On August 30, 2019, Yusuf Khan writes on Markets Insider:
Reuters
- Trump’s trade war has now raged on for over a year, and although talks are set to resume, the American economy has been suffering.
- GDP growth in the second quarter of 2019 came in lower than expected on Wednesday and America’s trade deficit widened — both signs of the drag the trade war is having.
- Now key sectors are fighting back, including farming, manufacturing, and retail, saying that the trade war is damaging their businesses, costing jobs and hurting their wallets.
Trump’s trade war has raged on for over a year and now key sectors of the US economy are hitting back at the president, all arguing that the trade war has been damaging.
In the most recent GDP figures released on Thursday, the US economy had cooled more than expected, growing at 2% in the three months from April to June.
Likewise, the US trade deficit grew in the last quarter — both a sign of the toll the trade war is taking on the American economy.
Now large sectors of the American economy are criticizing the president and his policies, including in key voter areas that Trump pledged to help through his presidency, such as manufacturing and agriculture.
Trump blamed the companies, lashing out on Twitter on Friday that they are “weak” and using the tariffs as an excuse.
Twitter
Here’s a look at five of those areas that are criticizing Trump for the impact of escalating tariffs.
1. Farming
Farmers were key part in Trump’s election and therefore their support in the run-up to 2020 will be crucial. However, farming groups have been hitting out at the president repeatedly, over the fact that China, a key market for soybean, wheat, and other crop growers has been cut off.
The American Farm Bureau said that in the 12 months to June farming bankruptcies have gone up 13% on the previous year.
The president said that “farmers are starting to do great again,” however the head of the National Farmers Unions said “President Trump is making things worse, not better.”
“Instead of looking to solve existing problems in our agricultural sector, this administration has just created new ones,” Roger Johnson, head of the NFU, told Business Insider. He added that Trump was “burning bridges with all of our biggest trading partners.”
Now it looks like support in key states like Kansas, Wyoming, and Nebraska could be waning. In a Farm Journal Pulse survey of 1,153 farmers on Friday, 71% said they still supported Trump. Yet the number of ranchers who strongly approved of the president fell by 10 percentage points, to 43%, from a survey in early July.
2. Manufacturers
After Trump “doubled down” on plans to expand tariffs to almost all imports from China manufacturers came out against the president, warning the tariffs would add unnecessary challenges to an already slowing industry.
Dozens of factory representatives warned US trade officials that the tariffs would put jobs at risk and do “irreparable harm” to their businesses.
Markets Insider reporter Gina Heeb reported that one business leader said: “These tariffs will continue to do irreparable harm to our small business. The Section 301 tariffs from List One and Three have resulted in an unexpected cost of over $600,000, which is significant for a small business like ours. We have determined that an additional cost of the List Four tariffs on our business would be almost $1 million.”
3. Consumers
Earlier this week, Goldman Sachs economists reported that American wallets were to take a direct hit from Trump’s tariffs.
The bank’s research showed that US consumer prices would rise as a result of the tariffs and US growth would slow also.
Planned tariffs that come into effect December 15, which would hit directly in the Christmas shopping season, directly increase the price of cell phones, toys, and computers. EU auto tariffs would also raise the price of cars from Europe.
“The impact of a 5-percentage-point tariff step up (on all Chinese imports except the December 15th tranche) would boost core consumer prices by another 0.05% to 0.10% by mid-2020,” said the Goldman Sachs economists Andrew Tilton and Alec Phillips.
4. Retailers
Like the manufacturers, dozens of US retailers testified before US trade officials in June saying that the tariffs would raise the price tags for businesses and consumers.
The US economy has been held recently by consumer spending, in fact, personal spending rose by 0.6% in July according to data released on Friday. This was mainly driven by retail sales — a rare bright spot in the US economy.
“In imposing tariffs, we will not achieve the goal of protecting IP infringement matters, but penalize US consumers and US companies throughout the, throughout the country,” said Christopher Volpe from United Legwear & Apparel Co.
5. Technology companies
Recently Apple’s CEO warned Trump that the tariffs would be a boost its rival Samsung.
That’s because Apple would see tariffs slapped on the iPhone, macs and other products as most of the products are made in China. Samsung being a Korean company wouldn’t be subject to those.
Consumer electronic tariffs are scheduled to take effect on September 1 and December 15.
Like Cook, other tech companies have warned of the tariffs being harmful.
“For the printing supplies industry, these tariffs do more damage to the consumers and intellectual property holders like HP than it will do to the IP infringing products,” said Andy Binder, Vice President & General Manager of Hewlett-Packard to US trade officials in June.
“Such a result would conflict with the administration’s goal of minimizing economic harm to consumers and would not be effective in advancing the goals of the Section 301 investigation,” he added.
