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Trump trade wars have led to lost US jobs and factories. We need a worker-centered recovery.

John Cavanagh  |  Opinion contributorplay

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Trump’s tariffs: the good, the bad and the ugly

President Trump’s ‘America First’ approach has relied on slapping tariffs on countries, such as China and Mexico, which have led to current trade wars. What is a tariff and how do they work? We explain.

As he courts Midwestern voters, President Donald Trump is returning to hard-hit manufacturing regions where he made big, bold promises in his last campaign. “If I’m elected…. you won’t lose one plant, I promise you that,” he told Michigan voters at a rally in October 2016. In fact, his big stick approach to global trade negotiations would bring jobs back home. Or so he claimed. 

Four years later, it’s clear that Trump’s trade policies have failed U.S. workers. Instead of more good jobs, his ever-escalating trade wars have led to higher costs, lost markets, and more plant closures. Economic Policy Institute research shows that nearly 1,800 U.S. factories disappeared between 2016 and 2018. 

In manufacturing-heavy Ohio, Trump’s tit-for-tat tariff battle with China was a major factor in the drop in annual job growth from 36,200 in 2016 to 3,700 in 2019, according to a new report I co-authored. Average weekly earnings for Ohio manufacturing workers also declined during this period. 

In Michigan, Fiat Chrysler, General Motors, and Ford have all closed plants since Trump’s brash campaign trail commitments. Auto companies as a whole reduced their investment in the state by 29% over the three full years of Trump’s presidency, compared with the previous three years under Obama. 

Trump tariff battle with China hurts 

Where were U.S. manufacturing companies investing? China. Trump’s war of words with Beijing has done nothing to stop American companies from pouring resources into this fast-growing market.

In 2019, U.S. firms invested $14 billion in China — more than in 2016, the year Trump was elected. Tesla and General Motors led the pack, with massive investments in electric vehicle production. These two companies’ decisions to expand in China were motivated in part by Beijing’s consumer subsidies for pollution-reducing technologies. 

But Trump also bears personal responsibility for encouraging offshoring because of the corporate tax cuts he pushed through Congress in 2017. U.S.-based companies no longer owe Uncle Sam anything on offshore profits up to a certain threshold. Above that level, they owe a federal tax rate that’s just half of what they’d pay for domestic profits. 

As a result, corporations can save on their IRS bills by shipping jobs overseas. Big companies like General Motors took their tax break and then shipped thousands of jobs out of Ohio, Michigan, and other states.

Trump’s economic debacle: Biden’s central message must be his plan for American recovery

What’s Trump saying now, as he once again stumps in these struggling industrial powerhouses? 

Don’t expect any apologies for his broken promises. Instead, you’ll hear false claims about all the car plants he’s supposedly created in these states. On Sept. 10 in Freeland, Michigan, he went so far as to claim that he’d “brought back our manufacturing jobs” and added: “If Biden wins, China wins.”

Of course, these are lies. The jobs haven’t come back. But even as he doubles down on his failed trade war with China, Trump continues to reward the corporations that offshored jobs there.

More broken promises from Trump

For instance, the president is now lobbing grenades directly at Chinese firms like technology giant Huawei and the TikTok video app. Meanwhile, he’s proposing tax breaks for big U.S. companies that return jobs to the United States. Essentially, taxpayers would have to pay big corporations to try to buy their jobs back. 

There’s a better way to address the hemorrhaging of U.S. manufacturing jobs. 

We need a trade policy overhaul that lifts up wages and working conditions for workers everywhere — including in China. If corporations were to face strong penalties for violations of labor and human rights, they would be less eager to slash U.S. jobs to exploit workers elsewhere. 

Don’t buy his tough act: Trump has been a great president for China. For America amid coronavirus, not so much.

That would be good news for workers in all countries. And in light of the pandemic, when the large-scale offshoring of production for personal protective equipment created critical shortages, keeping more production at home would be good news for the rest of us, too.

This new trade policy should be part of an overall economic plan that ensures large corporations are contributing their fair share to our national recovery. To get America back on its feet, we’ll need strategically targeted public investment in job creation, health and social services, new infrastructure, and the green industries of the future. Any trade rules that restrict such crisis responses must be abolished. 

Trump’s brute force tactics with China have backfired. We need a fresh new alternative that will deliver a worker-centered recovery — and make us better prepared for future crises. 

John Cavanagh is director of the Institute for Policy Studies and a co-author of “How Trade Policy Failed U.S. Workers — and How to Fix It,” published by IPS, Boston University’s Global Development Policy Center and the Groundwork Collaborative.

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