Trump's favorite parts of US economy are also the weakest
Washington (AFP) –
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.
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"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.
© 2019 AFP