Has Trump turned around US industry?
President Donald Trump prefers sweeping superlatives when he talks about his record on the economy. The Republican tax law has “the biggest tax cuts and reform in American history” (they’re not). The new trade agreement with Mexico and Canada is “the most important trade deal we’ve ever made by far” (the changes are more modest). And the unemployment rate has fallen “to the lowest level in more than 50 years” (it’s 49 and the continuation of a nine-year trend).
Then there’s Trump’s most grandiose claim: His administration has produced “the greatest economy in the history of our country” (it hasn’t; the combination of fast growth and low unemployment was better in at least three other periods since World War II).
But Trump sometimes gets more specific. In recent months, he’s boasted about five industries: steel, agriculture, autos, energy and manufacturing. Here are his claims and the facts:
The claims: “I came into office, steel was a dead business,” Trump said at an Oct. 12 rally in Lebanon, Ohio. “Now they’re opening up plants, U.S. Steel, Nucor. They’re opening up plants all over the country, big ones, new ones.”
Specifically, he said U.S. Steel is “opening up a minimum of eight plants” as a result of a 25 percent tariff his administration put on billions of dollars worth of imported steel starting in March.
Nucor Corp. “just announced a billion-dollar plant. Brandnew. Already started construction,” Trump said on Oct. 1. The facts: The steel industry is “generally healthier today than it was in 2016” before Trump took office, said Lisa Reisman, executive editor of Metalminer, an online market intelligence platform that does forecasting.
But Trump is exaggerating the state of the industry when he took office and the effect of tariffs.
The U.S. industry wasn’t dead in 2016, but prices for oil, industrial metals and other commodities started crashing in 2014. Commodity price swings are cyclical, driven by global forces, and the pendulum swung the other way about a year or so ago.
“The commodity bull market started happening in July 2017. We didn’t have any tariffs in place, tax reform hadn’t been passed yet,” Reisman said. “Commodity prices were going up before those things happened and then the policies came into play.”
As for the eight new plants, no, that’s a Trump whopper. U.S. Steel is not opening them, the company said. Rather, U.S. Steel said this year that it is restarting two blast furnaces at its Granite City, Ill., plant and spending $750 million to revitalize its Gary, Ind., plant.
And Nucor has not announced a new $1 billion plant. The company said in September that it would spend $650 million to expand production at its plant in Ghent, Ky.
The claims: “Our farmers have gone through a lot over the last 15 years. They’ve been taken advantage of by everybody. Prices have gone way down,” Trump said Oct. 1 in announcing a revised North American Free Trade Agreement. “The agreement will give our farmers and ranchers far greater access to sell American-grown produce in Mexico and in Canada.”
The facts: U.S. agriculture industry boomed from 2011 to 2014 because of strong commodity prices, boosted by exports, said the nonpartisan Congressional Research Service. During what it called “a golden period,” net farm income hit a record high of $123.7 billion in 2013, but it’s down 47 percent since then.
“Those years leading up to 2013 were very good in agriculture,” said Nathan Kaufman, an expert on agricultural economics at the Federal Reserve Bank of Kansas City.
Strong demand domestically and from fast-growing China led farmers to increase production.
But larger harvests, fueled by good growing conditions, led to a drop in prices. And now the trade war is a problem for farmers.
U.S. crops have been hit with new tariffs from China, Mexico, Canada and the European Union in retaliation for tariffs put in place by Trump.
The claims: “Many car companies are now building and expanding plants in the United States – something we have not seen for decades,” Trump said in his State of the Union address in January. “For many years, companies and jobs were only leaving us. But now they are coming back.”
Among his specific claims are that Toyota and Mazda will build a new plant in Alabama, Fiat Chrysler Automobiles is moving a major manufacturing plant back to Michigan from Mexico, and many more new auto plants are coming.
The facts: Toyota and Mazda announced in August 2017 that they would jointly build a $1.6 billion assembly plant in the United States and in January said the factory would be in Huntsville, Ala. That is the only new U.S. factory announced by any of the major automakers, said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research, a nonprofit research organization in Ann Arbor, Mich.
Fiat Chrysler said in January that it would move some of its pickup truck production back to an existing plant in Warren, Mich., from Mexico, citing the lower corporate tax rates. But new CEO Mike Manley said he was reconsidering that move.
Dziczek said that made sense. She originally thought the move back to Michigan was less about tax changes and more about fear that Trump would pull out of NAFTA.
Meanwhile, the 25 percent tariffs Trump imposed on steel and aluminum are a big hit for automakers. The tariffs have added $400 to $600 to the cost of each vehicle produced in the U.S., Dziczek said. And tariffs on many Chinese imports have raised the prices of auto parts.
The claims: “Think of it: We’re the single largest producer of energy in the world. Did you ever think you were going to hear that? This all happened very quickly,” Trump said Oct. 2 in a speech to the National Electrical Contractors Association’s convention in Philadelphia.
He’s also said the U.S. is the No. 1 producer of crude oil and natural gas. The facts: The U.S. is not the largest producer of energy in the world, according to the most recent data. In 2015, China produced 2,958 million tons of oil equivalent, a measure for primary energy supply that includes oil, natural gas, coal and biofuels, according to a report from the International Energy Agency. The U.S. was second with
2,167 million tons.
White House officials have said Trump is talking about crude oil when he references energy, even though energy encompasses more than that. In any case, the U.S. has just become the world’s No. 1 producer of crude oil, at 11.3 million barrels a day in August, compared with Russia’s estimated 11.2 million barrels a day.
The claims: “The last administration, without mentioning names, the last administration said manufacturing jobs, they’re dead. They’re gone,” Trump said at an Oct. 9 rally in Council Bluffs, Iowa. “We have 600,000 (that) have come back since the election.”
The facts: As often happens, Trump’s stats aren’t true. Data from the federal Bureau of Labor Statistics show there were 410,000 manufacturing jobs added from November 2016 to September 2018, the latest figures available when Trump made his claim in Iowa.
The sector was hit hard by the 2007-09 recession, which accelerated a downward trend that had begun in 2000.
Manufacturers shed about 2.8 million jobs from early 2006 to early 2010. Employment bottomed out at 11.453 million jobs in March 2010.
In recent months, President Donald Trump has boasted about five industries: steel, agriculture, autos, energy and manufacturing.