(What’s Left of) Our Economy: Why Tariffs are Off the Hook for Manufacturing’s Slowdown

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aluminum, China, Federal Reserve, industrial production, inflation-adjusted growth, metals, metals-using industries, real growth, steel, tariffs, Trade, Trump, {What's Left of) Our Economy

Here’s all you need to know to recognize that domestic U.S. manufacturing is experiencing some kind of slowdown: Today’s real output numbers from the Federal Reserve showed that production flat-lined on month in March. And that was a significant improvement from the comparable February figure – a 0.37 percent drop!

So do these dreary results mean that tariff fear-mongers are finally right to claim that President Trump’s levies on imports of steel and aluminum, and on a wide range of goods from China are backfiring on American industry? Not according to the internals.

As has been the case for months, the most convincing evidence comes from the metals-using industries. After all, the tariffs affecting their products have been in place longer. (April was the first full month in which they were in effect.) The most relevant industries are easy to identify. And because (with despite numerous exemptions) the tariffs have been virtually worldwide in scope, there’s no need to wonder whether how extensively the steel and aluminum in question are being supplied by an individual country or even group of countries.

The table below presents the inflation-adjusted output changes in major metals-using industries from April through each of the Fed’s last three data months. This format differs from that used in my previous industrial production-related posts because late last month the Fed released a set of revisions going back to 2015. So rather the old and new figures for the previous data month aren’t comparable anymore, and I simply decided to use the new figures going back three months.

                                            April thru Jan.      April thru Feb.     April thru March

overall manufacturing:      +1.20 percent        +0.83 percent         +0.82 percent

durables manufacturing:   +2.05 percent        +2.05 percent          +1.96 percent

fabricated metals prods:   +3.53 percent        +3.08 percent          +2.85 percent

machinery:                       +4.33 percent         +2.24 percent         +2.71 percent

automotive:                      – 2.84 percent         -0.58 percent          -3.06 percent

major appliances:             -1.83 percent          -1.30 percent         -5.62 percent

aircraft and parts:            +5.45 percent         +6.15 percent         +7.43 percent

An overall manufacturing slowdown is apparent from the February and March columns in the top line. And the second line shows that it’s impacted durable goods to a slightly greater extent – a possible signal of a tariff effect since that’s the super-category in which the main metals-using sectors are located.

But tariff-mageddon claims, as has been the case so far, falter upon looking at the details. First, they’re not very consistent with the volatility much of this data display. (E.g., automotive and appliances.) Second, over the past month, the big machinery sector (which provides equipment serving many different markets) has gained momentum. And aircraft and parts-making just keeps growing faster and faster. (Of course, its performance will likely become a drag on manufacturing output going forward because of Boeing’s 737 Max problems and the damage that will harm not only aircraft production, and possibly the industry’s entire supply chain.)

If tariffs are becoming a challenge for these industries, it’s clear that their impact is being swamped by other influences on their performance – especially the distinctive characteristics and status of their individual markets.

Unfortunately, all of the reasons for considering these metals tariffs-related conclusions compelling cut the opposite way when it comes to evaluating the China levies’ impact. The first full month when the earliest were in place was only August. And identifying industries most plausibly affected is difficult both because the tariff list and the industrial production data use different manufacturing classification schemes, and because of the challenge of figuring out where tariff-ed Chinese products play crucial roles in American industry (in the form of parts, components, materials, and other intermediate goods).

As a result, the bottom line remains that only a handful of manufacturing industries look like strong candidates for producing any kind of a China tariff effect, and most of these suffer from one of the above complications. Sharp-eyed RealityChek regulars will notice that I’ve added oil and gas drilling platform parts to the list:

                                            Aug. thru Jan.       Aug. thru Feb.      Aug. thru March

overall manufacturing:      +0.29 percent         -0.08 percent          -0.09 percent

ball bearings:                     +0.27 percent        +0.19 percent         +0.11 percent

industrial heating equip:     -3.61 percent         -3.39 percent         -5.27 percent

farm machinery & equip:  +2.22 percent       -17.14 percent        -11.65 percent

oil/gas drilling platfm pts: +4.74 percent        +4.59 percent         +4.36 percent

The overall manufacturing slowdown is apparent from these statistics, too. But so is a bewildering range of results, along with a small sample size. Whatever problems American industry might now be facing, the case that tariffs bear much, if any, blame has yet to be supported by these or any other data.

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(What’s Left of) Our Economy: Signs That No Tariffs-Led Inflation is the New Norm

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aluminum, Bureau of Labor Statistics, China, consumer price inflation, inflation, metals tariffs, steel, tariffs, Trade, {What's Left of) Our Economy

With inflation in the United States still running below the Federal Reserve’s target lately, it’s been difficult enough for tariff fear-mongers to claim that President Trump’s levies on metals and on many Chinese-made goods are setting prices throughout the economy – or even in directly affected sectors – on fire. Yesterday, with a new month’s worth of consumer price data from the Bureau of Labor Statistics, it’s become practically hopeless.

In fact, the big takeaway is that these March data closely resemble February’s. The only significant evidence of steel and aluminum tariffs-led inflation is found in canned fruits and vegetables – where it’s far from airtight – and in large household appliances, which include large laundry machines which have faced their own additional set of tariffs since early 2018. When it comes to products impacted notably by the China tariffs, the price changes are once more all over the board – which strongly indicates that the tariffs themselves haven’t been in the inflation driver’s seat.

As usual, the first table in these monthly consumer inflation analyses presents the price changes for metals-using products. They deserve pride of place for now because they’ve been in effect for more than a year, and because it’s easy to identify metals-using products.

Before zeroing in on the canned stuff, it’s worth mentioning that I found one more data point yesterday morning – inflation numbers for laundry equipment specifically. Some of these products could be the machines used by commercial cleaning operations as opposed to households, but they do sharpen the picture some. In addition, keep in mind that, since so many of the products affected by the metals and China tariffs are food products, the “core inflation” control group figures I’m using measure price changes minus energy – as opposed to the most widely use core data, which strip out both food and energy.

But back to the steel- and aluminum-related figures: Here they are for the February-March, 2019 period (the latest monthly numbers), and for last April to the present (the stretch during which the metals tariffs have been in place), as well as the year-on-year numbers for last April and this March (which provide some indication of trends over time). As usual, the results for tariffs-affected products (e.g., canned foods) are presented along with those of control goods (e.g., non-canned foods) to glean further insights into the tariffs’ effects.

                                 Feb.-March      Since April      y/y April            y/y March

core inflation:        +0.17 percent   +1.93 percent   +2.01 percent   +2.05 percent

fresh fruits             +1.56 percent   +3.55 percent    -0.43 percent   +4.25 percent

& vegs:

fresh fruits:            +1.21 percent   +0.65 percent   +1.38 percent   +1.37 percent

fresh vegetables:    +1.97 percent   +6.98 percent   -2.50 percent   +7.66 percent

processed fruits      +1.57 percent   +1.68 percent   -0.44 percent   +2.72 percent

& vegs:

canned fruits          +1.74 percent    +5.20 percent   -0.14 percent   +6.01 percent

& vegs:

canned fruits:         +3.02 percent    +4.99 percent   -1.60 percent   +8.60 percent

canned vegs:          +1.26 percent    +4.63 percent  +1.00 percent   +5.04 percent

soups:                     -1.33 percent     -0.16 percent    -0.38 percent   +0.54 percent

malt beverages       -0.62 percent    +1.77 percent   +0.84 percent   +1.84 percent

at home:

alcoholic                +0.20 percent    +1.34 percent   +2.17 percent   +1.46 percent

beverages away:

non-frozen, non-    -0.15 percent    +3.30 percent    -0.52 percent    +3.03 percent

-carbonated non-

alcoholic drinks:

carbonated drinks: +0.69 percent    +5.44 percent   +0.04 percent    +5.44 percent

juices & non-         +0.02 percent    +4.17 percent    -0.26 percent    +4.01 percent

alcoholic drinks:

new cars/trucks:    +0.46 percent     +1.13 percent    -1.61 percent    +0.74 percent

motor vehicle        +0.25 percent     +2.08 percent    -0.74 percent    +1.79 percent

parts:

appliances:             -0.76 percent     +2.80 percent   +0.27 percent    +4.83 percent

major appliances:   -2.02 percent     +4.59 percent   +1.55 percent    +8.80 percent

laundry                   -1.02 percent    +0.65 percent  +10.00 percent    +2.80 percent

equipment:

non-electric            -0.76 percent      -0.59 percent    -1.45 percent     -1.56 percent

cookware & tableware:

tools, hardware,     -0.63 percent      +0.86 percent   +0.19 percent    +1.22 percent

outdoor equipment:

The various fruits and vegetables results make a reasonable case that companies in those sectors have been able to pass along some hefty price increases for canned products to consumers. Specifically, except for the April year-on-year changes, all of the figures for canned fruits and canned vegetables show considerably faster price increases than for fresh fruits and vegetables, and even for their processed counterparts (some of which go into frozen or jarred, not canned, products).

It’s true that fresh produce prices as a whole have generally been rising much faster than core prices. But in their canned form, their prices take another big jump up – strongly indicating that something about the canning matters greatly. Moreover, even though the inflation rate in fresh vegetables is leaving in the dust that for fresh fruits, the canning effect is very apparent for fruits as well, especially over time.

It’s also true that the canning effect is much less pronounced for other food groups – like soups and beverages. But here the data is less definitive, largely because these inflation figures also include products sold in forms other than metal cans. And as observed in previous posts, the markets for these products tend to differ significantly as well – which inevitably impacts pricing power.

Yet this March, a generalized “metals-effect” argument once more falls apart upon examining the price trends in non-food products, whether for motor vehicles and their parts; household cookware and tableware; and tools, hardware, and outdoor equipment. Obviously other developments, and perhaps many other developments are playing bigger roles.

The glaring exception is in those double-tariffed laundry machines. Even here, however, that new laundry equipment category I just found reveals major year-on-year price deceleration between last April (ten percent) and this March (2.80 percent). And the March monthly prices were weak across the board in appliances.

The China tariffs continue to present an even more complicated picture for at least three reasons. First, for the following consumer products, last October was the first full month they were in effect. Second, the goods on the U.S. Trade Representative’s list for those levies are categorized using the different classification system than that used by the Bureau of Labor Statistics to gauge prices. As a result, the match-ups are far from exact. And third, the China-specific price effects for different products can be differ dramatically – according to the scale of the Chinese presence in a particular product market.

Nonetheless, here’s the China data for February-March, since last October, and for October and March year-on-year.

                                   Feb.-March         Since Oct.        Oct. y/y           March y/y

core inflation:          +0.17 percent    +0.99 percent   +2.02 percent    +2.05 percent

food:                        +0.28 percent    +1.45 percent   +1.21 percent   +2.12 percent

frozen/freeze-          +1.18 percent     -0.72 percent    -0.46 percent    -0.59 percent

dried prepared  foods:

fish/seafood:             -1.04 percent     +0.79 percent   +2.82 percent  +2.70 percent

processed fish/          -0.51 percent     +0.40 percent   +1.46 percent  +2.76 percent

seafood:

frozen fish/seafood:  -0.46 percent    +0.78 percent    -0.15 percent   +3.29 percent

fruits/vegs:                +1.57 percent    +3.43 percent    -0.32 percent   +3.91 percent

fresh fruits/               +1.56 percent    +3.71 percent    -0.38 percent   +4.25 percent

vegetables:

fresh fruits:               +1.21 percent    +2.51 percent    -1.40 percent   +1.37 percent

fresh vegs:                +1.97 percent    +5.07 percent   +0.81 percent   +7.66 percent

processed                  +1.57 percent    +2.37 percent    -0.06 percent   +2.72 percent

fruits/vegs:

frozen fruits/vegs:    +0.76 percent   +0.25 percent     -2.72 percent   -1.26 percent

non-carbonated/        -0.15 percent   +1.91 percent     +1.23 percent  +3.03 percent

non-frozen juices/drinks:

personal care             -0.27 percent   +0.64 percent     +1.52 percent  +1.25 percent

products:

household                  -0.04 percent   +0.74 percent    +0.69 percent   +1.46 percent

furnishings:

recreation goods:       -0.74 percent   -1.55 percent     -3.51 percent    -7.28 percent

men’s sportswear:      -1.04 percent   -2.54 percent    +1.47 percent   +1.98 percent

women’s                   +2.90 percent   +0.35 percent     -5.08 percent   -1.55 percent

sportswear:

computers,               +0.54 percent    -1.17 percent     -4.09 percent   -3.30 percent

peripherals, etc.:

window/floor           +0.44 percent    -1.96 percent    +0.74 percent   -1.83 percent

coverings:

furniture &              +0.17 percent    +1.38 percent    +1.26 percent   +3.27 percent

bedding:

appliances:               -0.76 percent     -0.58 percent    +4.82 percent   +4.83 percent

major appliances:    -2.02 percent      -0.34 percent   +8.08 percent   +8.80 percent

laundry equipmt:     -1.02 percent     -5.05 percent  +10.00 percent   +8.76 percent

misc appliances:      -0.29 percent     -1.33 percent    +3.25 percent   +2.56 percent

non-electric             -0.76 percent     -0.49 percent     -0.51 percent    -1.56 percent

cookware/tableware

tools/hardware        -0.63 percent    +1.27 percent     +0.39 percent   +1.22 percent

& outdoor equipment:

household               +0.83 percent    +1.24 percent    +1.79 percent    +3.33 percent

cleaning products:

televisions:              -4.20 percent   -10.91 percent   -17.95 percent   -19.28 percent

misc video equip:    -0.03 percent    +4.41 percent     -3.87 percent    +1.79 percent

pets & pet               +0.26 percent    +1.76 percent    +0.91 percent    +2.81 percent

products:

sporting goods:      +1.00 percent    +3.04 percent    +1.71 percent    +0.25 percent

photo equipment     -0.05 percent    -1.29 percent      -4.94 percent    -5.70 percent

& supplies

sewing machines/   +2.51 percent +12.51 percent     -2.08 percent  +10.32 percent

fabrics:

motor vehicle          +0.25 percent   +1.27 percent    +1.25 percent    +1.79 percent

parts:

tires:                        +0.15 percent   +2.28 percent    +0.03 percent    +1.08 percent

stationery/               +0.28 percent   +4.53 percent     -6.48 percent     -0.01 percent

gift wrap:

Even in sectors with a prominent Chinese presence, like apparel of consumer electronics, any kind of price-hiking tariff effect is elusive, at very best. In fact, in virtually all the products below, inflation has been decidedly weaker than in the core control group, and deflation is apparent in many.

Comparing the two year-on-year figures does reveal some accelerating inflation (or weakening deflation). This is especially clear in the food-related categories (including the broad food control group) and in some non-food segments (like household furnishings, men’s and women’s sportswear, computers and peripherals, furniture and bedding, stationery, sewing machines and fabrics). But softening prices can be seen in recreational goods, sporting goods, personal care products, window and floor coverings, televisions, miscellaneous appliances, and several others.

Since these tariffs-related price data began coming in, I’ve been saying that although inflationary effects haven’t yet shown up, they could always appear in the coming months. Roughly a year after the metals tariffs have been in place, it’s now time to start suggesting that the no tariff-led inflation situation is becoming the New Norm.

(What’s Left of) Our Economy: Hold the Gloating on Tariffs and Manufacturing Jobs

Tags

aluminum, China, Jobs, manufacturing, metals tariffs, metals-using industries, steel, tariffs, Trade, Trump, {What's Left of) Our Economy

Even though today’s March U.S. jobs figures overall improved dramatically on their February counterparts, the employment story in domestic manufacturing remained remarkably similar: Generally speaking the results were dismal. But the internals still don’t reveal any connection with President Trump’s tariff-heavy trade policies.

Let’s start by reviewing the manufacturing-wide March jobs performance. Industry’s payrolls dropped by 6,000 month-to-month – their first such decrease since July, 2017’s 3,000 dip. At least as bad, the weak 4,000 sequential jobs gain initially reported for February was revised down to 1,000.

As a result, March’s 209,000 year-on-year employment increase in manufacturing was the sector’s worst annual advance since February, 2018’s 206,000 net drop.

But the tariff-test effect can only be seen upon examining the results for the manufacturing sectors most heavily affected. The best evidence comes in metals-using industries. That’s partly because Mr. Trump’s steel and aluminum tariffs marked their first birthday in March and now we have data (though still preliminary) for eleven months of their first year in effect. But it’s also because the jobs data so precisely tracks trends in those sectors.

The first table below presents the results since last April – the first full month during which the tariffs were imposed – for leading metals-using sector. As has been the case consistently during the metals tariffs era, the latest figures show that most of the metals-using industries (three out of five) have out-hired the manufacturing as a whole (non-electrical machinery, fabricated metals products, and aerospace through February) and two (non-electrical machinery and aerospace through March) have created jobs at a faster pace even than the entire private sector.

The big automotive sector, of course, is a noteworthy laggard on both scores, and suffered an especially bad March. Appliances are dealing with not only metals tariffs, but separate levies on household washing machines. But in terms of momentum, fabricated metals products (whose payrolls exceed automotive’s) have held their own, and non-electrical machinery (which also employs more than motor vehicles and parts makers) has actually picked up the pace.

So because the industries most seriously affected by metals tariffs have generated such disparate employment results, blaming the metals tariffs for whatever problems they’ve been displaying seems unjustified. Clearly, their performance is explained by many other, including many other more important, factors.

                                                     Old thru Feb       New thru Feb       Thru March

entire private sector:                  +1.64 percent      +1.64 percent       +1.78 percent

overall manufacturing:              +1.58 percent      +1.53 percent       +1.48 percent

durable goods:                           +2.04 percent      +1.94 percent      +1.85 percent

fabricated metals products:       +1.60 percent      +1.60 percent      +1.60 percent

non-electrical machinery:         +2.82 percent      +2.71 percent       +2.76 percent

automotive vehicles & parts:   +1.11 percent       +1.04 percent       +0.40 percent

household appliances:               not available        -3.63 percent        not available

aerospace products & parts:      not available      +6.40 percent         not available

The same range of employment results emerges from the manufacturing sectors that seem to be most seriously impacted by the Trump administration’s tariffs on imports from China. But much less confidence should be placed in these figures for three reasons. The first levies imposed have only been in place since last July. The match-ups between the products on that first tariff list and the categories tracked by the Bureau of Labor statistics are much less exact. And statistics for many of these categories are available only through February.

Nonetheless, here’s the best I could come up with. And this month, I’ve added overall private sector data, plus two more items I could identify from that first tariff list, to provide one more point of comparison.

                                                             Old July-Feb   New July-Feb   July-March

entire private sector                           +1.10 percent   +1.10 percent   +1.24 percent

overall manufacturing                       +1.00 percent   +0.94 percent   +0.90 percent

aircraft engines and engine parts:      not available    +0.93 percent    not available

industrial heating equipment:            not available    +2.35 percent    not available

oil and gas drilling platform parts:    not available    +5.97 percent    not available

farm machinery and equipment:        not available    +1.83 percent   not available

ball bearings:                                     not available    +1.54 percent   not available

med/surgical/personal aid devices:   not available    +1.34 percent   not available

X-ray & electro-medical equip:        not available    +2.91 percent   not available 

If anything, when it comes to employment, the China-affected sectors have outperformed the rest of manufacturing and the overall private sector to an even greater extent than the metals-using sectors. (Interestingly, moreover, all these China-affected sectors are heavy metals users as well – so like appliances, they’re impacted by two sets of tariffs.)

So it’s starting to look like President Trump, and the economy as a whole, are looking at diminishing domestic manufacturing jobs mojo. But so far, his trade policy doesn’t belong on the list of culprits.

(What’s Left of) Our Economy: More Signs That U.S. Metals’ Tariffs are Winning

Tags

aluminum, China, metals, overcapacity, steel, tariffs, Trade, transshipment, Trump, World Steel Association, {What's Left of) Our Economy

As known by readers of RealityChek, President Trump’s tariffs on metals have worked out impressively since their imposition in March, 2018. Specifically, domestic output in tariff-ed steel and aluminum has rebounded impressively, and employment has increased, too. Price inflation has been contained. And partly as a result, production and hiring in the metals-using sectors widely predicted to become major victims of these levies generally have outperformed that of the rest of American industry.

But looking at steel production around the world provides additional evidence of the tariffs’ success – and especially of the administration’s widely assailed decision to apply them across-the-board (which numerous product-specific exemptions to be sure) rather than confine them to China. President Trump’s critics argued (correctly) that it was China whose bloated, government-subsidized output was mainly responsible for distorting global steel trade flows and output patterns.

But the Trump administration and domestic steel producers justified the comprehensive approach by claiming that many other steel-making countries were compensating for Chinese pressure on their own steel sectors by ramping up their exports to the wide open U.S. market, or permitting Chinese steel to be sent to the United States after passing through their ports, or some combination of the two (a practice known as transshipment).

The evidence for success on this crucial front comes from the World Steel Association (WSA), an international industry group that claims its members combine to turn out 85 percent of global output. (So there’s no reason to suppose that its findings are unduly influenced by the tariff-supporting domestic U.S. steel sector.)

Each month, the WSA releases steel output data (in volume terms) for 64 countries that it claims account for 99 percent of world production. And as you can see from the table below (calculated from the statistics found here), a stunning change has taken place in global output patterns since the American tariffs’ onset.

Chiefly, the month before the tariffs began, both Chinese steel production and global steel production were both growing considerably faster than America’s on a year-on-year basis. This past February (the last month for which data is available), Chinese output was still outgrowing the world’s as a whole – but so was U.S. steel production.

And as is evident, the American industry has consistently outperformed its collective global counterpart – as well as Chinese steel-makers for the most part – for several months. The clear implication: Because the tariffs have been worldwide in scope, they’ve shut down opportunities for other countries to cope with the China problem at America’s expense.

The figures also demonstrate that Chinese steel output remains feverish despite Beijing’s numerous promises of restraint and capacity cuts. But as long as the other steel-producing countries – many of which are clearly getting squeezed as a result – keep foot-dragging on cooperative efforts to end the Chinese world steel glut, the universal Trump tariffs will keep the United States in the enviable position of being able to say, “Not our problem,” and “mission accomplished.”

Steel output y/y    Feb.        Jan.       Dec.       Nov.       Oct.       Sept         Feb. 18

World                  +4.1%   +1.0%    +4.2%     +5.8%    +5.8%    +4.4%      +3.5%

China                  +9.2%    +4.3%    +8.2%    +10.8%   +9.1%    +7.5%     +5.9%

US                      +4.6%  +11.0%   +12.4%   +11.8%  +10.5%    +9.0%     +0.4%

(What’s Left of) Our Economy: The Fed Just Showed that Tariff Alarmism Needs to Wait (At Least) Another Month

Tags

aluminum, China, inflation-adjusted output, manufacturing, metals, metals-using industries, real growth, steel, tariffs, Trade, trade war, Trump, {What's Left of) Our Economy

The Federal Reserve’s new industrial production figures (for February) follow a pattern that’s begun to emerge lately. They provide evidence that the domestic U.S. manufacturing sector is shifting into a slower gear. But they offer scarcely any reason to believe that President Trump’s tariff-centric trade policies are behind this possible soft patch.

As usual, let’s start with the data pertaining to the President’s levies on aluminum and steel. These tariffs have been widely reported to have gut punched American industry – allegedly proving that Mr. Trump’s approach to trade has been totally counterproductive. Yet just as usual, the performance of the nation’s main steel-using industries – supposedly the main victim of the tariffs, since the trade curbs saddled them with extra costs for major inputs they use – utterly demolishes such claims.

The table below shows the inflation-adjusted output changes for U.S. manufacturing as a whole and for the leading metals-using sectors. And the time periods of the columns represent the gains or losses reported last month between April (the first full month the metals tariffs were in place) and January; the revised April-January figures released this morning, and the preliminary April-February statistics also put out today.

The message they send couldn’t be clearer. The overall manufacturing slowdown comes through from the deterioration that took place between the April-January and April-February results. In fact, on a monthly basis, real manufacturing output declined by 0.40 percent in February – a weakening that followed a 0.49 percent drop in January.

The metals-using industries (including the durable manufacturing super-category in which they’re all found) all exhibited weaker sequential performance between January and February, too (except for aircraft and parts). But with the exception of autos and parts, and major appliances (which are also laboring under the burden of a separate tariff on large household laundry machines imposed in late January, 2018), since the onset of the metals tariffs, they’ve all grown faster than manufacturing as a whole (which is included as a control group since it contains many sectors that don’t use especially large amounts of metals).

Even more revealing are the differences between the old and new January figures. In every case – including for the laggards – they’ve been revised considerably higher. So their underlying strength still looks impressive, which would make no sense whatever if they were really suffering terribly from the metals tariffs.

                                                   old thru Jan.      new thru Jan.         thru Feb.

overall manufacturing:            +1.20 percent      +1.15 percent    +0.75 percent

durables manufacturing:          +1.65 percent     +1.88 percent    +1.78 percent

fabricated metals products:      +3.19 percent     +3.35 percent    +3.30 percent

machinery:                               +3.87 percent     +4.63 percent    +2.67 percent

automotive:                               -5.18 percent     -3.78 percent     -3.87 percent

major appliances:                      -2.87 percent     -1.42 percent     -1.79 percent

aircraft and parts:                     +6.35 percent    +7.22 percent    +7.98 percent

Because the Trump China tariffs didn’t begin until August, their impact on domestic American industry is much less clear. In addition, the list of goods on which levies were imposed doesn’t compare well with the industrial production figures because they use different systems for classifying manufacturing sectors. Finally, the number of Chinese import categories tariff-ed in starting in August was relatively small – only $50 billion worth.

The table below presents results from industries where the matchups look solid. This time, I’ve added a column that permits comparing the old and new data for the previous month. And as you can see, the numbers are all over the place. The February figures look especially ugly. But in two cases, the January output results have turned out to be stronger than previously reported (especially in industrial heating equipment).

                                                      old Aug.-Jan.      new Aug.-Jan.      Aug.-Feb.

overall manufacturing:                +0.36 percent      +0.31 percent     -0.09 percent

ball bearings:                                -0.09 percent      +0.05 percent     -0.10 percent

industrial heating equipment:       -3.86 percent      -0.40 percent     -4.17 percent

farm machinery and equipment:  +9.12 percent     +9.12 percent   -12.70 percent

Even here, however, so much volatility is evident that withholding judgment is the best approach for now. For example, the February monthly decrease in after-inflation farm machinery output (twenty percent even) was that sector’s worst such performance since January of 2007 (20.54 percent). That’s a more than twelve-year low. Yet the (unrevised) 6.47 percent monthly production improvement in January was the best since last April’s 13.69 percent. Similar volatility can be seen in industrial heating equipment.

So the trade alarmists will have to wait at least another month at least for convincing evidence that the Trump tariffs have backfired big-time against domestic industry. Not that’s stopped them from spreading this wholly false narrative till now.

(What’s Left of) Our Economy: A Deep Dive Doesn’t Find Any Tariff-Led Consumer Inflation, Either

Tags

aluminum, China, consumer prices, inflation, Labor Department, metals, tariffs, Trade, {What's Left of) Our Economy

I decided to do something special for my regular analysis of the new U.S. consumer inflation figures (for February) and what they say about President Trump’s tariff-centric trade policies. Mainly because we now have four months worth of data on the prices of goods sectors where imports from China are common, it’s become possible to take the best stab yet determining whether the Trump levies are hammering American households by making these products much more expensive.

The verdict? Some tariffs-led inflation here can be detected, but the statistics are still too imperfect, and the time-frame examined still too short to justify any firm conclusions.

At the same time, it remains clear that Mr. Trump’s metals tariffs, which have now been in place for eleven data months, have had little if any impact per se on consumer buying power.

Let’s examine the steel- and aluminum-related figures first, since there are many fewer products involved. Here are the data for the January-February period, and for April to the present (the stretch during which the metals tariffs have been in place), as well as the year-on-year numbers for April and February (which provide some indication of trends over time). As usual, the results for tariffs-affected products (e.g., canned foods) are presented along with those of control goods (e.g., non-canned foods) to glean further insights into the tariffs’ effects.

But here’s another new wrinkle: Rather than use the most popular “core inflation” measure for the biggest control group, I’m going to use a different measure: all items minus energy. The reason? The standard core inflation gauge strips out food and energy, because price changes in those categories are so volatile that they’re thought to distort the picture of fundamental inflationary or deflationary forces influencing the economy.

Yet many metals tariffs-affected products are food products. So for our purposes, the core group needs to be more narrowly drawn – and in this case, is comprised of all items minus only energy.

                                       Jan.-Feb.        Since April       April y/y          Feb. y/y

core CPI:                   +0.15 percent   +1.76 percent  +2.01 percent   +2.07 percent

fresh fruits                 +0.72 percent   +1.95 percent   -0.43 percent   +2.34 percent

  & vegs:  

fresh fruits:                 -0.27 percent    -0.55 percent  +1.38 percent   -0.53 percent

fresh vegs:                 +1.86 percent   +4.92 percent   -2.50 percent  +5.76.percent

processed fruits         +1.42 percent   +0.11 percent   -1.29 percent  +0.88 percent

  & vegs:

canned fruits              +2.12 percent  +3.07 percent   -0.14 percent  +3.99 percent

  & vegs:

canned fruits:             +2.48 percent   +1.91 percent    -1.60 percent  +3.09 percent

canned vegs:              +2.23 percent   +3.70 percent   +1.00 percent  +4.66 percent

soups:                         +0.39 percent  +1.19 percent     -0.38 percent   -0.57 percent

malt beverages           +0.73 percent  +2.41 percent    +0.84 percent  +2.64 percent

  consumed at home:

alcoholic                     -0.26 percent   +1.14 percent   +2.17 percent   +1.36 percent

   beverages consumed away:

non-frozen, non-        +0.98 percent   +3.46 percent   -0.52 percent   +3.52 percent

  -carbonated non-

  alcoholic rinks:

carbonated drinks:      -0.19 percent   +4.72 percent   +0.04 percent   +5.04 percent

juices & non-             +0.98 percent   +3.46 percent    -0.26 percent   +3.52 percent

  alcoholic drinks:

new cars & trucks:     -0.24 percent    +0.66 percent   -1.61 percent   +0.29 percent

motor vehicle             -0.09 percent    +1.83 percent   -0.74 percent   +2.12 percent

  parts:

appliances:                 -0.94 percent   +3.44 percent  +0.27 percent    +6.80 percent

major appliances:       -0.56 percent   +6.86 percent  +1.55 percent  +11.08 percent

non-electric               +0.25 percent    -0.59 percent   -1.57 percent    +1.69 percent

  cookware & tableware:

tools, hardware,         +0.72 percent  +1.49 percent   +0.19 percent   +1.98 percent

outdoor equipment:

Something that becomes clear right away – the food price changes shown here demonstrate that they really are volatile. For example, from January to February, fresh fruits and vegetables prices together rose by 0.72 percent. The previous month, they fell 0.19 percent. Fresh vegetables prices have been on an even wilder roller-coaster – up 1.86 percent on month in February, down 1.66 percent on month in January. And unfortunately, this volatility can reduce the value of the year-on-year results.

The canned foods price volatility is impressive, too. Between January and February, the prices in the canned fruits, canned vegetables, and canned produce overall categories all rose more than two percent. But between December and January, the price of the first of these fell by 1.59 percent, the price of the second rose by just 0.45 percent, and the price of the third dipped by 0.05 percent.

And these products are where the strongest signs of metal tariffs-led consumer price inflation are found. So take the price acceleration revealed by the year-on-year data with a grain of salt. (No pun intended.). Also revealing: When you look at the cumulative price changes since the first metals tariffs were imposed (the post-April figures), some of these canned food categories exhibit stronger-than-core inflationary trends (the canned produce groupings and the drinks categories – which unfortunately also include many products packaged in glass and plastic bottles and cardboard containers) but some exhibit weaker pricing (like soups and alcoholic beverages consumed away from home – which also include many non-canned products). So there’s also abundant evidence that prices are mainly driven by something other than the metals in cans.

As for other products that use steel and aluminum, appliance prices keep increasing ever faster – but of course inflation in those categories has also been influenced by a separate set of tariffs imposed a year ago on large household laundry machines. The pricing trends for motor vehicles, automotive parts, non-electric cookware and tableware, and the tools and hardware categories, are decidedly mixed – which again undercuts tariff-centric interpretations of their inflation rates.

And now for the China tariffs’ effects. In part this post has been delayed because I actually went through the list of tariff-ed consumer (and other) goods published by the U.S. Trade Representative’s office in mid-September. The groupings of these products still often match up poorly with the groupings used by the Labor Department to track consumer pricing trends. Moreover, in many of these cases (especially the food products), imports from China are pretty modest. But the groupings aren’t entirely off, so I concluded these numbers are worth presenting.

What you see are the data for the latest month (February), for the post-September period (since October was the first full month these levies were in effect), and for October and February on a year-on-year basis. And as with the metals tariffs figures, the main control groups (like items minus energy) are presented as well.

                                     Jan.-Feb.          Since Oct.         Oct. y/y           Feb. y/y

core CPIU:              +0.15 percent   +1.76 percent   +2.01 percent   +2.07 percent

food:                        +0.40 percent   +1.17 percent   +1.21 percent   +1.96 percent

frozen/freeze-          +1.56 percent   +0.47 percent    -0.46 percent   +0.95 percent

  dried/prepared

  foods

fish/seafood:            +0.79 percent   +1.85 percent   +2.82 percent   +4.44 percent

processed fish/         +0.41 percent   +0.92 percent   +1.46 percent   +5.21 percent

  seafood

frozen fish/              +0.78 percent   +1.24 percent    -0.15 percent    +3.67 percent

  seafood

fruits/vegs:               +0.86 percent   +1.83 percent    -0.32 percent   +2.03 percent

fresh fruits/               +0.72 percent   +2.11 percent   -0.38 percent    +2.34 percent

  vegetables

fresh fruits:                -0.27 percent   +1.29 percent   -1.40 percent    -0.53 percent

fresh vegs:                +1.86 percent   +3.05 percent   +0.81 percent   +5.76 percent

processed                  +1.42 percent   +0.79 percent   -0.06 percent   +0.88 percent

  fruits/vegs:

frozen fruits/             +0.81 percent   -0.51 percent    -2.72 percent    -2.41 percent

  vegetables

non-carb,                  +0.98 percent   +2.06 percent   +1.23 percent   +3.52 percent

  non-frozen juices/drinks:

personal care            +0.55 percent   +0.91 percent    +1.52 percent   +1.87 percent

  products:

household                +0.31 percent    +0.78 percent    +0.69 percent   +1.49 percent

  furnishings:

recreation                 -0.86 percent    +0.53 percent     -3.51 percent    -1.38 percent

  goods:

men’s                       +3.27 percent     -1.52 percent    +1.47 percent   +4.10 percent

  sportswear:

women’s                   -2.51 percent     -2.47 percent     -5.08 percent   -5.91 percent

  sportswear:

computers,                -0.94 percent    -1.70 percent     -4.09 percent    -3.95 percent

  peripherals, etc.:

window/floor            -1.97 percent    -2.39 percent    +0.74 percent    -3.53 percent

  coverings:

furniture &               +1.20 percent   +1.22 percent    +1.26 percent   +2.36 percent

  bedding:

appliances:                -0.94 percent    +0.17 percent   +4.82 percent    +6.36 percent

major                         -0.56 percent    +1.83 percent  +8.08 percent  +11.03 percent

  appliances:

misc appls:                -0.85 percent     -1.04 percent  +3.25 percent    +4.38 percent

non-electric              +0.25 percent    +0.27 percent   -0.51 percent    +1.69 percent

  cookware/tableware:

tools/                        +0.72 percent     +1.91 percent  +0.39 percent    +1.98 percent

  hardware &

  outdoor equip:

household                 +0.13 percent    +0.41 percent  +1.79 percent    +2.94 percent

  cleaning products:

televisions:                 -3.23 percent   -7.01 percent  -17.95 percent   -20.18 percent

misc video                 +0.71 percent  +4.45 percent    -3.87 percent    +1.53 percent

  equipment

pets &                       +0.55 percent   +1.50 percent   +0.91 percent   +2.84 percent

  pet products

sporting                     -1.90 percent    +2.02 percent   +1.71 percent   +0.30 percent

  goods

photo equip               -2.26 percent     -1.24 percent    -4.94 percent    -4.12 percent

  & supplies

sewing                      +1.82 percent    +9.76 percent    -2.08 percent   +6.10 percent

  machines/

  fabrics

motor vehicle            -0.09 percent    +1.03 percent   +1.25 percent   +1.86 percent

  parts:

tires:                         +0.25 percent     +1.66 percent   +0.03 percent   +0.91 percent

stationery/                +1.60 percent     +4.24 percent    -6.48 percent    -0.22 percent

  gift wrap

Again, the short duration of these tariffs means that even the post-October and year-on-year results should be treated with major caution. And the prevalence of faster-rising food prices is clear from the table as well (although the modest level of tariff-ed imports from China further undermines the claim that trade deserves significant blame). Another complication that explains many of the diverging metals-related results, too: Different products operate in very different markets with highly distinctive features – including demand. Just look at the sportswear categories – where by most measures, pricing for men’s products is moving in exactly the opposite direction as pricing for women’s products.

The bottom line seems to be that, for price changes starting in October, only five of these 23 categories show increases above the core inflation rate, while 18 show below it. And one of those high inflation products was the major appliance category that’s also been affected by the washing machine tariffs.

Yet for year-on-year inflation rates, between October and February, the story looks very different. Price rises sped up (or price drops slowed down) in 18 of the categories, with greater price weakening characterizing the other five.

That’s why I believe that it’s still most responsible to adopt a wait-and-see approach to evaluating the China tariffs – along with the short time frame involved and the uncertainties over categorization. For the impact of the longer-lasting metals tariffs, however, claims of trade war-wreaked devastation just look even more and more far-fetched with each passing month.

Making News: New Op-Ed on Why Trump is Still Winning on Trade

Tags

aluminum, China, Making News, manufacturing, metals, steel, tariffs, The Washington Times, Trade, Trade Deficits, trade wars, Trump

I’m pleased to announce the publication of a new freelance article of mine.  This morning, The Washington Times posted my op-ed explaining why the huge increase in the monthly and annual U.S. trade deficits reported on Wednesday masked some surprising trends.  Specifically, the data made clear that President Trump’s trade policies continue progressing toward their two of their biggest goals.  Click here to read.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

(What’s Left of) Our Economy: Why the Lousy February Jobs Numbers Don’t Vindicate Tariff Alarmism

Tags

aluminum, China, Jobs, Labor Department, manufacturing, metals, metals-using industries, steel, tariffs, Trade, trade war, Trump, {What's Left of) Our Economy

The stunningly poor February overall and manufacturing jobs figures released by the Labor Department today surely caused rejoicing in the ranks of America’s trade alarmists. Here, finally, was evidence that President Trump’s tariff-centric policies are backfiring on the U.S. economy and especially its manufacturing sector.

Actually, however, the new employment data show that the alarmists will need to wait at least another month for the statistics even remotely to justify their claims and warnings. For however disappointing the 20,000 net monthly increase in total American job creation and the 4,000 improvement in manufacturing payrolls, the internals provide no reason to assign significant – or any – blame to trade.

The first clue of course was the steep sequential drop in non-farm employment (the Labor Department’s U.S. jobs universe) generally speaking recorded in this first survey of February trends. After all, if the trade wars were mainly behind February’s results, why was the monthly drop-off in job creation nearly three times steeper in the overall economy (most of which has little global trade exposure) than in manufacturing (which has lots of it)?

At least as important, although the President began imposing tariffs on imports of steel and aluminum eleven months ago, manufacturing sectors heavily reliant on these metals keep outperforming the rest of manufacturing in employment terms. And similar trends are becoming apparent for the enormous number of industries that use various inputs from China that have been tariff-ed starting in July.

Below are the net hiring increases since April (the first full month of the new metals trade regime) for the American private sector as a whole, for all of manufacturing, and for the main heavy metal-using industries.

                                                   Old thru Jan.         New thru Jan.         Thru Feb.

entire private sector:                +1.36 percent         +1.62 percent      +1.64 percent

overall manufacturing:            +1.39 percent         +1.55 percent      +1.58 percent

durable goods:                         +1.72 percent         +1.97 percent      +2.04 percent

fabricated metals products:     +1.57 percent         +1.80 percent      +1.60 percent

non-electrical machinery:       +2.57 percent         +2.54 percent      +2.82 percent

automotive vehicles & parts:  +1.15 percent         +0.97 percent      +1.11 percent

household appliances:             not available           -2.52 percent        not available

aerospace products & parts:    not available          +5.93 percent        not available

The only metals-using sector that seems to have encountered employment trouble in February was the fabricated metals industry. And even in this segment of manufacturing, hiring since April has been slightly stronger than in manufacturing overall.

Automotive job creation has been weak as well, but actually enjoyed a relatively good February, relatively speaking. And although the appliance employment picture remains very weak, it needs to be remembered that it’s been laboring under an additional set of product-specific tariffs since late January.

Yet the entire durable goods sector continued to punch above its job creation weight in February, including the crucial machinery and (at least through January), aerospace industries. Why haven’t higher metals prices darkened their employment picture.

As for the impact of the China tariffs, that’s harder to judge for four reasons. First, an enormous number of manufacturing industries use Chinese inputs – and to greatly varying extents. Second, these levies only began in July, and then on a relatively small scale. Third, the list of products tariff-ed beginning in July matches up imperfectly at best with the sectoral classification scheme used by the Labor Department to track manufacturing employment. And fourth, most of the affected products are found in relatively narrow categories of manufactures, where the jobs data is one month behind.

So the following table shows the post-July employment performance of some major manufacturing sectors that use the Chinese parts, components, and materials tariff-ed that month. But it should be viewed with caution. Nonetheless, they show a heavy burden of proof on the tariff alarmists to identify any damage resulting from the China levies – especially since most of the July-January gains have been so strong.

                                                Old July-Jan.       New July-Jan.          July-Feb.

overall manufacturing           +0.91 percent      +0.98 percent        +1.00 percent

aircraft engines/engine parts: not available       +0.70 percent         not available

industrial heating equipment: not available      +3.02 percent         not available

oil/gas drilling parts:              not available      +3.93 percent         not available

farm machinery/equipment:   not available     +2.67 percent         not available

ball bearings:                         not available     +2.32 percent          not available

“Even a stopped clock is right twice a day” is a popular expression explaining why individual accurate statements or correct predictions shouldn’t automatically signal an information source’s broader credibility. The February jobs figures indicate once again that the trade alarmists haven’t even met this rock-bottom bar.

(What’s Left of) Our Economy: Evidence that Tariffs Front-Running has Stalled Trump Trade Progress

Tags

aluminum, China, Commerce Department, imports, manufacturing, manufacturing output, manufacturing trade deficit, steel, tariffs, Trade, trade war, Trump, value added, {What's Left of) Our Economy

Yesterday’s post on the morning’s slew of manufacturing data released by the federal government could have included one more report: the Commerce Department’s latest sounding on gross domestic product by industry. And although this read on how different major sectors of the economy have been growing (or not) isn’t a market mover, it’s useful for analyzing the trade policy debate – for it enables calculations on how changes in the U.S. manufacturing trade deficit (a major concern of President Trump’s) compare with changes in manufacturing output.

Because this perspective provides the kind of context lacking when trade deficit increases or decreases are examined in isolation, it represents a much better way to judge whether the president’s trade policies are succeeding or failing according to one of his own main yardsticks.

And the verdict stemming from this new Commerce report? Progress that had been taking place during Mr. Trump’s tenure in boosting domestic manufacturers’ trade-related fortunes has come to a halt – probably because of what’s been called tariff front-running. That is, the President’s actual trade curbs and, doubtless much more important, his threats of additional curbs, have led overseas producers and their U.S. customers to boost greatly shipments to the American market in order to avoid paying as many of the levies as possible.

Consequently, as of the third quarter of last year (the latest data made available by Commerce), the U.S. manufacturing trade deficit resumed its long-term pattern of growing faster than domestic manufacturing production.

Specifically, between the third quarter of 2017 and the third quarter of 2018, U.S.-based industry increased its output by 7.23 percent according to a measure of growth called value-added (before inflation). During the same period, however, the manufacturing trade deficit jumped by 12.45 percent.

As made clear by my previous post on the subject, these results both contrast with the second quarter findings – when manufacturing production grew by 8.02 percent while the trade deficit widened by just 7.23 percent – and reversed a trend that began pretty much when the Trump administration did.

Just as clear – the first major Trump tariffs (on steel and aluminum imports) were slapped on in late March. So their arrival, along with China levies that began in early July and the much more sweeping duties imposed in late September and strongly hinted at in June, surely super-charged America’s import system.

Even with this step backward, it’s still evident that, so far during the the Trump years, domestic manufacturing is much less dependent on imports than before.  During the last year of former President Obama’s administration, for example, American manufacturing imports rose by 7.31 percent, while output expanded by only 4.53 percent – a pattern in place for most of the last twenty years.

But the real test of the Trump tariffs – at least concerning the manufacturing trade deficit – will come if and when U.S. trade flows settle into a new, post-tariff, normal, or one that follows the conclusion of the new, improved trade deals the President has promised. In that vein, the next chance to check these data will be April 19, when Commerce is scheduled to publish its fourth quarter and full-year, 2018 figures. Stay tuned!

(What’s Left of) Our Economy: A Valentine’s Day Bust for Tariff Alarmists

Tags

aluminum, inflation, Labor Department, manufacturing, metals, metals-using industries, PPI, Producer Price Index, producer prices, steel, tariffs, Trade, wholesale prices, {What's Left of) Our Economy

If trade alarmists and tariff fear-mongers were hoping for a Valentine’s Day gift from Thursday’s producer price inflation report, they’re now nursing broken hearts. For the new numbers from the Labor Department continue the string of official data releases showing that President Trump’s trade curbs on imports of metals and various goods from China have generated no significant inflationary pressure in the economy overall. Indeed, there’s only the scantest evidence that they’ve created upward price pressure even in the products most directly affected.

As has been the case for months for this Producer Price Index (PPI) data – along with the statistics on consumer prices – the most reliable figures are the Trump tariffs on steel and aluminum imports, because they’ve been in place since March. But when it comes to the producer price results – which look at the economy from the wholesale sector’s standpoint – it’s worth examining the China-related data as well, since the first tariffs on producer goods from China were imposed in July. (P.S.: Keep in mind that the new statistics, which bring the story up to January, incorporate an annual set of revisions that in this case impact the seasonally adjusted numbers going back to 2014).

Prices for steel remain elevated through, January, but increases have lost noteworthy momentum. True, they rose sequentially in January by 0.50 percent and their initially reported monthly decline of 0.63 percent in December was revised to a 0.18 percent dip. Moreover, steel prices have risen by 11.02 percent since April – the first full month they were in effect. By contrast, the super-category in the PPI report in which they’re placed – processed goods minus foods and feeds – saw its prices decline by 0.55 percent during that period.

But most of the steel price increases took place over the summer. Since September, they’re down 1.20 percent. That’s not nearly as big a fall-off as for their super-category overall (where prices were off by 3.83 percent during this period). But it’s a decrease nonetheless.

Upon moving to aluminum prices, however, the notion that tariffs have been mainly behind these high and still rising prices breaks down completely – because aluminum pricing trends have been so completely different.

Whereas wholesale steel prices increased on-month in December, wholesale aluminum prices fell – by an unrevised 0.40 percent. Both metals registered a 0.50 percent sequential price rise in January.

But aluminum’s period of strong pricing power was considerably shorter than steel’s, and ended in June. And since that month, they’re down by 6.40 percent. That’s almost double the price slump experienced by its core processed goods super-category (the same as steel’s) – 3.37 percent. So something other than tariffs clearly has been driving the price movements of these metals on the wholesale level.

Important divergences also appear in the data for metals-using industries. Last month, for example, we found that prices for sectors like pumps, compressors, and related equipment; mining machinery and equipment; construction machinery and equipment; and metal-forming machine tools, rose faster on month than prices in their super-category – final demand goods minus food and energy.

In January, these trends continued for construction machinery and that machine tools sector. But the new monthly increases for other metals-using sectors, like agricultural machinery and equipment (0.21 percent), metal-cutting machine tools 0.30 percent), industrial materials handling equipment (0.17 percent), and machine tool parts and mold-making equipment (flat), were considerably weaker, and completely in line or softer than the latest monthly price increase for the core final demand goods category (0.26 percent). That’s significant given recent solid output growth for the entire manufacturing sector, and especially the durable goods industries that rely heavily on metals as inputs.

Nonetheless, increases pushed through earlier in the year helped most metals-using sectors produce price hikes on a January-to-January basis considerably stronger than that for the core final demand goods super-category (2.40 percent).

Switch over to “intermediate demand” goods and you find mixed results, too. Big annual price hikes have been seen in sectors like metal containers, fabricated wire products, and certain kinds of valves (for January, 5.58 percent, 15.56 percent, and 5.77 percent, respectively). These increases all exceeded that for their core intermediate demand super-category (0.97 percent). Yet they were all lower than the December figures (6.46 percent, 16.42 percent, and 6.03 percent). (The intermediates super-category figure was 3.29 percent for that month.) So some inflation momentum has been lost.

Since the metals tariffs were imposed, prices of metal containers have risen 2.01 percent, prices of fabricated wire products have risen 10.16 percent, and prices of those valves are 2.82 percent higher. All these inflation rates are much faster than that of the intermediate demand super-category (where prices overall fell 0.55 percent during that period). But as with the annual figures, they vary considerably, with the wire products sticking out like an especially sore thumb.

The first Trump China tariffs weren’t imposed until early July, so the sample size is smaller. But the case for tariff-led wholesale inflation on this front is just as weak as in the metals-related sectors.

The evidence for tariffs-led producer price inflation is much weaker for goods imported from China – perhaps because the levies haven’t been in place for nearly as long as the metals tariffs. The table below shows the PPI changes for some of the leading products found on the Trump administration’s initial China tariff list. They were imposed on July 6, so the numbers show the cumulative price changes since August. (Note: Because the administration’s Trump announcement used a different classification system than that used in the PPI reports, the below data don’t match up exactly with that tariff list. But the following goods are all at the least main parts of the items on the Trump list, or vice versa. The same holds for the super-category figures used, as with metals tariff-related products, for comparison’s sake.)

                                                                                  Aug.-Dec.            Aug.-Jan.

core processed goods for intermediate demand:   -0.88 percent       -2.50 percent

aircraft engines and engine parts:                         +0.04 percent      +0.44 percent

ball bearings:                                                         +1.01 percent     +1.24 percent

electric generators:                                                +1.61 percent     +1.66 percent

medical, surgical & personal aid devices:            +0.34 percent      +0.93 percent

core commodity final demand                              +0.64 percent      +1.13 percent

industrial heating equipment:                               +1.79 percent      +2.41 percent

oil and gas drilling platform parts:                              0 percent              0 percent

farm machinery and equipment:                           +2.26 percent      +2.55 percent

paper-making machinery:                                     +0.31 percent      +0.52 percent

electricity transformers:                                        +0.12 percent      +0.68 percent

medical, surgical, and personal aid devices:         +0.33 percent      +0.93 percent

X-ray and electro-medical equipment:                  +0.12 percent     +0.37 percent

In a phrase, these results are all over the place – strongly indicating that the tariffs have not been the leading cause of their price changes. The only consistent pattern suggesting a notable tariff effect emerges after comparing the August-December and August-January results. In the core intermediate demand grouping, prices dropped at a faster pace between the two periods. But for the China-related goods, they rose, albeit at different rates.

In the core final demand grouping, prices rose at a faster pace for the super-category, and for all the specific goods within it except for oil and gas drilling platform parts. Interestingly, though, the acceleration for two other sectors – farm machinery and equipment and paper-making machinery – was slower than for the super-category as a whole. In addition, during the latest, August-to-January, period, prices for no less than five of the seven sectors rose more slowly than for the super-category for a whole – again signaling the strong influence of non-tariff factors.

America’s globalist elites haven’t lost credibility solely or even mainly because of trade policy. But that’s surely been part of the mix. And if they want to start regaining some, they might think about admitting that facts really do matter, and that scarcely any of them support their tariff fear-mongering.