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At rallies and whistle-stop campaign
tours, President Donald Trump proclaims a renaissance in US factories
rebuilding the nation with “American steel,” “American heart” and “American
hands.”
But in reality, despite his relentless use of punitive tariffs to help
skew the playing field in favor of US companies, the very industries he has
tried to help have become the weakest links in the otherwise solid economy.
With just over a year to go before he faces reelection, Trump takes credit
for the most vigorous economy in the industrialized world, with the expansion
entering its 11th year and historically low unemployment.
But while services and office jobs dominate the US economy, Trump
continues to promote the factory and mining jobs that were the lifeblood of
the economy in the last century.
“American steel mills are roaring back to life,” he declared last month in
Florida — the same day US Steel announced it would idle plants in Michigan
and Indiana until “market conditions improve.”
And to West Virginians he said, “The coal industry is back.”
But in fact each of the sectors Trump has championed — coal mining,
steel, aluminum and auto manufacturing — have been buffeted by a combination
of market forces and changing technologies — factors beyond his control —
or damaged by the very things he did to protect them, economists and analysts
say.
Last month, a national survey of manufacturing activity hit its lowest
level in nearly three years — narrowly avoiding slipping into contraction —
while regional surveys have also seen record declines.
In March, the number of workers in US manufacturing shrank for the first
time in nearly two years and it is now growing more slowly than the rest of
the American workforce.
“There’s clearly a rather large element of hyperbole in what the president
has said,” said Scott Paul, president of the Alliance for American
Manufacturing, which supported the tariffs Trump has put on steel, aluminum
and Chinese imports.
But he adds: “I think it’s also fair to say a lot of Americans wanted to
see a president fight for American industry.”
Trump has imposed tariffs on hundreds of billions in imports, renegotiated
trade agreements and dangled the threat of worse over China and Europe and
Mexico — all while publicly browbeating companies that close US factories or
move production offshore.
But weak foreign demand, a strong US dollar and a decades-long evolution
away from domestic manufacturing have progressively shrunk America’s
industrial sector, said Gregory Daco, chief US economist at Oxford Economics.
Trump’s world trade war has not helped either.
– Automakers’ ‘greatest threat’? –
“The polices that have been implemented in terms of protectionism have
hurt the very sectors they were meant to protect. There’s no escaping that,”
Daco told AFP.
To boost the coal industry, the president has rolled back regulations on
the climate and pollution. Last month, he ordered the Energy Department to
pour millions into research to boost the performance of coal-fired power
plants.
But coal is in crisis.
As more electrical utilities switch to cheaper wind, solar and natural
gas, coal consumption has plummeted to its lowest level in 40 years,
according to the Energy Department, and bankruptcies have abounded, closing
dozens of mines, shrinking capacity and idling hundreds of workers.
One company this month shuttered operations with no warning to workers.
And while US production of primary aluminum has risen, benefitting from
the worldwide 10 percent tariffs Trump imposed last year, the number of
workers at American aluminum smelters has actually fallen one percent since
Trump took office, according to the Labor Department.
On Wall Street, share prices for Century Aluminum and Alcoa Corp, the top
US producers, have fallen by more than 50 percent in the last year.
Prices have plunged since last year, largely due to oversupply from China,
said Tom Leary, vice president at Harbor Aluminum in Texas, adding that
domestic market premiums rose with the tariffs — meaning US-made product is
frequently no cheaper than imports.
“A 10 percent tariff, it’s not enough,” Leary added.
Elsewhere, as automakers pour billions into developing new technologies
for autonomous and electric vehicles, they are abandoning factories that made
the sedans and compacts Americans no longer want to buy.
And as a result, the industry has been laying off workers at the fastest
pace since the Great Recession, according to the employment firm Challenger,
Gray & Christmas.
Charles Chesbrough, senior economist at Cox Automotive, said Trump’s
twitter bombast has forced automakers to think twice about offshoring
production.
In a Twitter outburst Friday, Trump again touted tariffs as “a great
negotiating tool, a great revenue producer and, most importantly, a powerful
way to get companies to come to the USA and to get companies that have left
us for other lands to COME BACK HOME.”
But his threat to put 25 percent tariffs on auto imports would massively
disrupt US auto manufacturing in ways still hard to quantify.
“I would say that the president still remains the greatest threat to the
industry,” Chesbrough told AFP.
(BSS/AFP)
