Trump’s pol­icy can’t stop US de-in­dus­tri­al­iza­tion

Global Times US Edition - - BIZCOMMENT - By Hu Wei­jia

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

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