Trump promised to revive US manufacturing. But the sector just plunged deeper into a recession.
- The last time President Donald Trump was a candidate in 2016, he won over Rust Belt states on the back of pledges to revive American factories.
- But two years into his term, his reelection campaign could struggle to maintain that support.
- Manufacturing plunged deeper into a recession in September, with a key gauge of factory activity dropping to its lowest level since the global financial crisis.
- Visit the Business Insider homepage for more stories.
The last time President Donald Trump was a candidate in 2016, he won over Rust Belt states on the back of pledges to revive American factories. But two years into his term, his reelection campaign could struggle to maintain that support.Manufacturing plunged deeper into a recession in September, with a key gauge of factory activity dropping to its lowest level since the global financial crisis in 2009. The dip to 47.8 on the Institute for Supply Management index marked the second straight month of contraction in the sector.Advertisement
Trump quickly sought to shift blame onto the Federal Reserve, though the data suggested his tariff disputes were behind the weakness. While US manufacturing has faced separate challenges, including a broader slowdown abroad, economists said a drop in demand for new orders showed how the sector has been directly affected by trade policy.
"The continued decline in new export orders suggests that the trade war is an important source of the ongoing slowdown in the manufacturing sector," said Torsten Slok, the chief economist at Deutsche Bank Securities.By effectively taxing American importers, tariffs on Chinese products have disrupted global supply chains and threatened to upend trading relationships that have been built over a span of decades. Domestic jobs have been put increasingly at risk as heightened costs and uncertainty weigh on the outlook.
Hiring accelerated less than expected in September, the ADP Research Institute said Wednesday. Factory job losses have been concentrated in states like Pennsylvania, Ohio, Michigan and Wisconsin, adding to political risks for a president already faced with a rapidly evolving impeachment inquiry."While the hourly news cycle obsesses over impeachment and the political battles unfolding in Washington, the real risk to the President's re-election can better be measured watching the economy," said David Kochel, a Republican operative who has advised campaigns for Mitt Romney and Jeb Bush. "An ailing economy, if it continues to slow through 2020, will make the Democrats' case much easier." Read more: US factory activity unexpectedly hits 10-year low as Trump's trade war persistsAdvertisement
With no end to the trade dispute in sight, American factories are bracing for additional pain in the sector. Thousands of companies have asked the Trump administration for exemptions from planned tariff increases on Chinese imports set to take effect in the coming weeks.
"In the interim we have not found viable option that meets our customer's expectations and required volumes," said G&S Metal Products Co., Inc., a manufacturing company based in Ohio. "Expanding our manufacturing capabilities within our factory in the US would require a significant investment and is not a viable option at this time."Manufacturing accounts for less than 12% of gross domestic product, but it is deeply tied to broader activity in the economy. According to recent polls, Americans have become worried about the effects of tariffs in recent months and said they would at least partly blame the president in the event of a sharp slowdown.Advertisement
"An economic downturn, especially manufacturing job losses, would hurt any president, but could be especially damaging to Trump because they go against the brand he has so carefully created for himself," said Douglas Heye, a former communications director at the Republican National Committee.
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