Want the U.S. economy to rebound? Refocus on manufacturing

Every four years, presidential candidates find their way to battleground states and sing the virtues of blue-collar factory jobs. That rhetoric has been as bold as ever this year, with slogans such as “Buy American, Hire American” and “Build Back Better.”

The numbers tell a different story. Since President Donald Trump took office, Iowa has gained only 5,000 such jobs; nationwide we’ve lost 164,000. The national goods trade deficit was a record $83 billion in August. And while the Trump administration can claim at least some accomplishments that will help American workers, like a more worker-friendly North American Free Trade Agreement update, our biggest trading relationship — with China — is as skewed as it has ever been, despite a trade war and the “Phase One” truce. And no one needs to tell Iowa’s farmers who has borne the brunt of it.

You can lay many of the factory job losses and import spikes on the economic fallout from the coronavirus, which has been made worse by an uneven public health response and federal relief measures that ran out of money months ago. But whoever is elected president must dig the country out of a mess that has left millions out of work, underpaid, and struggling to pay bills.

To do it, they should make good on their slogans and revitalize the domestic manufacturing base. In Iowa, manufacturing is a relative economic strength. A national industrial policy is precisely the kind of thing to help rescue the rest of the economy from recession.

That kind of policy ultimately means two things: domestic investment to create demand and trade reform to keep American exporters competitive. When it comes to trade, it means effective reform of America’s gigantic trading relationship with China, which will require a strategy more thoughtful than slapping tariffs on everything in sight. That approach has basically made China agree to buy American soybeans, but it hasn’t created many opportunities for American factory workers or balanced our bilateral goods trade deficit, which stood at nearly $30 billion in August. And China isn’t close to making good on the soybean deal yet.

A successful strategy means working with like-minded allies who don’t like China flouting trade rules any more than we do. That doesn’t mean rejoining the Trans-Pacific Partnership as is, but it starts with recognizing that our case for balanced trade is stronger when other countries join us. 

Just as important as trade reform, though, is investment. And nothing would create demand for manufactured goods like a national infrastructure program. Washington for years has feinted at an infrastructure bill, and an economy begging for a relief package could finally provide the impetus to getting one done.

If rules are included so this investment is also spent in America — so that the actual physical material of our infrastructure is American-made — Iowa alone could see more than 21,000 new jobs in construction and fabrication, according to a new paper from the Economic Policy Institute. And that doesn’t account for the downstream effects an infrastructure program would cause when newly hired construction and factory workers buy cars, groceries, and other things around town.

Restarting a stalling economy is not an easy thing. So let’s think big here. They’re saying “Buy American, Hire American” and “Build Back Better” now. Don’t let them forget that when it’s time to do it later.

Scott Paul is president of the Alliance for American Manufacturing, a nonprofit, nonpartisan partnership formed in 2007 by American manufacturers and the United Steelworkers. He lives in Bethesda, Maryland.