Manufacturing Employment, Hours and Output and the Trade War, Pre-Covid-19

Can we settle on a verdict on whether the trade war saved manufacturing? One way is to examine how the manufacturing sector fared.

FIgure 1: Manufacturing employment (black), aggregate hours (red), of production and nonsupervisory workers; manufacturing production (teal), all in logs, 2018M06=0. Light orange denotes Section 301 tariffs in effect.

Peak manufacturing is December 2018-February 2019. In other words, manufacturing was stagnant nearly a year before the pandemic. Now, we don’t know the counterfactual. Perhaps manufacturing would’ve done worse in the absence of protection. However, statistical analyses suggest manufacturing lost jobs on net due to Trump’s trade war, as discussed in this post, as well as this paper.





50 thoughts on “Manufacturing Employment, Hours and Output and the Trade War, Pre-Covid-19

  1. Willie

    Trump will be gone in January. Maybe we will find out if policies change. Otherwise, it will take some convincing to get me to think that tariffs and the dollar make importing cheaper and trade deficits higher. And less domestic manufacturing. There is probably a tax policy aspect of it as well.

  2. Willie

    Ah. Messed that up. I pulled a Moses. I meant that tariffs and a strong dollar hurt domestic manufacturing. That wasn’t clear at all.

  3. Moses Herzog

    The interesting question here to me would be, what is the percentage or ratio of the cause of the trade war not helping American manufacturing connected to the value chain and to “upstream” and “downstream” costs. I think Menzie and others have discussed this as it related to steel and say American automobile manufacturers. But also an interesting question to me is, “Isn’t it a self-fulfilling prophesy at this stage??” (meaning say 1978 America vs 2020 America, 2020 America being “at this stage”). Because if so many important (and YES even national security important, such as rare earth minerals) manufacturing processes are already located overseas you’re going to have increased downstream costs with tariffs. If you have more manufacturing processes located domestically, certainly the downstream costs of tariffs are going to be lower. If for no other reason than there would be be less retaliatory tariffs if more manufacturing processes are located domestically.

    One thing that’s fascinating to me also, is I think when academics and “opinion leaders” find that ideas they’ve presented to sell books and research papers are getting “stale” they try to find fresh sounding words to sell very old/ stale ideas. Such as “free trade”. Those words, “free trade” no longer sell books like they did in 1982. But we still have to “sell” the American public that moving jobs overseas is “good for everyone”. So we create new words for the same ideas, which really is nearly all this “value chains” sales pitch is about. There’s really nothing new here. Watch Milton Friedman discuss the making of a number 2 led pencil. I mean, what the hell is that if it’s not a “value chain”?? That isn’t to say reading books and papers about value chains isn’t educational, interesting, and things can’t be gleaned from it. But it’s just mostly a way to take the glassy look out of people’s eyes when you’re discussing free trade.

    The main “take away” to me on value chains?? If you have all the inputs in a value chain of a final product (such as cars) located domestically, you don’t have to worry about retaliatory tariffs for that product. OK, milk is not a manufacturing process, but are Americans really that worried if Canada cuts off our supply of Canadian milk?? But America has expressed a fear of China cutting off our supply of rare earth minerals. A long winded way to say it, because I know some people will argue “Well even if you make product Y at home, the foreign country can respond with a tariff on product Z”. But my point is, if you have more of the alphabet of products or inputs at home, you don’t have to worry as much about retaliatory tariffs or input supply lines (chains) being completely shut off. To which some will reply “Do you think America can produce THAT many products domestically??” My response to that would be, do you know how many payday loan outfits we have in this nation?? Mortgage loan recyclers etc?? We “need” this many garbage/sham insurance companies that never pay off on claims??? America “needs” drug companies selling ineffective drugs that cause cancer and expedited deaths?? You tell me America “needs” 3 payday loan outfits on every block, and we can’t control 80%+ of our own manufacturing processes?? People/countries do and make what they WANT to do and make.

      1. Moses Herzog

        There was something else related to this, I think it was a guest post, and I was racking my brains to remember what it was, but they gave some type of ratio related to this, and it was a little bit driving me nuts what it was now. I really thought it was an outstanding point and semi answered something I had had a question on for ages. You ever have one of those moments where you can’t remember some old-timey celebrity’s name and you keep trying to pull it out?? Like Gabby Hays or, Noah Beery or Ken Curtis. And if Menzie or someone doesn’t think of it, or know the post I am referring to, it’s going to drive me nuts for the next half-week. It was a guest post I’m 85% sure. It was something related to trade and I just thought it was a super-outstanding post, just because of that one point they were making.

      2. Moses Herzog

        Found it…….. with an assist from Google search:

        I really really really liked one part of this post, which was basically this (my paraphrase):
        The increased costs of inputs into American goods actually hurts more than the retaliatory tariffs.

        If that guest post by Cox and Russ (and also quoting the work of Flaaen and Pierce) had said nothing else (and/or stated it with the empirical evidence), in my personal opinion it would have been [ IS } one of the better gems of this blog.

    1. Bruce Hall

      Moses, I think you may be struggling between two different concepts: protectionist tariffs and dependence.

      In general, I would guess that most people with some education would accept the premise that trade is good. That is, we produce something that is needed elsewhere in exchange for something we need that can be provided less expensively from elsewhere. That’s supposed to be a win-win.

      It gets a little more complicated when our main export becomes dollars in exchange for dependence on strategic or very important materials and products that, if withheld, could cause significant harm to our economy. I’ll refer you to 1973. To the extent that our supply base is diversified, we can avoid another 1973. But, for example, if we put all of our transportation eggs into the electric vehicle basket and our most of our supply of critical battery materials is from one source that might also be considered a strategic adversary, then we could be faced with another 1973. That same concept could be applied to medicines and may other critical products.

      The question is whether the proposed cure for these potential disasters is in the form of tariffs or some other policy or tax approach. That doesn’t mean that the “cure” is less expensive than continuing the present situation, but you might consider it analogous to owning a car without insurance. The cost of purchasing the insurance makes the cost of ownership higher… until it isn’t.

      Back to 1973… and 1980. We learned something (but maybe not enough) about dependence on a single source or organization. The cure was more expensive: fracking. Until it wasn’t. Single source dependence is a cancer that can go unnoticed until chemotherapy, radiation, and surgery are required. That’s expensive, but not as much as the alternative.

      1. pgl

        “I would guess that most people with some education would accept the premise that trade is good. That is, we produce something that is needed elsewhere in exchange for something we need that can be provided less expensively from elsewhere. That’s supposed to be a win-win.”

        Bruce no relationship to Robert Hall can always be counted as writing the dumbest comment of the week. Yes there may be efficiency gains but then there are winners and losers in the same nation from ANY relative price change. Look up Stopler-Samuelson. The seminal paper was published 79 years ago and any one who has studied international trade knows it is one of the core proposition in our knowledge of the effects of trade v. protectionism.

        But of course the village idiot named Bruce Hall is as clueless as ever.

        1. Bruce Hall

          pgl, you make some stupid irrelevant observations and attempt to say that I’m stupid? Come on man!

          I was pointing out to Moses the dangers of dependence using 1973 (and 1980) oil disasters for our economy and you veer 90º and observe “but then there are winners and losers in the same nation”. Sure, smarmy, but there were a lot more losers than winners those years as a result of our oil dependence on OPEC and specifically Saudi Arabia. I’m sure some inside traders like yourself made money while the nation suffered, but that’s really not the point, is it?

      2. pgl

        Not only is Bruce Hall devoid of any knowledge with respect to international trade, his comments re this virus would beyond stupid. For example he was touting how daily deaths had declined to 700 and would continue to fall. How did that work out?

        Hmmm – 7-day average daily death rate is now 1080. But to Brucie boy, that is a tiny increase.

        Of course Bruce needs to try even harder to be the dumbest troll here as JohnH is BAAAAACK!

        1. Bruce Hall

          pgl, yes 7-day moving average of deaths is almost up to 40% of what it was in April when the epidemic was centered in New York City. Now it is diffused across the nation and, while still affecting a lot of people, not nearly the crisis mode it was when Cuomo was herding the sick elderly back into nursing homes (and his pal Gretchen Whitmer in Michigan, too). Sure, the governors have done their best to keep the economy down in the name of “saving us”. Gretchen still wants to shut things down now that there is an uptick in deaths in Michigan. The trick is to keep spouting cumulative numbers to obfuscate the current situation.

          And you know, of course, that the preponderance of those deaths are the older demographics, not the prime working demographic… and especially not the grade school/high school demographic.

          But don’t worry. Biden has a plan! Take credit for the virus vaccine developed during Trump’s administration through a process that cut through red tape, then slam the economy shut but rescue it with a $3-4 trillion gift from the Democratic Party, and then tell us all how wonderful he is. Oh, joy….

  4. Steven Kopits

    Referring back to a previous comment, re: school choice:

    “This paper evaluates the Zones of Choice (ZOC) program in Los Angeles, a school choice initiative that created small high school markets in some neighborhoods but left traditional attendance zone boundaries in place throughout the rest of the district. We leverage the design of the program to study the impact of neighborhood school choice on student achievement, college enrollment, and other outcomes using a matched difference-in-differences de-sign. Our findings reveal that the ZOC program boosted test scores and college enrollment markedly, closing achievement and college enrollment gaps between ZOC neighborhoods and the rest of the district. These gains are explained by general improvements in school effectiveness rather than changes in student match quality, and school-specific gains are concentrated among the lowest-performing schools. We interpret these findings through the lens of a model of school demand in which schools exert costly effort to improve quality.The model allows us to measure the increase in competition facing each ZOC school based on household preferences and the spatial distribution of schools. We demonstrate that the effects of ZOC were larger for schools exposed to more competition, supporting the notion that competition is a key channel driving the impacts of ZOC. In addition, demand estimates suggest families place a larger weight on school quality compared to peer quality, providing schools the right competitive incentives. An analysis using randomized admission lotteries shows that the treatment effects of admission to preferred schools declined after the introduction of ZOC, a pattern that is explained by the relative improvements of less-preferred schools. Our findings demonstrate the potential for public school choice to improve student outcomes while also underscoring the importance of studying market-level impacts when evaluating school choice programs.”

    Authored by a soon-to-be-minted PhD from those communists at Berkeley.

    1. not_really

      Yeah, the history of charter schools is to get State/Federal funds for racists who “lost” on school segregation. Betsy Devos is clever about hiding her racist intentions.
      Along the way, the Right discovered charter schools are a great tool for destroying social class mobility. Just a few reasons why the Right loves charter schools.

      Please know these studies don’t typically track longitudinally. “College enrollment” may go up, but, the student is still ill-equipped to be there, and typically can’t afford to be there, and then quits a year or less into a college track. With the American emphasis on “go to college” that’s the only metric that matters to anyone measuring success. Just don’t measure ‘college success’ three/four/five/six years later.

      1. Moses Herzog

        Bride of Satan Betsy Devos would be proud of what’s going on in Oklahoma. Epic Charter schools, on top of all the other outrageous crimes against the taxpayers and rubber-stamped by Republicans in the Oklahoma State Legislature in the links above, literally took Oklahoma taxpayer dollars to open up at least one spanking brand new school in California, with no one being punished and the Oklahoma law system making no plans to punish them whatsoever. I believe George and Ira Gershwin called it “Nice Work If You Can Get It”.

        You’ll notice, many of the records about Epic Charter School in the Republican “red state” of Oklahoma are closed to public viewing. In “dirty liberal” California the records MUST be released to the public by state law. So guess where much of this absconding with Oklahoma taxpayers’ information is sourced from??? HINT: Not Republican Governor Stitt or State Superintendent Hofmeister (also Republican).

        The more Republican politicians rob the taxpayer blind in this “red state” the more these illiterate Okies can’t contain themselves to run out to the polling station and vote for them.

    2. baffling

      steven, if you want to promote a school choice agenda, then you need to give schools the ability to get rid of poor teachers (and i am sure you will gladly eliminate tenure) and ALSO provide extra funds to ATTRACT and KEEP quality teachers. the second step is conveniently removed from most conservative solutions to schools. if you do not create a way to INCREASE the number of quality teachers, all you do is play a zero sum game with some schools winning and some schools losing. you should be playing a game where all schools win, if you are serious about education reform. most conservatives are not really serious about education reform.

      1. macroduck

        A recent meta-analysis of school funding studies (which I can’t locate right now – sorry guys) found that educational performance improves with spending. (This is supported by other research: )

        An interesting secondary result is that improvement was greatest in districts with unionized teaching staffs. The authors concluded that keeping quality teachers was the critical element in making best use of new funding.

  5. pgl

    Value chains. Reminds me of something Wilbur Ross tried to spin. Look – high tariffs on imported steel have a high effective rate of protection for car producers as a car requires a lot of steel. So what does Wilbur do? Pulls out a can of Coke where the cost of the can is a small percentage of the overall cost. That is all you do it when you work for a liar like Trump!

  6. ltr

    November 9, 2020



    Cases   ( 10,421,956)
    Deaths   ( 244,448)


    Cases   ( 8,591,075)
    Deaths   ( 127,104)


    Cases   ( 1,807,479)
    Deaths   ( 40,987)


    Cases   ( 1,213,363)
    Deaths   ( 49,238)


    Cases   ( 967,825)
    Deaths   ( 95,027)


    Cases   ( 688,972)
    Deaths   ( 11,657)


    Cases   ( 268,735)
    Deaths   ( 10,564)


    Cases   ( 86,245)
    Deaths   ( 4,634)

  7. ltr

    November 9, 2020

    Coronavirus   (Deaths per million)

    US   ( 737)
    Mexico   ( 734)
    UK   ( 724)
    France   ( 627)

    Canada   ( 279)
    Germany   ( 139)
    India   ( 92)
    China   ( 3)

  8. ltr

    November 10, 2020

    Chinese mainland reports 22 new COVID-19 cases

    The Chinese mainland registered 22 new COVID-19 cases on Monday, 21 from overseas and 1 locally transmitted, the National Health Commission announced on Tuesday.

    The sole local transmission was detected in Shanghai, said the commission.

    A total of 25 new asymptomatic COVID-19 cases were recorded, while 786 asymptomatic patients remain under medical observation. No COVID-19-related deaths were reported on Monday, and 20 patients were discharged from hospitals after recovering.

    As of Monday, the total number of confirmed COVID-19 cases reached 86,267, with 4,634 fatalities.

    [ There has been no coronavirus death on the Chinese mainland since May 17.  Since June began there have been 5 limited community clusters of infections, each of which was contained with mass testing, contact tracing and quarantine, with each outbreak ending in a few weeks.

    Single local infections have in the last few days been recorded in 2 cities, with mass testing, contact tracing and quarantine again being used to identify the origins of as well as to contain and end each possible outbreak.

    Imported coronavirus cases are caught at entry points with required testing and immediate quarantine.  Asymptomatic cases are all quarantined.  The flow of imported cases to China is low, but has been persistent.

    There are now 426 active coronavirus cases in all on the Chinese mainland, 6 of which cases are classed as serious or critical. ]

  9. ltr

    November 10, 2020

    1 in 5 COVID-19 patients develop mental illness within 90 days: study

    Many COVID-19 survivors are likely to be at greater risk of developing mental illness, psychiatrists said on Monday, after a large study found 20 percent of those infected with the coronavirus are diagnosed with a psychiatric disorder within 90 days.

    Anxiety, depression and insomnia were most common among recovered COVID-19 patients in the study who developed mental health problems, and the researchers also found significantly higher risks of dementia, a brain impairment condition.

    “People have been worried that COVID-19 survivors will be at greater risk of mental health problems, and our findings … show this to be likely,” said Paul Harrison, a professor of psychiatry at Britain’s Oxford University.

    Doctors and scientists around the world urgently need to investigate the causes and identify new treatments for mental illness after COVID-19, Harrison said.

    “(Health) services need to be ready to provide care, especially since our results are likely to be underestimates (of the number of psychiatric patients),” he added.

    The study, published in The Lancet Psychiatry journal, * analyzed electronic health records of 69 million people in the United States, including more than 62,000 cases of COVID-19….


  10. JohnH

    It’s hard to conclude much from that chart, particularly given exogenous factors, particularly the grounding of Boeing MAX, which coincided with flattening of manufacturing growth in 2019.

    1. pgl

      Here we go again. This is what Menzie gets for drawing informative graph – some Mr. Magoo who thinks the Boeing issue caused most of these declines??? Some Mr. Magoo has refuses to read that paper from Flaaen and Pierce. Like I said – the Usual Suspects have a new comrade.

  11. ltr

    November 10, 2020



    Cases   ( 10,559,184)
    Deaths   ( 245,799)


    Cases   ( 8,635,754)
    Deaths   ( 127,615)


    Cases   ( 1,829,659)
    Deaths   ( 42,207)


    Cases   ( 1,233,775)
    Deaths   ( 49,770)


    Cases   ( 972,785)
    Deaths   ( 95,225)


    Cases   ( 705,640)
    Deaths   ( 11,860)


    Cases   ( 273,037)
    Deaths   ( 10,632)


    Cases   ( 86,267)
    Deaths   ( 4,634)

  12. ltr

    November 10, 2020

    Coronavirus   (Deaths per million)

    US   ( 741)
    Mexico   ( 736)
    UK   ( 732)
    France   ( 627)

    Canada   ( 281)
    Germany   ( 141)
    India   ( 92)
    China   ( 3)

    Notice the ratios of deaths to coronavirus cases are 9.8%, 4.0% and 2.3% for Mexico, the United Kingdom and France respectively.  These ratios are high, but have been significantly higher, while falling recently as new cases are being rapidly recorded.

  13. ltr

    November 11, 2020

    Chinese mainland reports 17 new COVID-19 cases

    The Chinese mainland registered new COVID-19 cases on Tuesday, 16 from overseas and 1 locally transmitted, the National Health Commission announced on Wednesday.

    The sole local transmission was detected in east China’s Anhui Province, said the commission.

    A total of 15 new asymptomatic COVID-19 cases were recorded, while 776 asymptomatic patients remain under medical observation. No COVID-19-related deaths were reported on Tuesday, and 21 patients were discharged from hospitals after recovering.

    As of Tuesday, the total number of confirmed COVID-19 cases reached 86,284, with 4,634 fatalities.

    Chinese mainland new imported cases

    Chinese mainland new asymptomatic cases

    [ There has been no coronavirus death on the Chinese mainland since May 17.  Since June began there have been 5 limited community clusters of infections, each of which was contained with mass testing, contact tracing and quarantine, with each outbreak ending in a few weeks.

    Single local infections have recently been recorded in 3 cities, with mass testing, contact tracing and quarantine again being used to identify the origin of as well as to contain and end each possible outbreak.

    Imported coronavirus cases are caught at entry points with required testing and immediate quarantine.  Asymptomatic cases are all quarantined.  The flow of imported cases to China is low, but has been persistent.

    There are now 422 active coronavirus cases in all on the Chinese mainland, 6 of which cases are classed as serious or critical. ]

  14. pgl

    The governor of Florida is a total nutcase:

    ‘Report: DeSantis Hires Sports Blogger, Uber Driver Who Promotes Covid-19 Misinformation As Data Analyst

    Florida Gov. Ron DeSantis, who has been accused of downplaying the severity of the coronavirus pandemic, fleshed out his data analysis team by hiring a little-known Ohio sports blogger with a reputation for spreading disinformation about Covid-19 online, according to a report from the Miami Herald.
    Kyle Lamb, a Columbus, Ohio-based sports blogger and Uber driver on November 6 announced on Twitter he had accepted an offer to work for the DeSantis administration doing data analysis on Covid-19 “and other projects.”

    While a spokesman for DeSantis told the Herald Lamb was hired for an “entry level” position, and was not working exclusively on Covid-19 data, the new hire has shown contempt for data-driven experts.

    Lamb touts the fact that he isn’t an expert, doctor, epidemiologist, virologist or scientist on the website for his subscribers’ online podcast about the coronavirus, writing “experts don’t have all the answers, and we’ve learned that the hard way throughout the entire duration of the global pandemic.”
    Lamb regularly tweets disinformation about the coronavirus and posts conspiracy theories to sports message boards: he’s claimed that face masks are ineffective, said Covid-19 deaths are comparable to deaths from the flu, and promoted hydroxychloroquine, the drug promoted by President Donald Trump that proved to be ineffective against Covid-19, as a viable treatment.
    Fellow sports bloggers in the Columbus area who worked with Lamb told the Herald he was “a rank conspiracy theorist,” and a “crackpot” who “thinks he’s an expert on everything.”’

    OK! I bet he is closely followed by our Usual Suspects!

  15. pgl

    Trump’s voter fraud claims are beyond absurd. First that Nevada issue:

    A list of voters accused by lawyers representing the Trump campaign of “criminal voter fraud” for absentee ballots submitted in Nevada, contains hundreds of overseas military post office boxes and more than 1,000 locations where military personnel are stationed across the United States, reported. Amy Rose, the spouse of a military member, whose information appears on the list, told that she was appalled to learn that she and her husband had been included on the list of “improperly cast” absentee ballots. “To see my integrity challenged, along with other members of the military to be challenged in this way, it is a shock,” Rose who votes absentee in Nevada said. “And to be potentially disenfranchised because of these actions, that’s not OK.” Rose and her husband are currently stationed in Davis, California, but she told that the couple claims Henderson, Nevada where they lived until 2018 as their home. Her husband was later assigned to the Golden State. By law, military voters can choose to vote absentee in their home of record or register to vote in the state where they are assigned.

    Now that postal worker in Pennsylvania:

    Postal worker recants claims of fraud cited by Trump campaign, top Republicans
    The account went to Sen. Lindsey Graham, who referred the matter to the DOJ, FBI
    A Pennsylvania postal worker has recanted claims that supervisors attempted to backdate ballots mailed after the election, according to congressional aides. The false allegations were cited by the Trump campaign and top Republicans as examples of voter fraud impacting the results of the presidential election. Richard Hopkins, a Postal Service worker from Erie, Pennsylvania, alleged that he overheard supervisors discussing a plan to backdate mail-in ballots for Election Day. The Trump campaign, which, like the president, has rejected the results of the election and alleged widespread — and unsubstantiated — voter fraud, passed Hopkins’ account to Senate Judiciary Committee Chairman Lindsey Graham, who referred the matter to the Justice Department and FBI for investigation. But Hopkins walked back his assertions when questioned by federal investigators with the Postal Service Inspector General’s office, the leader of the watchdog agency told the House Oversight Committee staff on Tuesday. “IG investigators informed Committee staff today that they interviewed Hopkins on Friday, but that Hopkins RECANTED HIS ALLEGATIONS yesterday and did not explain why he signed a false affidavit,” committee Democrats said in a statement posted to Twitter.

    Lindsey Graham is a stooge working for someone who would deny the votes of our soldiers!

  16. joseph

    Here is a comparison of the vote margins in the three key states in 2016 and 2020. There isn’t any question about who won those elections.

    Pennsylvania: Trump won by 44K. Biden won by 48K.
    Michigan: Trump won by 11K. Biden won by 145K.
    Wisconsin: Trump won by 23K. Biden won by 20K.

    In 2016, Clinton conceded on the day after the election. Two days after the election Obama hosted Trump and Biden hosted Pence in the White House and executed the first steps of formal transition — just two days after the election.

    Republicans are authoritarians who really, really hate democracy.

  17. joseph

    This is what I wrote back in October and so far it seems according to plan:

    Rick Stryker: “After all, the data are pretty clear that Donald Trump will be re-elected President of the United States.”

    What Megapixel Stryker means is that Trump is not going to gracefully concede the election despite overwhelming election results. Trump is going to have his Brooks Brothers lawyers contest the election results in every swing state to delay certification of the results for months. Then he’s counting on his new super-majority on the Supreme Court to hand him the election.

    1. 2slugbaits

      joseph I’m not sure about the “Brooks Brothers lawyers” part of your prediction. So far Trump’s lawyers look to be bargain basement thrift shop off-the-rack lawyers. How else to explain press conferences sandwiched between a crematorium and a porn shop? I don’t think any Brooks Brothers tailor could fit a suit to Rudy Giuliani.

    2. pgl

      Where has Rick Stryker been over the last week? Oh yea – he is out bribing people to claim voter fraud.

  18. joseph

    So far there have been more verified fraudulent claims of voter fraud than there have been verified claims of voter fraud.

      1. Barkley Rosser

        Well, there was this Trump supporter in Michigan I think who tried to get a ballot for his mother to vote who had died 5 years ago, but he got caught and did not pull it off.

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