The economy of the United States was reorganized in 1787 due to the adoption of the Constitution herby establishing the entire nation as a unified, common market with no internal tariffs or taxes on interstate commerce. Since 1787, the United States has seen adjustments to its economy to become what it is today. Going through times of extreme economics growth to the time of the Great Depression, it is the job of the sitting US President to provide economic policies to help keep the economy functioning and prospering in good times and bad. From 2008 to 2016 the American economy has seen times of slow GDP growth and the loss of jobs to the foreign markets. Throughout his tenure as the 45th president, Donald Trump has reinvented the modern American economy through strategic economic policies and procedures.
Since its common market establishment, the American Economy tended to have two types of economies up until WW2 and the Cold War, the peacetime economy and the wartime economy. The peacetime economy is when soldiers are coming home looking for jobs and the government no longer supplies arms dealers with governmental contracts. The transformation after WW2 to a peacetime economy became harder to transition after five years of governmental funding to companies to make weapons and other wartime necessities. After over 40 years of a wartime economy during the Cold War where the United States struck contracts with major companies in order to contribute to the war effort, it became hard to do away with this type of spending when it helped the economy so much. The United States started to fund military projects in the hopes of advancing the American economy along with American military forces and defense. The Manhattan Project began in 1939 when the United States employed over 130,000 people while spending two billion dollars, equal to $22 billion in 2016 when adjusted for inflation. It was because of ongoing projects like these that the United States formally changing the Department of War to the Department of Defense in 1947 causing the reconstruction of a peacetime economy to become non-existent among Americans.
“The U.S. Senate voted to give the military $716 billion for 2019, approving one of the biggest defense budgets in modern American history despite concerns from some economists and lawmakers about the rapidly rising federal deficit. The 2019 military budget, approved by an 85-to-10 vote, gives America's armed forces an $82 billion increase from 2017.” The American economy has never transitioned back to a peacetime economy since the Cold War. A war economy is the set of contingencies undertaken by a modern state to mobilize its economy for war production. Philippe Le Billon describes a war economy as a "system of producing, mobilizing and allocating resources to sustain the violence." The wartime economy is good for countries because it brings more spending and jobs to the country’s markets. The wartime economy of WW2 brought the United States out of the Great Depression and into a roaring wartime economy where it has been ever since with the exception of minor dips such as the 2008 crisis.
Coming from a very strict monarchy in England, the newly formed United States attempted to distance themselves as much as possible from a tyrannical government. This meant in any way possible taking government out of everyday living, including the profit process. Otherwise known as the economy, The United States was the first superpower nation of influence that fostered their economy away from governmental control and into the hands of the private industry. Unlike Communist societies such as the Soviet Union and Cuba, the United States government did not take control of the wealth of the nation and looked to give people an equal opportunity rather than an equal outcome. Capitalism is defined as “an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.” (Merriam Webster) Adam Smith was the key architect of Capitalism and in his eyes, the markets should be controlled by the people since they are the ones fueling the fire of an economy. Unlike other economic systems like socialism and capitalism the role of government is left to more of an insurance role rather than a controlling stake.
Campaigning on the issue of a broken and stagnant economy candidate Donald Trump vowed to turn the United States back into a superpower and further the economic growth of the country. While on the campaign trail, Donald Trump promised to help the American Economy in many ways, specifically he talked about his intention to raise tariffs on goods imported to the US and give Americans a huge tax cut. Now President, Donald Trump has fulfilled these promises starting with imposing tariffs onto China in order to better leverage the US roll in trading with China. While campaigning Trump stated, “Any country that devalues their currency to take unfair advantage of the United States and all of its companies that can’t compete will face tariffs and taxes to stop the cheating.” (PolitiFact) Trump has since hit China with tariffs on $200 billion in goods. These tariffs seem to be working as some American companies are being forced to buy metals domestically instead of from suppliers abroad. As of December 2nd, 2018, the United States and China have reached a ceasefire on the trade tariffs for 90 days to allow for talks to help address US concerns over Chinese trade practices. This ceasefire comes after President Xi Jinping of China agreed to buy very “substantial” amount of US goods in order to show dedication to the United States on closing the trade gap between the two countries. Passing into law with the signature of President Trump on December 22, 2017, the Tax Cuts and Jobs Act of 2017 included major changes including reducing tax rates for businesses and individuals. These changes were made for the budget of the fiscal year 2018, amending the Internal Revenue Code of 1986. The TCJA also increased the standard deduction and family tax credit, capped a number of deductions used by wealthy taxpayers, and ended the Affordable Care Act’s insurance penalty.
Under the TCJA of 2017, many companies such as General Motors and Patagonia have seen enormous economic growth within their companies because of the tax break and subsidies offered by these subsidies. With Patagonia misusing the money saved from the tax break and donating it to environmental programs poses the question is it their money in the first place to donate. According to Donald Trump, that’s not their money to give away, it’s their workers money in order to foster growth within the company and give raises to workers. General Motors with the closing of five northern American factories, four of which are based out of the US and one in Canada. (Arch Paper) This news caught the attention of President Trump on twitter causing him to reply with “Very disappointed with General Motors and their CEO, Mary Barra, for closing plants in Ohio, Michigan and Maryland. Nothing being closed in Mexico & China. The U.S. saved General Motors, and this is the THANKS we get! We are now looking at cutting all @GM subsidies, including for electric cars. General Motors made a big China bet years ago when they built plants there (and in Mexico) – don’t think that bet is going to pay off. I am here to protect America’s Workers!” Due to these valuable corporate subsidies for taxes, corporate profits have seen a growth of over 12 percent in the second quarter of 2018.
Another economic policy by President Donald Trump was the withdrawal from the Trans-Pacific Partnership and the reformation of The North American Free Trade Agreement or NAFTA into the USMCA or The United States–Mexico–Canada Agreement that will take effect once each country ratifies it into law. Although the United States was never formally in the Trans-Pacific Partnership, it was brought forth by President Obama as a means to “extend restrictive intellectual property laws across the globe and rewrite international rules on its enforcement.” The agreement in its original form fell apart when the United States abandoned it in November 2016 following the U.S. Presidential election. A statement from the Office of the United States Trade Representative details that “The Office of the U.S. Trade Representative (USTR) issued a letter to signatories of the Trans-Pacific Partnership Agreement that the United States has formally withdrawn from the agreement per guidance from the President of the United States. The letter emphasizes the commitment of the United States to free and fair trade while encouraging future discussions on “measures designed to promote more efficient markets and higher levels of economic growth.”” However, an 11-country version of the agreement called the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) was signed by the remaining 11 countries in March 2018, with almost all of the intellectual property chapter of the agreement suspended.
The North American Free Trade Agreement or NAFTA is an agreement signed by Canada, Mexico, and the US creating a trilateral trade bloc in North America. The agreement came into effect on January 1, 1994. According to the Office of the United States Trade Representative “Tariffs were eliminated progressively and all duties and quantitative restrictions, with the exception of those on a limited number of agricultural products traded with Canada, were eliminated by 2008.” (USTR)
Although the United States has not formally withdrawn from NAFTA, President Trump used the threat of the US departure from the deal as a means to strongarm a renegotiation into the USMCA agreement. NAFTA set out to accomplish several key goals outlined by the deal. Those goals include:
• to reduce barriers to trade
• to increase cooperation for improving working conditions in North America
• to create an expanded and safe market for goods and services produced in North America
• to establish clear and mutually advantageous trade rules
• to help develop and expand world trade and provide a catalyst to broader international cooperation
The USMCA agreement was formally signed by the three leaders on November 30th, 2018 while on a plane on its way to the G-20 summit in Argentina. This leaves the only obstacle is the ratification by the different countries respective governing bodies. This deal creates another huge trade are and has special focus on different industries including: Steel/Aluminum, Automobiles, Textiles, Chemicals and Dairy. According to the USMCA steel and aluminum tariffs will remain in place along with Mexico’s retaliatory tariffs with these industries being subject to additional discussion. The changes to automobiles are due to the goal of having more cars and trucks manufactured in North America. The automobile sector will have new rules of origin with the hourly wage component of $16/hour required initially for 30% of the work accomplished on any automobile or automobile part. This number would increase up to 40% over three years causing shakeups within supply chain decisions. “For example, in order to qualify, a car or truck must have 75% of its components manufactured in the United States, Mexico, or Canada (this is up from the current 62.5% requirement).” (Crowell) For textiles, more North American content is required causing tariffs to be more restrictive towards non-originating fabrics. Canada agreed to increase access to the dairy market from 3.25% under NAFTA to 3.59% under USMCA. Canada is also required to establish safeguards to prevent surges in shipments of milk protein concentrates, skim milk powder and infant formula. The biggest change under USMCA is the required revision after six years before it goes into full effect after 16 years and following the 16-year period it will be reviewed again before its second 16-year term.
President Donald Trump has caused an uproar in the United States economy through his polices forcing rapid growth and lower unemployment. Thanks to his Tax Cuts and Jobs Act of 2017, the United States has seen unprecedented economic activity in the modern era. In November 2018, jobs smashed through economic estimates of 190,000 jobs by giving the United States a surge of 250,000 jobs allowing the wage gains to pass 3% for the first time since the recession. Average hourly earnings increased by 5 cents an hour for the month of November representing a 3.1% gain, the best pace since 2009. This job growth kept the unemployment rate at 3.7% the lowest since December 1969. The S&P 500 touched an all-time high of 2,873.23 beating the high reached on January 26th, 2018. The DOW raised 5,000 points this year for the first time ever. Unemployment which had peaked in October of 2009 at 10 percent, is now at 3.7 as of October of 2018. (US Bureau of Labor)
Black or African American unemployment rates have also dropped to a historic low due to the Trump Tax Cuts. In August, the black unemployment rate fell to 6.3 percent, continually falling from the 16.8 percent peak shortly after the recession. Trump also has the record as the lowest Black unemployment rate since the US Government started to record these statistics beginning in 1972.
The job market under President Trump has seen great reformation into what it is today. The top 10 industries growing under the Trump administration include Mining, Oil and Gas, Metal Manufacturing, Machinery Manufacturing which has seen growth compared to the state of these same industries under the Obama Administration. Mining has seen the most growing coming in at a staggering 27.6 percent.
Some industries that have seen slower growth under the Trump Administration than under the Obama Administration include: Rail Transportation that also saw shrinkage under the Obama Administration, Motion Pictures, General Goods Stores and Travel Arrangement services.
Wages under the Tax Cuts and Jobs Act of 2017 has seen growth of 2.9 percent over the past 12 months, leading to the fastest growth in nearly a decade. The second quarter of 2018 closed with a GDP growth of 4.1 percent, ahead of the 4 percent estimate President Trump promised.
The United States economy finally overtook China once again as the US restored the top ranking as the most competitive global economy. This caused consumer confidence to spike to a 17-year high in May of 2018. As a good economy does not discriminate towards any ethnicity, social class or race, Hispanic Household income hit a record high in 2017 as the median household income for Hispanic families raised to $50,486 according to the Census Bureau’s annual income report. All of this economic growth and prosperity catches the eyes of American citizens even some on the other political spectrum than that of President Trump. Stephen Collinson from CNN wrote an article titled “Trump’s right: The economy is doing well, and he deserves some credit” where he outlines that President Trump is probably deserves some overdue credit for steering the strongest economy in the world into new heights.
Although Donald Trump has reinvented the modern economy through strategic economic policies and procedures, all stands to be lost with his legacy. Much like Barack Obama, a president who had his “legacy” unraveled within the first 100 days of the new presidency, Donald Trump stands before the same path. Almost all of Obama’s legislation was done through executive orders rather than using Congress as a means of cementing the legislation. So far, the only pieces of legislation that Donald Trump and Barrack Obama have in common are the Affordable Care Act and the Tax Cuts and Jobs Act of 2017, to date these are the only legislative moves that Trump and Obama used Congress in conjunction with the presidency causing Obamacare to be the only promise made on the campaign trail that Donald Trump has not been able to fulfill.
As 17 of the 44 presidents of the United States coming from a governor’s mansion, these presidents are accustomed to using their state legislatures in order to pass legislation much like they would end up doing with in the presidency. Out of the past six US presidents, 3 of them have gotten the presidential seat from a governorship. With Donald Trump and Barrack Obama both not serving as governors, they do not possess the experience of working with another legislative body to pass legislation. Furthermore, Donald Trump has a very business minded technique where he is used to calling the shots on his own without having to go through any other group. Therefore, all these procedures and policies such as trade negotiations with global economies, job growth, unemployment, industry expansion, the stock market, and other economic results from President Trump with the exception of the Tax Cuts and Jobs Act of 2017, will be up to the next president whether or not they should continue, leaving the legacy of President Trump, solely contingent on the next president.