The Federal Reserve’s new (September) industrial production figures contained the latest evidence that President Trump’s metals tariffs are showing no sign of harming America’s metals-using industries. Indeed, on top of their inflation-adjusted output generally remaining impressive compared with that of the rest of domestic manufacturing, industries that had apparently paid a high price for the levies (chiefly major appliances, where separate safeguard tariffs on household laundry equipment have been in place since February) have made up lost ground dramatically.
Moreover, although they began only in July, the industrial production figures so far show no reason to believe that Mr. Trump’s China tariffs are undermining domestic industry, either.
Here’s how major metals-using industries have done in terms of generating real growth between August and September (according to this morning’s preliminary data) – along with the numbers for manufacturing as a whole, and durable goods as a whole (the super-category in which the heaviest metals users tend to be found). This table also includes the previously released and new July-August results.
Old July-Aug New July-Aug Aug-Sept
overall manufacturing: +0.28 percent +0.29 percent +0.24 percent
durable goods: +1.01 percent +1.08 percent +0.59 percent
fabricated metals products: +0.22 percent +0.51 percent +0.05 percent
machinery: +1.07 percent +1.87 percent +0.88 percent
automotive: +4.02 percent +4.27 percent +1.70 percent
small appliances: +0.81 percent +1.98 percent +1.34 percent
major appliances: -2.76 percent -1.58 percent +3.26 percent
As with domestic manufacturing as a whole, the metals-users experienced a sequential production slowdown in September – and in fact one that exceeded that for manufacturing overall. But this slowdown came right after a July-August performance that was much stronger than for the rest of industry, and where revisions were much more positive.
The longer-term statistics tell much the same story – including about a big comeback for appliance production. Here are the real output data since April (used as the baseline since the metals tariffs were imposed beginning in late March):
old thru Aug new thru Aug thru Sept
overall manufacturing: 0.54 percent +0.52 percent +0.76 percent
durables manufacturing: +0.48 percent +0.82 percent +1.41 percent
fabricated metals products: +0.79 percent +1.22 percent +1.28 percent
machinery: +0.09 percent +1.93 percent +2.84 percent
automotive: -0.63 percent -0.30 percent +1.39 percent
small appliances: -5.33 percent -2.54 percent -1.23 percent
major appliances” -5.25 percent -4.00 percent -0.87 percent
Finally, although the China tariffs are much more recent, reports are already appearing claiming that they, too, are backfiring on American industry. Yet just as with the metals tariffs, the official data refute these claims. Here are the real output figures for manufacturing as a whole, and its two super-sectors, for the two months preceding the first tariffs on imports from China and for the two months following them:
overall manufacturing: +1.15 percent +0.54 percent
durable goods: +1.28 percent +1.68 percent
non-durable goods: +1.01 percent -0.63 percent
True, a slowdown is apparent. But it’s entirely due to weak performance in the non-durable goods sector. And it’s likely that this setback owes at least partly to Hurricane Florence, since among the worst results were those in the textiles sector, which boasts a large presence in the Southeastern United States.
As always, the data going forward could change the tariff-impact picture significantly. It will need to for the narrative to start finally matching up with the reality.