President Donald Trump was swept into office on promises of shaking up the U.S. economy, but one of his hallmark plans may run into a harsh economic reality, according to a CNBC analysis.
Two of Trump's main economic talking points are increasing the number of well-paid manufacturing jobs and cutting back on imports. But many of the highest-paying manufacturing jobs — and those most important to the economy — rely most heavily on imported materials.
Take a look at the chart below. It's based on an analysis by economists at the Peterson Institute for International Economics, a nonpartisan think tank.
Each point represents a sector of U.S. manufacturing. The further to the right, the more that sector contributes to the overall U.S. gross domestic product. The closer to the top of the chart, the more dependent that industry is on imported goods.
That upward slope shows that the more important a sector is for the U.S. economy as a whole, the greater the share of its raw materials and components that come from abroad. And generally, it's the higher-paying manufacturing sectors like computers and electronics that rely the most on imported components. In the chart, a point's size indicates the average annual salary for workers in the sector.
In a presentation in February, Peterson Institute President Adam Posen pointed out the problem with the so-called border adjustment tax, which would halt taxes on U.S. exports but impose mandatory taxes on U.S. imports.
"If you do a tax that's fundamentally biased against import content, you are taxing the most advanced, highest value added sectors in the U.S. manufacturing sphere," Posen said, according to a transcript. "This is taxing our most competitive highest value added sectors at the expense of our most backward sectors."