Trump Campaigned on Saving Factory Jobs, but U.S. Manufacturing Just Went Through a Year-Long Recession
Trump's trade war has harmed the very industries and workers he aimed to help.
One way to think about President Trump's electoral victory was as a referendum on the nation's changing economy, in which the manufacturing jobs of the 20th century were giving way to service-sector employment of the 21st.
Trump won an electoral college victory by flipping votes in the industrial midwest, where those shifts have been most jarringly apparent. His inaugural address lamented that "factories shuttered and left our shores, with not even a thought about the millions upon millions of American workers left behind." His campaign slogan, Make America Great Again, was at least in part a nostalgic appeal to an old economic model, in which manufacturing employment and output was a form of national greatness.
But although it is true that America's economy has, on the whole, performed admirably well under Trump, with unemployment numbers hovering near historic lows, one of the notable dark spots over the last year has been manufacturing jobs—particularly those in the upper midwest.
Last week, the Federal Reserve reported that U.S. manufacturing was in a recession for all of 2019. This wasn't slow growth; the sector actually became smaller. The slowdown was relatively mild, with factory production shrinking by about 1.3 percent. But it was the worst performance since 2015, the year that Trump started his presidential campaign. Under Trump, the manufacturing economy has returned to the Obama era.
Manufacturers have a clear culprit in mind for the sector's poor performance. As The Washington Post notes in a report on the Federal Reserve data, the uncertainty and increased costs surrounding Trump's trade war, which was billed as a way of supporting American factory jobs, has instead wreaked havoc on an export-heavy sector that relies on the global flow of goods to operate. Trump's interventions were intended to prop up U.S. manufacturing. But they backfired, harming the people he claimed to help—who also happen to be some of the people who played a crucial part in his election.
And while manufacturers did add jobs during the first two years of Trump's presidency, the largest share of those jobs weren't in the nation's old industrial heartland, but in the sunbelt and the West. In states like Pennsylvania and Wisconsin, manufacturing employment has fallen.
As Reuters reported last year, there were signs of serious manufacturing sector weakness in five of the six states that flipped from twice supporting President Obama to backing President Trump in 2016.
Nor are manufacturing jobs the only ones to be hit by trade costs and uncertainty. As a New York Times report notes, middle-wage job growth, which includes manufacturing as well as occupations like mining and construction, slowed considerably over 2019, dropping from 2.6 percent to 1.3 percent, owing to trade-war squabbling. "That slowdown is driving the deceleration of job growth across the American economy," the report notes. Farming, another industry that Trump campaigned on helping, was so harmed by the trade war that the Trump administration ended up spending some $28 billion—more than double the price tag of President Obama's auto bailout—to keep them afloat.
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don't trade anymore-we win big. It's easy!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
There is an obvious lesson here, which is that, despite Trump's repeated insistence to the contrary, trade wars are neither good nor easy to win; they raise costs on American consumers and businesses; they add complexity and uncertainty, disrupting supply lines and business plans even when threatened tariffs don't go into effect. They have, in other words, exactly the predictable negative effects that economists have known of and warned about for years.
But there are also subtler lessons in the perils of sector-specific economic planning, and of expecting too much from a president. Trump's attempts to prop up the manufacturing sector through tariffs and trade restrictions didn't just fail to work; they actively harmed the people they were intended to help. So even as Trump has overseen an economy that has many bright spots, the sector and worker demographic he tried to boost ended up struggling.
You can, of course, chalk this up to Trump's ignorance on trade, or to being captured by hackish advisors who believe that protectionism is its own form of good. But even if you think Trump was well-meaning, trying only to make good on the economic promises of his campaign, the failure of the trade war is worth keeping in mind the next time a politician promises to aid some particular group or industry: When the government tries to help, it often does more harm than good.
