I’m a football fan. Maybe you’re not, but you’ll still understand this analogy. When a team is successful with a play, I am very much in favor of trying it again until it doesn’t work anymore. Then it’s time to try something else, right?
I first heard Donald Trump talk about how other countries were ripping us off roughly 30 years ago. He would sometimes call in to CNBC, and on one of those occasions, he aired his long-standing complaint about trade deficits.
So it’s no surprise that when he first became president in 2016, he levied tariffs on imports from various countries, especially China. As far as the stated goals of this policy—to encourage U.S. manufacturing and create more jobs at home—it initially worked very well, adding 460,000 manufacturing jobs between 2016 and 2018. That momentum slowed dramatically in 2019, adding only an additional 40,000 jobs. Yes, the pandemic hit in 2020, so we’ll ignore that year as an aberration.
Given these results, it’s not surprising that in his second term, Mr. Trump has invoked much higher tariffs. The idea was that if a little worked well, a lot would work better. The result has been completely opposite of what happened in his first term, at least so far. During the first six months of the second Trump Administration, manufacturing jobs declined by 40,000.
Maybe it’s time to try something else.
The job picture, in fact, seems to be getting progressively worse. When the Labor Department released monthly payrolls for July, the numbers were weak. The president found out that the head of the Bureau of Labor Statistics was a Biden appointee and decided that the real problem wasn’t the economy and his policies’ effect on it, but the manipulation of numbers to make him look bad. So he fired the head of the bureau.
Turns out, the problem wasn’t the political sabotage he imagined. Under his new appointee, the Bureau of Labor Statistics released an even weaker jobs number for August.
In 2024, under the last administration, 2.2 million new jobs were created. For the whole of Biden’s term, 16.6 million new jobs were created. There are still 3 ½ years to go in the second Trump Administration, but since his inauguration, we have added 468,000 jobs, which would put us on a pace to add less than half the new jobs that were added in 2024. And based on the last couple of months, it may not even be that high. The August jobs report showed only 22,000 new jobs. Further, the final revision of the June jobs report is now revised down to minus 13,000—that’s 13,000 net jobs lost in June.
Manufacturing, which is supposed to be the main beneficiary of tariffs, isn’t faring well. One of the best indicators of that is something called the Institute of Supply Managers Report. This report shows how purchasing managers for major corporations view their companies’ prospects for the next six months. It’s an index. Any number above 50 says that, basically, the majority of purchasing managers are optimistic. Repeated reports below 50 indicate likely recession, either at the current time or the near future. The ISM gives us three numbers each month: the total of all purchasing managers, the total of only the service sector, and the total of only the manufacturing sector. So far, since the inauguration, the ISM for manufacturing has been below 50 most of the time. It dropped below 50 in April when the tariff policies were announced, and it hasn’t risen above that since.
A recession in manufacturing is not necessarily a recession in the whole economy. Manufacturing is only roughly 13 percent of the U.S. economy. But the tariffs are supposed to be helping U.S. manufacturing. It’s pretty clear that, at least so far, it isn’t working.
So, coach, time to change the plan?
By the way, when you look at statistics for the last 40 years, the losses in the last six months are not an aberration. Since 1985, there have been 50 million new jobs created when Democrats held the White House, but only 17 million new jobs when Republicans were in charge. And most of those were during the Reagan administration. If you are a millennial, almost all of the new jobs created during your life were under Democratic administrations.
Maybe the coach will come up with a new plan that will work better, but based on history, including and especially the last six months, maybe we just need a new coach.
Hal Masover is a Chartered Retirement Planning Counselor and a registered representative. His firm, Investment Insights, LLC is at 508 N 2nd Street, Suite 203, Fairfield, IA 52556. Securities offered through, Cambridge Investment Research, Inc, a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Investment Insights, Inc & Cambridge are not affiliated. Comments and questions can be sent to hal@getyourinsight.com. These are the opinions of Hal Masover and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal. Past performance is no guarantee of future results.