President Trump made improvement in manufacturing a campaign priority in 2016. For two years, that sector did improve but has started to falter. It would easy to say this is entirely due to the Trump’s trade war, but that doesn’t tell a fair story. Worldwide, manufacturing is slipping, for reasons unrelated to the trade war, and that worldwide slippage is weighing on our U.S. manufacturing somewhat. However, our slippage in manufacturing is almost entirely in the export sector. Our domestic demand remains surprisingly strong.
Our exports started to decline slowly within months of the trade war. This decline was further aggravated by the 7% strengthening in the dollar. The growth rate of exports is still positive but has dropped from a robust 3.0% last year to only 0.6% now. It won’t be long before exports actually start to decrease.
In other words, manufacturing in the U.S. is holding up better than in most nations, and the only weakness in U.S. manufacturing is the export sector, which is getting worse.