Trump’s policy can’t stop US de-industrialization
US manufacturing contracted for the first time in three years in August. So the question for US President Donald Trump is: has your effort to bring factory jobs back to the US paid off?
Trump has put manufacturing jobs at the center of his economic platform since he took office. He describes a beautiful picture for Americans in which tens of thousands of people suddenly have jobs as manufacturers relocate production to the US, and the country’s manufacturing sector bounces back with products 100 percent made in the US. However, the actual situation is not so cozy.
In the US, a manufacturing recession is on its way. Although Trump has been boasting about creating manufacturing jobs, the US trade deficit stood at $72.3 billion in July. US manufacturers signaled a further slowdown in overall growth in August, with the Institute of Supply Management’s manufacturing index coming in at 49.1 – its lowest level since January 2016. The situation may continue to deteriorate amid trade tensions with China.
US companies’ suppliers in China are bracing for a huge jump in costs as tariffs on Chinese goods take effect. China is a supply chain superpower, serving as a secure source of raw materials, parts and components, or production equipment for some US factories. US tariffs on imports from China elevate production costs for US manufacturers.
The cost of manufacturing in the US is much higher than in the rest of the world due to multiple factors such as workers, wages and education. Now the problem is being aggravated by trade tensions. There is very little possibility that the US manufacturing sector can bounce back.
Even if Trump can make the US into a manufacturing superpower, US products will lose market share in China due to China’s retaliatory tariffs.
China was the third-largest goods export market for the US in 2018. US goods exports to China stood at $120.3 billion last year, down 7.4 percent year-on-year. Washington’s trade policy has caused serious damage to US exports, putting pressure on its manufacturing sector.
Trump’s trade policy cannot reverse the de-industrialization of the US economy. On the contrary, it has accelerated this process. With the trade war, Trump’s promise to bring back manufacturing jobs will turn out to be empty talk. The author is a reporter with the Global Times. bizopin[email protected] globaltimes.com.cn