Has the Trump administration really helped the US manufacturing sector? | Mintly

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Has the Trump administration really helped the US manufacturing sector?

When Donald Trump got elected as the 45th president of the USA on 8th November 2016 he had brought with him a dream to “Make America Great Again”. Many people were skeptical about the policy changes he had talked about during his campaign. As soon as he swore in into the office he has been known for taking radical steps to make his dream come nearer to reality. Immigration from a number of Islamic countries was banned, trade sanctions were imposed on Iran and North Korea following claims of nuclear programs for non-peaceful purposes and increased import tariffs on European Union countries, China, India, Mexico, Canada etc..

Tariffs on trade were not welcomed by many countries across the globe, it was reciprocated by many of the countries. It also led to the US threatening to withdraw from NAFTA which later on got through with a re-negotiated NAFTA treaty. The main purpose of imposing sanctions on foreign goods by the Trump government was to strengthen the US manufacturing sector, increase the employment of the US citizens and reducing the trade deficit which they were having with China.

 

This move to impose reciprocating tariffs was not just opposed by the governments of the trade allies but also with the US by the traders, industrialists and not to forget even the members of Trump's own senators and party members. Despite all this flak, there was little change. The tariffs have been imposed. The impact of all the above-mentioned policy changes on the manufacturing sector has been discussed below:
 

  1. Increased prices:
    With the tariffs on steel and aluminum imports, the cost of production of different products like automobiles and construction material has increased. This increased cost is then passed on to the consumers. With the increase in the cost for the consumers the consumption has come down and this leads to decreased profits and margins for the companies in the manufacturing sector. Campbell Soup Company in one of its statement said that it might face a double-digit increase in the prices of aluminum which will be cutting down its margins significantly.
     
  2. Become more competitive:
    Although the manufacturing sector didn’t appreciate the move but the core manufacturing sector did appreciate the move. Core manufacturing sector includes the producers of iron and aluminum. The production of iron and aluminum became more competitive in the US market. They also proposed that if in case there is no increased tariff on the foreign imports from a country then there should be a quota on the amount that can be supplied, this was particularly aimed at China which has been held responsible for dumping the iron produce on multiple occasions.
     
  3. Retaliation to the US:
    The US move of imposing tariffs has been retaliated and reciprocated by many countries. To recollect one such instance the “Made in USA” blue jeans, t-shirts, and footwear etc. have faced increased tariffs in the European Union. This will lead to tougher days for US apparel making companies like Tommy Hilfiger, Nike, Levi Strauss, GAP etc.
     
  4. Tight supply:
    One of the most important raw material for the auto-makers is aluminum and with the tariffs being imposed on the Chinese and Indian imports of aluminum the supply for the metal has become tight. Without the supply of the lightweight metal, the whole of the value chain will get affected so one can't be sure if this will lead to more employment generation in the American aluminum industry or layoffs in the automobile and the related industries.
     

Now it's time to evaluate if it really helped the American economy and its manufacturing sector or all the efforts by Trump went in vain. During the month of November 2018, the trade deficit hit an all-time high at $43.1 billion. An economist at Moody's was quoted saying "The Trump administration is learning you can't tariff your way out of a trade deficit". The purchasing manager's index which is used to track the growth of the manufacturing sector saw a rise of 1.6% from 57.7% to 59.3% from October 2018 to November 2018. This made it the 27th consecutive month where the index has seen growth but the prices of raw materials have gone up for past 33 months straight.

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