President Donald Trump’s push to impose tariffs on international trade partners aimed to incentivize companies to build factories and create jobs within the United States. However, a new analysis reveals that labor costs present a notable challenge to this vision.

Economists at Wells Fargo Securities point out that if the goal is to restore manufacturing employment to its 1979 peak, numerous obstacles stand in the way. The available workforce is a major constraint. The Bureau of Labor Statistics reported 7.2 million unemployed workers as of April. Reaching the employment levels of the 1970s, when manufacturing accounted for 22% of all jobs, would require an additional 22 million manufacturing employees.

A central issue in securing these workers is the contradictory nature of manufacturing wages: they are simultaneously too high and too low.

Why U.S. Wages Are Too High

Compared to other nations, notably developing countries where manufacturing has been offshored, the U.S. has higher labor costs.

According to Wells Fargo economists, American workers earn significantly more than their counterparts in Vietnam (16 times as much), Mexico (11 times as much), and China (7 times as much). This disparity forces manufacturers in the U.S. to invest heavily in automation to remain competitive,which translates to fewer jobs per factory and higher overall costs.

Wells Fargo estimates that restoring the 6.7 million manufacturing jobs lost since 1979 would require approximately $3 trillion in investment.

Farouk contractor, an economics professor at Rutgers, noted that this makes the U.S. more suitable for producing complex, high-value goods rather than simpler items like toys and furniture.”High-value stuff can come back to the U.S., partially as the value is not in labor, but in thought,” Contractor said. “So if you have a highly automated, highly sophisticated item like computer chips, it doesn’t matter if labor cost jump from $6 to $36 an hour, because the labor content is low, and the main value and the price of the item is in thought, rather than in manual labor.”

“High-value stuff can come back to the U.S., partially as the value is not in labor, but in thought.”

American-Made Is Often More Expensive

Higher wages contribute to the higher cost of producing goods in the United States compared to other countries.

Ramon Van Meer,CEO of showerhead company Afina,conducted an experiment to illustrate this point,testing whether consumers were willing to pay more for products labeled “Made in the USA.”

Afina offered two versions of its showerhead: one made in China and Vietnam for $129, and another made in the U.S. for $239 (the lowest price possible). Of 584 sales, not one customer chose the American-made version.

Why Wages Are Too Low

Paradoxically, manufacturing wages are also too low to attract workers when compared to other industries within the U.S.

Wells Fargo, using data from the Bureau of Labor Statistics, found that manufacturing workers earn less than