Consumers and businesses have already begun to feel the pinch of President Donald Trump’s trade battles with the rest of the world, and the pain may be just starting.
Trump has launched protectionist trade campaigns aimed at countries from Canada to China. Effects of Trump’s tariffs are starting to pop up in reports of inflation data and confidence indicators and in the decisions of some high-profile businesses, Business Insider reported.
Neil Dutta, the head of US economics at Renaissance Macro Research, pointed to the soaring cost of consumer appliances as evidence the tariffs were starting to drive up costs.
“Even though core commodity CPI has been deflating, there have been pockets of tariff related pressure,” Dutta said in an email.
Over the past three months, he said, CPI for household appliances was up 15.7% on a seasonally adjusted annual rate. And companies are seeing the cost of raw materials rise as well.
Given Trump’s push for tariffs on auto imports and interest in yanking the US out of the World Trade Organization, it doesn’t look as if the trade tensions will ease up anytime soon.
New data on prices of goods subject to Trump’s tariffs shows that the cost of certain items has already jumped as a result of the tariffs—and more tariffs are planned.
China’s commerce ministry said on Tuesday it is raising “anti-dumping tariff rates” for some optical fiber products originating from the United States, effective on Wednesday, July 11, Reuters said.
The new anti-dumping tariff rates for dispersion unshifted single-mode optical fiber imported from the US range between 33.3% to 78.2%, compared with 4.7% to 18.6% as set in 2011.
US companies including Corning Inc, OFS Fitel, LLC and Draka Communications Americas Inc are among firms affected by the tariff change, the ministry said on its website Tuesday.
All-Out War
In March, Trump said that “trade wars are good and easy to win”. Last week, the trade wars kicked into high gear.
Following the president’s tariffs on steel and aluminum imports, Canada increased tariffs on US imports worth $12.5 billion a week ago Monday. On Thursday, Mexico slapped tariffs on an additional $3 billion of US goods. China also retaliated against US moves to impose tariffs on an additional $34 billion of Chinese goods.
Now, America’s leading business lobbies, who together represent every sector of the economy, have declared all-out war against Trump’s trade tariffs.
Manufacturers, corporations of every size and shape, retail businesses, agricultural industries and consumer groups—45 associations in all—have joined forces to defeat the president’s plans to impose higher trade taxes on longstanding trading partners and most loyal allies, Postregister reported.
The largest of these organizations, the US Chamber of Commerce, which represents more than three million businesses nationwide, is launching an unprecedented campaign against the tariffs.
Global Trade War
A brief tweet sent out in advance of its announcement framed the issue in four words: “Trade works. Tariffs don’t.”
“The administration is threatening to undermine the economic progress it worked so hard to achieve,” said Chamber President Tom Donohue. “We should seek free and fair trade, but this is just not the way to do it.”
The chamber charged that Trump is threatening a global trade war by slapping higher taxes on imported steel and aluminum, targeting Canada, China, Mexico and the European Union.
Business leaders and economists have told him that such action would trigger a costly trade war, sending consumer prices through the roof, destroying US jobs and hurting American exports around the globe.
“Tariffs are simply taxes that raise prices for everyone,” Donohue said this week.
Indeed, he added, Trump’s tariffs were “beginning to take a toll on American businesses, workers, farmers and consumers as overseas markets close to American-made products and prices increase here at home.”
What the Trump administration isn’t telling voters is that half of all US manufacturing jobs depend on exports, and one out of three acres of American farms grow crops for overseas markets.
The 25% Trump tariff on imported steel would hurt US manufacturers, especially auto manufacturers.
You don’t need a doctorate in business economics to figure out that such a global trade war will hurt businesses and kill jobs throughout the American economy.
It’s important to understand that these business groups, which included Apple, Google and Walmart, were not giving our trading partners a free pass, saying in a letter to Trump that they had very “serious concerns” about China’s theft of trade secrets and other unscrupulous practices.
But, they said, the administration “should not respond to unfair Chinese practices and policies by imposing tariffs or other measures that will harm US companies, workers, farmers, ranchers, consumers and investors.”
All of these and other fears about Trump’s trade wars are having an outsized impact on the economy.
