per worker are measured in tens of thousands of dollars, reaching $50,000 for small manufacturers.
Day 1 and follow-on executive orders have directed agencies to expedite energy and industrial permitting, including emergency procedures that, in some cases, cut environmental reviews from perpetually open-ended to less than a month. Potentially unlimited compliance costs were effectively capped.
Targeted national security exemptions have been granted for certain chemical plants, iron ore processing and other facilities that supply manufacturers. Broader energy production measures, such as more drilling permits and leases, are helping keep down factory costs by expanding domestic energy production.
An April 2025 executive order directed multiple departments to review all federal workforce programs to reach 1 million new active apprentices per year. The Department of Labor has redirected more than $80 million in grants to that end.
Among other trades, this helps expand the pipeline of experienced machinists who become more productive manufacturing employees.
Also in April 2025, the administration began expediting permitting for several critical mineral projects, while additional executive orders authorized the leasing of mineral-rich federal lands.
A March 2026 executive order directed federal agencies to prioritize enforcement against false “Made in America” claims and tighten country-of-origin verification on federal contracts.
Although the administration’s tariff agenda has received considerable media attention, its track record is mixed. Tariffs can serve as a powerful negotiating tool, but their slapdash implementation has hurt certain manufacturers by raising costs even as it has helped others by increasing access to foreign markets, leaving an ambiguous net impact.
The administration has already recalibrated some of its tariffs and continues to fine-tune others to minimize the negative impact on American manufacturing while exerting maximum pressure on foreign governments. That refinement will hopefully improve further with time.
All the progress made during this administration to strengthen manufacturing is at risk of being undone by today’s high energy prices stemming from the war with Iran. Particularly damaging is the price of diesel fuel, which has now reached a record high.
The increase in energy prices is eating into profits, reversing last year’s gains.
To make a manufacturing renaissance a reality, the war with Iran must be wrapped up immediately, and oil markets must normalize — fast.
• E.J. Antoni, Ph.D., is chief economist and the Richard Aster fellow at The Heritage Foundation and a senior fellow at Unleash Prosperity.
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