Trump’s push for US jobs is mixed bag

WASHINGTON — From tax cuts to relaxed regulations to tariffs, each of President Donald Trump’s economic initiatives is based on a promise: to set off a wave of investment and bring back jobs that the president says the United States has lost to foreign countries.

"We have the greatest companies anywhere in the world," Trump said at the White House recently. "They’re all coming back now. They’re coming back to the United States."

Trump’s tax cuts unquestionably stimulated the U.S. economy in 2018, helping to push economic growth to 2.5% for the year and fueling an increase in manufacturing jobs. But statistics from the government and other sources do not support Trump’s claim about his policies’ effectiveness in drawing investment and jobs from abroad.

Foreign investment in the United States grew at a slower annual pace in the first two years of Trump’s tenure than during Barack Obama’s presidency, according to Commerce Department data released in July. Growth in business investment from all sources, foreign and domestic, accelerated briefly after Trump signed a $1.5 trillion tax-cut package in late 2017, but then it slowed. Investment growth turned negative this spring, providing a drag on economic output.

In Trump’s first two years in office, companies announced plans to relocate just under 145,000 factory jobs to the United States, according to data and modeling by the Reshoring Initiative, a nonprofit group that advocates measures to bring back 5 million factory jobs. That is a record high in the group’s data, which dates to the late 1980s, but it adds up to less than one month of average job gains in the United States in its decadelong expansion. More than half of those jobs — about 82,000 — were announced in 2017, before Trump’s tax cuts took effect.

Researchers at A.T. Kearney said in July that Trump’s trade policies, including tariffs, had pushed factory activity not to the United States but to lowcost Asian countries other than China, such as Vietnam.

Manufacturers of primary metals, which include steel and aluminum, have added fewer than 15,000 jobs since Trump took office, and more than half of those gains came before Trump imposed tariffs on foreign-made metals last year.

Now manufacturing is struggling amid a global slowdown and fallout from the trade war.

Administration officials assert that U.S. tariffs are helping to create jobs. Commerce Secretary Wilbur Ross told a conference in Washington in July that the positive effects of Trump’s steel and aluminum tariffs "can be measured on the factory floor."

Jim Lentz, who oversees North American operations for the Japanese automaker Toyota, has cited the company’s plans to invest $13 billion in American operations over the next several years, crediting Trump's economic policies.

At a summit in June, Prime Minister Shinzo Abe of Japan handed Trump a chart showing Japanese investments in the United States that would yield just under 22,000 new jobs. Trump hailed the figures, but Commerce Department data show that the rate of Japanese investment growth in the United States has slowed under Trump from Obama’s second term.

On another front, administration officials point to companies such as Mylan and Allergan — which had moved their corporate addresses overseas in a process known as inversion but recently said they would return to the United States — as a sign of success for the tax law. Larry Kudlow, director of the National Economic Council, said last week that "you’re seeing American firms move back."

When a CNBC interviewer said the Mylan and Allergan moves would not bring back manufacturing jobs, Kudlow agreed. But he said, "You’re also going to have factories moving back in from other places around the world, including China."

Brad Setser, a senior fellow at the Council on Foreign Relations who tracks international investment flows, said it was notable that relatively few pharmaceutical companies were moving plants and activity back to the United States from countries such as Ireland or Switzerland. Pharmaceutical imports from those countries actually rose in 2018, he noted.

The tax law reduced the corporate income-tax rate to 21% from a top rate of 35%, and it overhauled the way the United States taxes multinational companies. Data show those changes have encouraged multinational companies to shift hundreds of billions of dollars in profits to their American operations, essentially for accounting purposes, through a process known as repatriation.

Trump often cites repatriation figures as if they reflected direct investment in the United States. That’s wrong, Setser said.

Commerce Department statistics show that the repatriated funds came mainly from low-tax countries such as Ireland and Bermuda, where companies had booked profits to minimize tax liability, and not from China or other economic competitors such as Japan.

Researchers from Wall Street financial firms and the Federal Reserve have concluded that companies used repatriated funds mostly to buy back stock.

Administration officials contend that those selling shares will soon invest their proceeds from the buybacks into startups, business expansions or other forms of economic activity.

Trump won office by tapping into frustration among working-class voters in traditional manufacturing states where economists say up to 2.5 million jobs were lost to Chinese competition in the century’s first decade.

Sen. Sherrod Brown, a Democrat from Ohio, an industrial state that Trump carried easily in 2016, said some workers in the state are growing disillusioned over the president’s failure to deliver jobs to replace those in shuttered factories such as the General Motors plant in Lordstown.

"We’re sensing and seeing a betrayal of workers and promises broken over and over again," Brown said.