Published On: Wed, Jan 25th, 2017

Manufacturing in the US Set to Increase Thanks to Trump’s Presidency

In his ‘Contract With the American Voter’, new U.S. President Donald Trump has outlined what he intends to do in his recently begun first one hundred days in office in order to ‘make America great again’. Seven actions that he is planning to initiate during these first days as President make up a key component of this contract, including protecting American workers and lifting restrictions on domestic energy production, which will have long-term effects on the success of U.S. manufacturers.

General Consensus

There is a general consensus that the U.S. manufacturing sector has the highest impact on the country than any other industry. According to the National Association of Manufacturers, it’s estimated that for every dollar that is spent on producing manufactured goods, almost double that in additional value is funded back into the U.S. economy, representing around 12% of GDP two years ago. Along with this, the Manufacturer’s Alliance for Productivity and Innovation estimates that the manufacturing industry and its supply chain account for around one third of total U.S. GPD and employment, with each full time factory worker creating an average of 3-4 non-factory jobs elsewhere for other workers.

Economic Dividends

President Trump’s promotion of domestic energy production in the form of natural gas, shale oil, and clean coal will yield significant economic dividends in a range of ways. One such way is by stimulating economic activity in the U.S. and helping to revive and replenish job creation within the energy sector both for workers who are employed for direct, manual work such as drilling for oil and gas, and those working to provide support for operations via a range of means. Promotion of domestic energy production will also lead to more profit for U.S. manufacturing companies who provide tools and resources such as laser cutter tools, drills and safety equipment.

photo Alina Ku-Ku via Shutterstock

Tax Reforms

Proposed by the new President’s economic policy advisors are tax policy reforms which have the potential to have a positive impact on U.S. manufacturers in the coming years. This is likely to include a reduction in the top U.S. corporate income tax rate, down from 20% to just 15%. Lowering the rate of U.S. corporate income tax from one of the highest in the world to a rate that’s below the average for most European and Asian companies will give U.S. manufacturing companies amongst others an international tax advantage over their global competitors.

Improving Employment

Trump’s plan to reduce corporate income tax and promote domestic manufacturing of energy and other products will also improve employment across the U.S. With less tax bills to pay, U.S. manufacturers can employ more workers and more support staff to take on larger projects and operations. If you are currently unemployed, it might be a good idea to consider learning a manufacturing trade as skilled labor demand is highly likely to increase over the next four years.

Entrepreneurship Opportunities

Both small and big businesses are essential to the U.S. economy, and with President Trump promoting domestic manufacturing and reducing income tax for companies, those who’ve maybe been considering starting their own manufacturing company in the future will soon be presented with the best opportunity to do so. Although on an individual level, the downside to this is that U.S manufacturers can expect to face fiercer competition, however, when it comes to the economy the benefits are huge.

Removing Restrictions

Finally, President Trump also plans to remove restrictions on domestic energy development and pipeline infrastructures which support the efficient transportation of gas and oil. This move will ensure that the U.S. continues to remain one of the cheapest manufacturing locations in the world for any energy-focused production. The low prices that American manufacturers of chemicals, plastics, fertilizer and fabrics have enjoyed in recent years are expected to continue into Trump’s presidency. The current prices are 50% less than those in other locations such as South America, Asia and Europe as far as natural gas manufacturing prices go and will continue to go a long way towards offsetting other higher U.S. labor costs. Removing restrictions on domestic energy development will enable the U.S. to be even more competitive globally with countries with lower labor costs, for example China.

If you are currently manufacturing with natural gas in the U.S., working for a company which does, or supplying tools and resources, Trump’s presidency is set to give the industry a boost. Regulations made by President Trump, along with removing certain restrictions on production, will help to improve U.S. employment, economy, small businesses and global competitiveness.  

Author: Joao Pedro

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