Oct 6, 2019

Business leaders spooked by Trump's manufacturing slump

Expand chart
Data: Bureau of Labor Statistics; Chart: Axios Visuals

American manufacturers rode a wave of optimism after President Trump took office, clinging to his promises to revive the industry and bring back jobs.

Yes, but: The politically important sector is being choked by his trade war with China, and business leaders tell Axios that the tariffs threaten to upend the economy if not addressed soon.

Driving the news: The manufacturing sector added 18,000 jobs in September of last year, following a steady rise in employment.

  • But just one year later, the pace of gains has slowed: Last month, the sector cut thousands of jobs for the 2nd time this year.
  • A closely watched index that tracks the health of the industry also showed that manufacturing is in the worst shape since before President Trump took office — contracting for 2 straight months. The last time the sector contracted was in 2016.

And while President Trump has blamed the Federal Reserve for the slump, and White House economic adviser Larry Kudlow punted responsibility to Europe, business groups and manufacturers say there's no question Trump's trade war is the real problem.

White House spokesperson Judd Deere told Axios: "The fundamentals of the economy are strong because of this president’s pro-growth policies, and the White House does not see an imminent economic downturn." 

  • "Talks with China are continuing this week, but there is no doubt that President Trump will continue to use every available tool to level the playing field and reduce barriers to the export of our goods and services."

The U.S. Chamber of Commerce's chief policy officer Neil Bradley, who has worked closely with the Office of the United States Trade Representative on the Trump administration's pending trade agreements, tells Axios he's been "concerned about the outlook for the manufacturing sector for some time now."

  • "When businesses begin to decline, one of the first sectors to be impacted by that is manufacturing," Bradley said. "The next few months are critical. Either confidence [in the markets] is going to be restored, or that lack of confidence from the tariffs will continue to spread. And that's when you risk a recession."
  • Meanwhile, the president of the National Association of Manufacturers, Jay Timmons, said that optimism among their members is declining — and the lack of clarity surrounding USMCA and tariffs has put “a chill on business investment decisions” in the sector.

The bottom line: Counties with local economies that rely on manufacturing overwhelmingly supported Trump in 2016 and celebrated the "Trump bump" that accompanied him when he took office. But those votes could be in jeopardy as uncertainty continues to grip the industry.

Go deeper

Updates: George Floyd protests enter 12th day

Protesters in Washington, D.C. on June 6. Photo: Samuel Corum/Getty Images

Tens of thousands of demonstrators are rallying in cities across the U.S. and around the world to protest the killing of George Floyd. Huge crowds have assembled in Washington, D.C., Philadelphia and Chicago for full-day events.

Why it matters: Twelve days of nationwide protest in the U.S. has built pressure for states to make new changes on what kind of force law enforcement can use on civilians and prompted officials to review police conduct.

Updated 1 hour ago - World

In photos: People around the world rally against racism

Despite a ban on large gatherings implemented in response to the coronavirus pandemic, protesters rally against racism in front of the American Embassy in Paris on June 6. Photo: Julien Mattia/Anadolu Agency via Getty Images

Tens of thousands of people have continued to rally in cities across the world against racism and show their support this week for U.S. demonstrators protesting the death in police custody of George Floyd.

Why it matters: The tense situation in the U.S. has brought the discussion of racism and discrimination onto the global stage at a time when most of the world is consumed by the novel coronavirus.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 7:30 p.m. ET: 6,852,810 — Total deaths: 398,211 — Total recoveries — 3,071,142Map.
  2. U.S.: Total confirmed cases as of 7:30 p.m. ET: 1,917,080 — Total deaths: 109,702 — Total recoveries: 500,849 — Total tested: 19,778,873Map.
  3. Public health: Why the pandemic is hitting minorities harder — Coronavirus curve rises in FloridaHow racism threatens the response to the pandemic Some people are drinking and inhaling cleaning products in attempt to fight the virus.
  4. Tech: The pandemic is accelerating next-generation disease diagnostics — Robotics looks to copy software-as-a-service model.
  5. Business: Budgets busted by coronavirus make it harder for cities to address inequality Sports, film production in California to resume June 12 after 3-month hiatus.
  6. Education: Students and teachers flunked remote learning.