“Jobs, jobs jobs.” That has been Donald Trump’s promise to the American people since the start of his presidential campaign. More jobs for American workers, more manufacturing jobs and more products made in America.
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Before taking office, Trump worked out a deal with Carrier AC to save 1,100 jobs at its plant in Indianapolis when the manufacturer agreed not to move production to Mexico in exchange for $7 million in financial incentives.
“Companies are not going to leave the United States any more without consequences,” Trump told an audience gathered at the plant.
In the following months, Trump made those phone calls. He threatened companies over Twitter. He warned of a “big border tax” for U.S. automakers trying to sell Mexican-made cars back across the border.
Meanwhile, investor confidence soared with record-breaking numbers of Wall Street. Trump secured promises of new investments during White House “listening sessions.” The economy continued to add jobs at a steady rate. And the outlook from American manufacturers was the highest it had been in decades.
Throughout Trump’s campaign, U.S. automakers were a regular target for attack for outsourcing production and jobs to Mexico. Shortly after taking office, Trump fired a warning shot at General Motors threatening tariffs on the company’s Mexican-made cars. The threat appeared to be successful, when only hours later Ford announced it was canceling plans to build a $1.6 billion plant in Mexico for its smaller model cars. Instead the company said it would invest in its Michigan operations.
Later, Trump would claim credit for encouraging the auto-giant to come back to to the United States.
But on Tuesday, Ford announced that the plant slated for Mexico would be opened in China. The new plant will build the compact Focus model, which Ford currently builds in Michigan and China.
Later in the week, Trump’s new Trade Representative Robert Lighthizer told a group of U.S. lawmakers that he was “troubled” by Ford’s decision. He further suggested that he would support taking action against the company if the move was based on “non-economic reasons,” but made no indication of what those actions might be.
Finally, Boeing announced on Thursday that it would be laying off 200 employees at its plant in North Charleston, South Carolina. The location served as the backdrop for one of Trump’s major speeches in February, which began, “[We’re] here today to celebrate jobs.”
However, these latest moves from companies who were given special attention by the president may be more symbolic than significant.
“I realize that Carrier and maybe Ford briefly received a lot of this flurry of press attention, but that briefness is a signal for how completely unimportant they are,” said Brookings Institution labor economist Gary Burtless.
The impact of the highly-publicized deals Trump struck during his first months in office is “relatively tiny,” Burtless explained, adding that he is “doubtful that jawboning individual companies” will affect net job creation.
Since the start of 2015, the U.S. economy has added close to 200,000 jobs per month on average. Even the largest deal Trump has struck from the White House, 50,000 jobs with tech giant SoftBank, pales in comparison to the monthly ebb and flow of the job market.
“Objectively speaking, most labor economists like myself don’t think this company by company negotiation is going to have very much net effect,” Burtless noted. “The tax plan that the president proposes, the deregulation in some areas may have bigger job impact.”
Unfortunately, those higher impact policy areas have received little attention from President Trump whose legislative agenda has been tied up for months with healthcare. The timeline for tax reform legislation has been pushed back by the Trump administration, and still appears to be months away. And Trump’s two-page tax reform plan left much to be desired — like details.
The ambitious regulatory reforms long-sought-after by Republicans has largely been limited to executive orders, with bills progressing slowly through Congress.
Regardless of the limited success, confidence remains high. At the end of March the National Association of Manufacturers (NAM) found that optimism among America’s manufacturing firms reached their highest levels in twenty years.
The source of the optimism stemmed from the belief that the new administration would succeed in pushing through regulatory relief, tax reform and a major infrastructure package, NAM reported.
Whether economic realities will match those high hopes will depend, of course, on the president’s success enacting legislative and whether those changes actually improve the business climate for American workers and job creators.
The other major element in fulfilling Trump’s promise to bring manufacturing jobs back to the United States is increasing America’s demand for American goods.
Trump’s “Buy American, Hire American” executive order in April was a step toward fixing that problem by directing all executive branch agencies to “maximize” the use and purchase of goods made from start to finish in the United States, including iron, steel and other manufactured goods.
President Trump’s message of buy American, hire American has also been picked up the states.
In the past month, both New York and Texas passed legislation requiring the use of American-made iron and steel for state infrastructure projects and repair work.
The “Buy American” legislation in Texas was signed into law last week requiring large state projects like roads, bridges, water pipelines and other public works to purchase iron and steel from American suppliers, unless it is cost prohibitive.
New York Governor Andrew Cuomo signed a similar bill this week requiring that a number of state agencies include the use of American-made structural iron and steel in road and bridge projects.
Rob Scott, senior economist at the Economic Policy Institute, explained that these moves at the state level can be helpful in creating the types of high-paying manufacturing jobs that America has been losing for decades.
“The key is to rebuild demand for domestic manufactured goods,” he said. “Investments in infrastructure, which is what the states do, are one of the biggest sources of demand for manufactured products.” Ensuring the materials used in the products are mined and made in America, is a good way to stimulate production and employment across the board.
While Scott expressed his support for Trump’s underlying policies, he has seen little evidence that the president is following through.
“Overall it has the feeling of being trade policy by press release,” Scott said.
The administration has taken small actions to generate a few hundred jobs, as happened with the Carrier plant, “but [they] don’t take any action that’s going to address the fundamental causes of the loss of 5 million manufacturing jobs over the last two decades.”
The reasons underlying those losses boil down to unfair trade deals and currency manipulation by some of America’s top trading partners, he noted. Each of those elements contributing to the massive half-trillion dollar trade deficit last year. Those problems are not easy to fix, but they were the heart and soul of Donald Trump’s economic promises on the campaign trail.
Scott said he was disappointed that Trump came into office promising to label China a currency manipulator on day one of his presidency and promising tough penalties for companies that move offshore, but none of those bore out.
“If you step back and look at the big picture, the major reason why we’ve lost jobs in the manufacturing sector is that there’s simply not enough demand for manufactured goods that are made in the United States,” Scott explained. “It’s not as though we’re not buying manufactured goods, we’re just buying them from somebody else.”
The effort to prioritize American-made manufactured goods may get a big boost in the near future. On Thursday, the Secretary of Commerce launched an investigation to determine whether the importing foreign aluminum poses a threat to U.S. national security. A similar investigation on steel imports was also launched recently.
The outcome of the aluminum and steel 232 investigations could mean tariffs and financial penalties for countries who try to flood the U.S. markets with cheap metals. In turn, that could potentially translate into new domestic demand, new jobs and the resurgence of manufacturing.
