What are the main reasons why Trump won?

Is Trump Really Bringing Jobs Back?

Making the manufacturing and large industries with their many jobs strong again in the US has been the central element of Trump's political agenda since he announced in 2016 that he would run for the presidency.

Donald Trump had sharply criticized the previous administrations for allowing American companies to relocate their production to countries like Mexico and China. He promised to bring these jobs back to the US. Although Trump celebrates himself as a "hero of industrial revival", some observers consider his achievements in this area to be poor.

"There has been no recovery in manufacturing employment at all in the US," said David Dollar, a Sino-American economic relations expert at the Brookings Institution, an independent think tank in Washington, D.C. "When Trump came into office, the manufacturing industry represented 8.1 percent of employment in the civil sector - and today it is 8.1 percent," Dollar told DW.

The Institute of Utilities Management (ISM) - a not-for-profit organization based in Tempe, Arizona - released data this week that shows manufacturing has contracted for the fourth consecutive month in November 2019. Incoming orders have fallen to their lowest level since 2012.

Goods "Made in USA" are not particularly popular everywhere. Donald Trump wants to change that.

Homemade problems

America first policies and protectionist measures by the government have created general uncertainty, trade retaliation and disrupted supply chains, while inhibiting investment and hiring, the experts said.

Jacob Funk Kirkegaard of the Peterson Institute for International Economics, a Washington-based denfabrik, told DW about the many customs disputes that the US president broke off during his time in office: "Trump's trade wars are almost solely responsible for his failures in manufacturing Business."

Kirkegaard explains it like this: "Despite record-breaking fiscal incentives for peacetime, persistent low interest rates and a generous reduction in corporate taxes, the willingness to invest remains very low.

The jobs have not returned

Washington's trade dispute with Beijing has resulted in some productions being relocated from China to Mexico or Vietnam, says David Dollar of the Brookings Institution. But the jobs did not come back to the USA. "At the same time, many US companies are dependent on components and machines from China and are hit by the tariffs."

Marick Masters, an economics professor who specializes in labor issues at Wayne State University, rates Trump's job record as "generally positive". His trade policy has "considerable political appeal" in the US, Masters told DW: "Trump likes those people who were frustrated that the US did not want to mess with their trading partners. His willingness to strike back appeals to many people. "

How important is production?

Manufacturing has an eleven percent share of US gross domestic product, according to figures from the US Department of Commerce from the second quarter.

In previous decades the sector was more important. But it is still considered important for innovation, and jobs in production are usually well paid. Peter Navarro, who heads the National Trade Council of the White House, sees production as a multiplier because it also creates many jobs in other areas.

The National Association of Manufacturers has calculated that every dollar spent in production results in an increase in value of 1.81 dollars elsewhere in the economy. The producers are the greatest "multipliers" of the entire economy.

Jobs in production tend to be better paid and also ensure a corresponding level of education, according to a study by the American Economic Policy Institute in 2018.

During his election campaign and in his presidency, Trump made a firm promise to end the long-lasting downward trend in industrial production and to revive the so-called "Rust Belt" in the Midwest. A particularly large number of people voted for Trump in 2016.

Since Trump became president, US companies have created 400,000 new manufacturing jobs, according to the White House website.

BMW in Spartanburg: One of many companies that also produce in the USA and an example of globalization.

What that can mean for re-election

But the economic slowdown and economic uncertainty could have the opposite effect for Trump in the Rust Belt states, say some analysts. Big companies like John Deere and Caterpillar warn of falling profits and the fear of layoffs grows.

All of this could reduce Trump's chances of re-election, said Kirkegaard of the Peterson Institute: "To be re-elected, Trump has to win again in the states in the upper Midwest." Here he only had a slim majority in 2016. "But if the manufacturing industry is in recession there and cuts jobs, it will be difficult for Trump."

Across the country, the producer dent is hitting Republican counties hardest, according to data from the Brookings Institution. That can be the deciding factor in the election in highly competitive states like Wisconsin and Michigan, where in some counties one in five jobs is in manufacturing.

"Trump's re-election depends to a large extent on the state of the economy and the perceived level of 'extremism' on the part of his Democratic challenger," says Marick Masters of Wayne State University. "Should the economy slide into recession with rising unemployment, Trump's chances of re-election will decrease. But if the economy continues to do well and the Democrats nominate an extreme left, his chances will increase."

Faltering business prospects and declining global demand have hit US factories hard. In addition, trade conflicts and increasing protectionism are also dampening growth in other countries.

Who is to blame Well, the Fed, of course!

Meanwhile, Trump is trying to blame the Fed for the industrial decline of the US Federal Reserve. The President has sharply criticized the Fed's monetary policy on several occasions. With her interest rate hikes she drove the dollar exchange rate up and thus made US goods more expensive in other markets.

In an effort to stimulate economic growth, Trump urged the central bank to cut interest rates - even if experts told him the problems were more with trade than with monetary policy.

The US Central Bank in Washington. According to President Trump, responsible for the country's economic problems.

Since the summer, the Fed has cut key interest rates again, in three interest rate steps to the current 1.75 percent. That doesn't seem to be enough for Trump.

"Entrepreneurs are hindered by the strong dollar, which has shot up because of the ridiculous policies of the Federal Reserve," tweeted Trump on Monday (December 2nd, 2019).

"The Fed should cut interest rates (there is almost no inflation). That will make us competitive again and production will go through the roof!" Trump said on Twitter. "The dollar is too strong against other currencies," he added. In August he tweeted that the Fed was making it difficult for "our big producers like Caterpillar, Boeing" to do business.

But despite the weakness of large industrial companies, says Brookings analyst Dollar, the US economy is doing broadly well. "The majority of jobs are concentrated in the service sector - and that is still growing reasonably well." For the presidential election, the general economic situation is more important than the situation in the manufacturing sector, Dollar is convinced.