https://api.forbesindia.com/nodeapi/v1/frb/search-summary

search

Statistics from the US government and other sources do not support Trump's claim about his policies' effectiveness in drawing investment and jobs from abroad

Trump's push to bring back US jobs shows limited results

President Donald Trump speaks to reporters as he leaves the White House on Wednesday morning, Aug. 7, 2019. The nonprofit Reshoring Initiative found fewer than 30,000 jobs that companies said they would relocate to the United States because of Trump’s tariffsImage: Anna Moneymaker/The New York TimesWASHINGTON — From tax cuts to relaxed  regulations to tariffs, each of President Donald Trump’s economic  initiatives is based on a promise: to set off a wave of investment and  bring back jobs that the president says the United States has lost to  foreign countries.“We have the greatest companies anywhere in the world,” Trump said at  the White House recently. “They’re all coming back now. They’re coming  back to the United States.”Trump’s tax cuts unquestionably stimulated the U.S. economy in 2018,  helping to push economic growth to 2.5% for the year and fueling an  increase in manufacturing jobs. But statistics from the government and  other sources do not support Trump’s claim about his policies’  effectiveness in drawing investment and jobs from abroad.Foreign investment in the United States grew at a slower annual pace  in the first two years of Trump’s tenure than during Barack Obama’s  presidency, according to Commerce Department data released in July.  Growth in business investment from all sources, foreign and domestic,  accelerated briefly after Trump signed a $1.5 trillion tax-cut package  in late 2017 but then slowed. Investment growth turned negative this  spring, providing a drag on economic output.In Trump’s first two years in office, companies announced plans to  relocate just under 145,000 factory jobs to the United States, according  to data and modeling by the Reshoring Initiative, a nonprofit group.  That is a record high in the group’s data, which dates back to the late  1980s, but it adds up to less than one month of average job gains in the  United States in its decadelong expansion. More than half of those jobs  — about 82,000 — were announced in 2017, before Trump’s tax cuts took  effect.Moreover, the Reshoring Initiative data show fewer than 30,000 jobs  that companies say they will relocate to the United States because of  Trump’s tariffs on imported steel, aluminum, solar panels, washing  machines and a variety of Chinese goods. Researchers at A.T. Kearney  said in July that Trump’s trade policies, including tariffs, had pushed  factory activity not to the United States but to low-cost Asian  countries other than China, like Vietnam.On Tuesday in Pennsylvania, Trump declared that his tariffs had  turned things around for the domestic steel industry and that “now your  business is thriving.” But manufacturers of primary metals, which  include steel and aluminum, have added fewer than 15,000 jobs since  Trump took office, with more than half of those gains coming before  Trump imposed tariffs on foreign-made metals last year.Now manufacturing is struggling amid a global slowdown and fallout  from the trade war, which Trump has escalated by imposing additional  tariffs on Chinese goods and by labeling China a “currency manipulator.”Trump won office by tapping into frustration among working-class  voters in traditional manufacturing states where economists say up to  2.5 million jobs were lost to Chinese competition in the century’s first  decade. And administration officials assert that tariffs are helping to  create jobs. Commerce Secretary Wilbur Ross told a conference in  Washington in July that the positive effects of Trump’s steel and  aluminum tariffs “can be measured on the factory floor.”Jim Lentz, who oversees North American operations for the Japanese  automaker Toyota, has cited the company’s plans to invest $13 billion in  American operations over the next several years.“Thank you, Mr. President, for having such a strong economy for  allowing us to be able to do that,” Lentz said at the White House in  July.At a summit in June, Prime Minister Shinzo Abe of Japan handed Trump a  chart showing Japanese investments in the United States that would  yield just under 22,000 new jobs.While Trump hailed the figures, Commerce Department data show that  the rate of Japanese investment growth in the United States has slowed  under Trump, compared with Obama’s second term. And companies like  Toyota have warned that the president’s determination that foreign autos  pose a national-security threat and may be subjected to tariffs could  discourage additional investment.On another front, administration officials point to companies like  Mylan and Allergan — which had moved their corporate addresses overseas  in a process known as inversion but recently said they would return to  the United States — as a sign of success for the tax law. Larry Kudlow,  director of the National Economic Council, said last week that “you’re  seeing American firms move back.”When a CNBC interviewer said the Mylan and Allergan moves would not  bring back manufacturing jobs, Kudlow agreed. But he said, “You’re also  going to have factories moving back in from other places around the  world, including China.”Brad Setser, a senior fellow at the Council on Foreign Relations who  tracks international investment flows, said it was notable that  relatively few pharmaceutical companies were moving plants and activity  back to the United States from countries like Ireland or Switzerland.  Pharmaceutical imports from those countries actually rose in 2018, he  noted.And a May report by researchers at the International Monetary Fund  concluded that the investment effect of the tax bill “has been smaller  than would have been predicted based on the effects of previous U.S.  tax-cut episodes” and that the strongest effects on investment were  likely to have shown up in the first year after the law was enacted.  Morgan Stanley’s Business Conditions Index shows companies’ plans for  new investment plummeted this summer.The tax law reduced the corporate  income-tax rate to 21% from a top rate of 35%, and it overhauled the way  the United States taxes multinational companies. Data show those  changes have encouraged multinational companies to shift hundreds of  billions of dollars in profits to their American operations, essentially  for accounting purposes, through a process known as repatriation.Trump often cites repatriation figures as if they reflected direct investment in the United States. That’s wrong, Setser said.Commerce Department statistics show that the repatriated funds came  mainly from low-tax countries like Ireland and Bermuda, where companies  had booked profits to minimize tax liability, and not from China or  other economic competitors like Japan.That flow of money “doesn’t mean all that much,” Setser said. “You’re  not in any way seeing a shift in real activity back to the United  States.”Researchers from Wall Street financial firms and the Federal Reserve  have concluded that companies used repatriated funds mostly to buy back  stock.Administration officials contend that those selling shares will soon  invest their proceeds from the buybacks into startups, business  expansions or other forms of economic activity.Harry Moser, founder and president of the Reshoring Initiative,  praised Trump’s efforts to bring jobs and investment back to the United  States, but said the president’s trade fights appeared to have undercut  those efforts last year.“We are pleased with the over 50% surge in reshoring jobs announced  in 2017 and the record number of companies announcing reshoring jobs in  2018,” said Moser, whose group advocates measures to bring back 5  million factory jobs.But he said efforts to draw investment and jobs to the United States  were less successful in 2018 than 2017 because of a stronger dollar,  which makes American products more expensive in foreign markets, as well  as “uncertainty from the tariffs, dysfunction in Washington and the  increasing skilled-workforce shortage.”Sen. Sherrod Brown, D-Ohio, an industrial state that Trump carried  easily in 2016, said some workers there were growing disillusioned over  the president’s failure to deliver jobs to replace those in shuttered  factories like the General Motors plant in Lordstown.“We’re sensing and seeing a betrayal of workers and promises broken over and over again,” Brown said.Brown has proposed several bills that he says would reverse the  outflow of jobs, including tax incentives for companies that invest in  the United States and pay workers well. Moser said the aim could be  furthered by investment in skills development for manufacturing workers  and by the weakening of the dollar — both policies that Trump has  pushed.

Trump's push to bring back US jobs shows limited results

Statistics from the US government and other sources do not support Trump's claim about his policies' effectiveness in drawing investment and jobs from abroad

Latest News

On Everyone’s Radar