Just days after Donald Trump‘s former campaign manager Paul Manafort flipped for Robert Mueller, the president has taken to Twitter for some new shiny objects. A major tweet was his premature victory declaration regarding his tariffs. Despite the manufacturing renaissance he claims, it’s too soon to determine the full scope of any benefit or harm they might create.
Trump is correct to say the tariffs should bring more money to the government. But it’s not a meaningful amount in the context of a multitrillion-dollar budget. Companies that deal the most with the imports that Trump is taxing have had to absorb higher prices, yet the president says the price increases barely register.
As for the steel sector, Trump can tout some new investments because of helpful government policy, but it’s too early to claim that his policies have catapulted the industry to new heights.
A look at the president’s tweets Monday and the reality behind them:
TRUMP: “Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be ‘Tariffed!’”
THE FACTS: In trade talks with China, Canada, and Mexico, it’s not entirely clear how much of an advantage the United States has gained from the tariffs. The import taxes imposed on steel and aluminum have been pressure points. So are the tariffs on $50 billion worth of Chinese goods, with the president suggesting he’s prepared to tax an additional $467 billion of imports from China. But Americans have to see a final deal with Canada or China to assess whether these taxes are delivering a better bargain.
Still, have tariffs brought in billions of dollars and jobs without increasing inflation?
Yes, the tariffs have brought in slightly more revenue. It’s hard to know if they’ve helped create jobs. And the companies closest to the tariffs say that, yes, inflation is a risk.
In theory, the tariffs should add money to federal coffers. The 25 percent tax the Trump administration slapped on $50 billion of Chinese imports should raise $12.5 billion if the flow of goods continues without interruption.
And even though many tariffs haven’t been in place long enough to determine whether they’re helping draw in significantly more revenue, the Treasury Department said there has been a $5.4 billion jump in the collection of customs and duties so far this fiscal year. Some of this increase is due to more exports entering the United States. But customs and duties account for just 1.2 percent of federal revenues, so any increase from tariffs does little to address the ballooning budget deficit.
The U.S. economy was adding jobs before the tariffs were announced, and it has been adding jobs since. It’s hard to know at this stage how the tariffs have influenced the pace of job creation, since any analysis would need to consider the whole of the nine-year expansion and the stimulus from Trump’s deficit-funded tax cut.
So, what about inflation?
Steel and aluminum prices can be volatile. But over the past year, steel and iron prices have jumped nearly 15 percent, according to the Labor Department. Aluminum price growth increased in June and has since fallen. The companies surveyed by the Institute of Supply Management for its index of manufacturing growth say that the tariffs are a risk for both the likely price increases and the uncertainty they create. Out of the 10 companies cited in ISM’s survey, half reported concerns about the tariffs.
TRUMP: “Our Steel Industry is the talk of the World. It has been given new life, and is thriving. Billions of Dollars is being spent on new plants all around the country!”
THE FACTS: Trump has certainly helped steelmakers, but so far it’s not the dramatic turnaround that he portrays.
Analysts at Citibank said this month that steel companies have approved more than $3 billion in investment following the tariffs. Some steel mills have restarted old lines and added new capacity.
Manufacturers focused on primary metals have added 7,100 workers in the past 12 months for a total of 381,700 jobs, according to the Labor Department. But that total still lags the 402,600 jobs with primary metal manufacturers at the end of 2014. A stronger dollar and lower oil prices hurt the demand for steel products, causing production and employment to fall. And Trump is a long way from the more than 450,000 jobs in this sector at the start of 2008.
More importantly, steel is a modest component of U.S. job growth. Primary metals represented just 0.3 percent of the 2.33 million job gains in the past year.
In a stormy week, President Donald Trump blustered and distorted reality, denying massive deaths from a hurricane that scientists believe to be one of the nation’s deadliest and blowing out of proportion U.S. economic growth and his role in spurring it.
He’s insisting the federal response to Hurricane Maria, which hit Puerto Rico last September, was “incredibly successful,” even though blackouts there remain common and several forms of federal aid have been slow to arrive compared with past disasters. Independent researchers have estimated the death toll was nearly 3,000 people. Trump is rejecting that work, claiming it’s a conspiracy by Democrats and isn’t true.
And as the November elections near, Trump is citing record-breaking middle-class income that isn’t so and exaggerating progress on his long-promised wall along the U.S.-Mexico border.
At the same time, some of Trump’s critics were not entirely immune from hyperbole.
Former President Barack Obama asserted “healthy” economic growth during his administration that is in dispute and a Democratic lawmaker blamed all the estimated deaths from Puerto Rico’s hurricane on the Trump administration as if the storm itself took no one.
Here’s a much closer look at some of the recent claims:
TRUMP: “‘Middle-Class Income Hits All-Time High!’ @foxandfriends And will continue to rise (unless the Dems get in and destroy what we have built).” — tweet Thursday.
VICE PRESIDENT MIKE PENCE: “Just today, if you hadn’t heard about it yet, the U.S. Census Bureau reported that last year, middle-class incomes in America hit an all-time high — that’s worth celebrating — for working families.” — remarks Wednesday in Grand Rapids, Michigan.
THE FACTS: These assertions are an example of how Trump and other administration officials often seek credit for trends in place before they took office. Trump’s own Census Bureau also cast doubt on the claims.
Median U.S. household income — the level at which half of the U.S. population earns more and half less — grew 5.1 percent in 2015 and 3.1 percent in 2016, during the Obama administration. It was the fastest two-year growth on record, dating to 1967. In 2017, Trump’s first year in office, median income grew at a slower pace of 1.8 percent to reach what technically was an all-time high, adjusted for inflation, of $61,372.
The Census Bureau, however, warned in its report Wednesday that after adjusting for changes in its methodology in 2013, last year’s figure was not actually an all-time high. Instead, it remained slightly below 1999′s level of $61,966, though the bureau noted that the difference was minor.
OBAMA: “And by the time I left office, household income was near its all-time high.” — rally Sept. 7 at the University of Illinois Urbana-Champaign.
THE FACTS: That’s true, though it was a long time coming. According to the Census Bureau, in 2016 the typical household earned $59,039, adjusted for inflation, nearly matching the peak it reached in 1999. Another way of looking at those figures, of course, is that the U.S. middle class essentially went 17 years, Obama’s two terms included, without a raise.
THAT FAMOUS ‘BEAUTIFUL’ BORDER WALL
TRUMP: “We’re building the wall, not only building it, we’ve already started it. We’ve started the wall. $1.6 billion last year, $1.6 billion this year, we’re rapidly in San Diego and other parts of the country. We’re picking the locations that are worse.” — remarks Sept. 7 at a fundraising event in South Dakota.
THE FACTS: Trump’s suggestion that he secured $3.2 billion for construction of a wall along the U.S-Mexico border is wrong. Nor is the construction underway adding any mileage to what’s already in place.
Congress allocated $1.6 billion for the wall and related security measures this year. The administration requested an additional $1.6 billion next year to add 65 miles (104 kilometers) of wall in Texas’ Rio Grande Valley but has not received any of it. Legislative leaders in the House and Senate pledged agreement this past week on a short-term spending bill that would not address wall money. GOP leaders have said they preferred to resolve the issue after the Nov. 6 elections.
Trump is correct that wall construction is underway in San Diego — as well as Santa Teresa, New Mexico, and Calexico, California — but it replaces or fortifies existing barriers. Barriers currently blanket 654 miles (1,046 kilometers), or roughly one-third of the border with Mexico, much of it built under President George W. Bush.
The $1.6 billion that Congress authorized this year came with a condition that the wall must adhere to existing designs. Last year, the administration built eight prototypes in San Diego that were intended to guide future construction.
TRUMP: “3000 people did not die in the two hurricanes that hit Puerto Rico. When I left the Island, AFTER the storm had hit, they had anywhere from 6 to 18 deaths. As time went by it did not go up by much. Then, a long time later, they started to report really large numbers, like 3000….” ″This was done by the Democrats in order to make me look as bad as possible when I was successfully raising Billions of Dollars to help rebuild Puerto Rico. If a person died for any reason, like old age, just add them onto the list. Bad politics. I love Puerto Rico!” —tweets Thursday.
THE FACTS: He is making a baseless assertion that massive deaths did not happen, even if the exact toll from the hurricane remains imprecise.
Independent researchers at George Washington University estimated 2,975 excess deaths related to Hurricane Maria in the six months following the hurricane, which hit last September. Puerto Rico Gov. Ricardo Rossello commissioned the study and accepted the death toll as the best available. Rossello rejected the findings of a different study that estimated more than 4,000 died, saying he found the GWU research with its lower number to be scientifically sound.
The study found that 22 percent more people died than would have been expected during that period in a year without the storm. Its central finding has been roughly corroborated by other, similar studies. A second phase will examine the circumstances of specific deaths to arrive at a more precise number.
The lead researcher on the study was Dr. Carlos Santos-Burgoa, a well-known expert in global health, particularly in Latin America.
Trump’s claim that the death toll was no more than 18 when he visited Puerto Rico, nearly two weeks after the storm, ignores the fact that the U.S. territory’s official death toll was raised to 34 later that day, Oct. 3. After that, it climbed to 64. With services devastated, most power out, many people desperate for food and water and roads impassable, it was impossible to know how many died directly from Maria or from floodwaters or deprivation in its immediate aftermath.
That’s why the official death toll remained relatively low until researchers could examine death records and gain a broader understanding of people’s circumstances.
It took years to assess the death toll from Hurricane Katrina in 2005 despite the relative accessibility of the Gulf Coast, for example. About 1,800 died from Katrina.
Trump was a one-man island in attributing the Puerto Rican death estimate to Democrats. House Speaker Paul Ryan, R-Wis., saw “no reason to dispute” the estimate. Sen. Marco Rubio, R-Fla., tweeted his support of the 3,000 finding and lamented that “These days even tragedy becomes political.” Several other Republican lawmakers from Florida similarly rejected Trump’s words. Democrats were outraged.
TRUMP: “We got A Pluses for our recent hurricane work in Texas and Florida (and did an unappreciated great job in Puerto Rico, even though an inaccessible island with very poor electricity and a totally incompetent Mayor of San Juan).” — tweet Wednesday.
TRUMP: “I think Puerto Rico was incredibly successful. Puerto Rico was, actually, our toughest one of all because it’s an island … Everything is by boat …The job that FEMA and law enforcement and everybody did, working along with the Governor in Puerto Rico, I think was tremendous. I think that Puerto Rico was an incredible, unsung success.” — remarks Tuesday.
THE FACTS: Trump’s claim that the federal government had an “incredibly successful” response to Maria is questionable.
The storm is estimated to be one of the nation’s worst disasters, after the U.S. territory raised its official death toll from 64 to 2,975 based on the GWU study. That surpasses the 1,800 people who died from Hurricane Katrina. Maria is also estimated to have caused $100 billion in damage.
A July report by the Federal Emergency Management Agency noted several shortcomings in its response, including that it underestimated how much food and water would be needed after the storm and that not enough Spanish-speaking aid workers were deployed to the island.
Responding to Trump’s comments, Rossello disputed the notion that the response was “successful.”
Blackouts still remain common; nearly 60,000 homes are covered by only a makeshift roof not capable of withstanding a Category 1 hurricane, and 13 percent of municipalities lack stable phone or internet service.
In Maria’s aftermath, according to FEMA data analyzed by media outlets, approvals for individual assistance checks in Puerto Rico were slower compared with what happened with large storms last year. From Sept. 30 to Oct. 7, not one of those checks was approved. On Oct. 8 the approvals began rolling again, but with a large spike suggesting a backlog.
In addition, data from the U.S. Small Business Administration indicate that approvals for disaster loans in Puerto Rico were slow — the first one was not approved until 15 days after the storm was declared, four times as long as with Hurricane Harvey.
DEMOCRATIC SEN. ROBERT MENENDEZ of New Jersey: “You’re right, Mr. President. The Hurricane didn’t kill 3,000 people. Your botched response did.” — tweet Thursday.
THE FACTS: He’s taking it too far. Whatever the shortcomings of the federal response, attributing a specific death toll to that alone is unsupported. FEMA faced some problems that were beyond its control, principally the sheer force of the Category 4 monster storm as well as the logistical difficulties of reaching the Caribbean island, more than 1,000 miles from the U.S. mainland.
Residents have been critical of the hurricane response by local officials, not just by Washington. Puerto Rico’s government has acknowledged that its emergency plans were designed only for a Category 1 hurricane, and admitted failures to follow those plans and communications breakdowns.
ECONOMY AND JOBS
TRUMP: “The GDP rate (4.2 percent) is higher than the Unemployment Rate (3.9 percent) for the first time in over 100 years!” — tweet Monday.
WHITE HOUSE ECONOMIC ADVISER KEVIN HASSETT: “The correct number is 10 years.” — briefing Monday.
THE FACTS: Actually, the correct number is 12 years. In the first three months of 2006, the economy expanded at a 5.4 percent annual rate. At the same time, the unemployment rate was 4.7 percent.
The economy’s growth rate, which reached 4.2 percent in the April-June quarter, has been higher than the unemployment rate dozens of times since World War II. Hassett acknowledged Trump’s tweet was wrong.
HASSETT: “There was an inflection at the election of Donald Trump, and … a whole bunch of data items started heading north.” — briefing Monday.
THE FACTS: If you look at a chart of monthly job gains or the economy’s growth rate, that inflection point is hard to spot. Hassett notably did not include in his presentation any mention of overall job creation or the broadest measurement of the economy’s output, GDP.
That’s probably because the growth rate Trump repeatedly cites, the 4.2 percent expansion at an annual rate that occurred in the April-June quarter, isn’t out of line with Obama’s record. The economy grew more quickly than that four times during Obama’s eight years in office.
Economists generally acknowledge that growth has accelerated this year compared with 2016 and 2017, and most of them partly credit last year’s tax cuts for fueling more consumer and business spending. The economy is on pace to grow at a 3 percent or faster pace in 2018, which would be the first time since 2005 it would reach that mark.
Yet it barely missed that cutoff in 2015, when it expanded 2.9 percent under Obama.
When it comes to jobs, the U.S. added more jobs in each of the last three years of Obama’s presidency, 2014-2016, than it did last year, Trump’s first in office. Job growth has picked up a bit this year but is still on track to come in below the 2014-2015 pace.
OBAMA: “The actions we took during that crisis returned the economy to healthy growth and initiated the longest streak of job creation on record.” — rally Sept. 7 at the University of Illinois Urbana-Champaign.
THE FACTS: He’s right on jobs, but whether the economy experienced “healthy growth” is a matter of dispute.
As measured by the gross domestic product, the broadest measure of the economy’s output, the U.S. economy expanded at an average annual rate of 2.2 percent from 2010, after the Great Recession ended, through 2016, Obama’s last year in office. That is the weakest growth of any post-recession recovery since World War II.
OBAMA: “When the job numbers come out, the monthly job numbers, and suddenly Republicans are saying it’s a miracle, I have to kind of remind them, actually, those job numbers are the same as they were in 2015 and 2016.” — Illinois rally.
THE FACTS: Obama is correct, though many economists are surprised that hiring has continued at such a solid pace after more than nine years of expansion. Job gains even picked up a bit in 2018.
Still, in 2015 employers added an average of 226,000 jobs a month. Last year, Trump’s first in the White House, that figure fell to 182,000 a month. So far in 2018, hiring has come in a bit better, averaging 207,000 a month.
In some ways, Obama isn’t giving himself enough credit: The strongest year for job growth since the recession was 2014, when employers added more than 250,000 on average every month.