Following the American Revolution and ratification of the U.S. Constitution, a debate raged within the federal government on the nature of the economy. Many aligned with Thomas Jefferson wanted to preserve America as a predominantly agrarian country while others—heeding the vision of Alexander Hamilton—believed that a strong manufacturing base was needed to rid the United States of lingering economic dependency on Great Britain. Their successors have argued over the economy ever since but one thing is certain: Hamilton won the original dispute. Manufacturing is central to national prosperity. Even the 2016 presidential nominees put forth dueling proposals regarding the revitalization of manufacturing.
International Currency Values
When the dollar is too strong against other world currencies, demand for American goods shrinks because they become more expensive. Hillary Clinton (and, presumably her running mate, Governor Tim Kaine) has warned countries like China and Japan that she will retaliate when they proactively weaken their currencies to stimulate their own exports. This often involves a state buying its own currency from foreign countries to drive down the value. Imposing additional duties and tariffs on American imports from China, for example, is in Mrs. Clinton’s “tool box” in the event that the People’s Republic continues to artificially depress the value of the Renminbi.
Donald Trump also asserts that China is hurting the American manufacturing economy through currency manipulation. He has accused the Obama administration—and by extension Mrs. Clinton—of doing too little to stop this practice. Along with vice presidential candidate Mike Pence, Trump calls for China to be officially named a currency manipulator “on day one” of his administration. When the U.S. Treasury makes this designation, a president has the power to impose punitive tariffs on the offender. How these would differ from Hillary Clinton’s tool box is unclear. What is clear is that both candidates call for tougher policies against the PRC than are currently in place.
Trade Deals and the Trans-Pacific Partnership
Advocates of free trade believe that the fewer barriers to competition at home and abroad, the better it is for American business, i.e. exports, profits and jobs. An opposing camp contends that maintaining tariffs and quotas on imports is necessary when trading with parties that subsidize their own domestic industries—keeping prices low—and violate accepted norms regarding treatment of labor or care for the environment. The Bill Clinton, George W. Bush and Barack Obama administrations negotiated free trade agreements with Canada, Mexico, Central American nations and South Korea, among others. Next on deck is the Trans-Pacific Partnership, or TPP. Encompassing 12 nations in the Americas and Asia, plus Australia and New Zealand, the TPP is sold by advocates as increasing exports, expanding economic growth and creating millions of new manufacturing jobs.
Hillary Clinton opposes TPP as currently structured. She has stated that, while she supports free trade, it must be reciprocal and include a safety net for workers who might be adversely affected by the agreement’s consequences. Those two essentials, she states, are missing from TPP. Donald Trump, on the other hand, has been critical of most of the recent free trade deals, and is categorically opposed to TPP, which he calls “insanity.” From the 5,500 pages of its terms to the lack of reference to currency manipulation, he condemns TPP as bad for workers. Trump has publicly stated that trade deals should be between individual countries and not multilateral.
Investment and Infrastructure
While trade and currency are important to creating global demand, both candidates have ideas about how to stimulate manufacturing on the home front. Mrs. Clinton promises a $10-billion investment in an alliance of unions, businesses, higher education and government to keep companies from off-shoring jobs and promote American-made goods at home. She likewise vows heavier investment in roads, bridges and other infrastructure to boost manufacturing activity. Targeted tax incentives also comprise her manufacturing agenda.
Mr. Trump calls for a reduction in the corporate tax to 15 percent, maintaining that this will spur creative ingenuity and competitiveness. He also argues for reducing burdensome regulations from government entities like the Environmental Protection Agency and the Occupational Safety and Health Administration. These agencies, Trump believes, are not transparent, are riddled with conflicts of interest and frequently circumvent Congress. Reining them in, according to this school of thought, will allow industries to focus on research, development and hiring.