The cascade of tit-for-tat tariffs has spooked corporate executives, potentially slowing investment, and the Federal Reserve suggested this week that it might have to rethink its economic forecasts if the trade wars continue.
.. The economy is booming, but Mr. Skarich said he was not reaping the benefits. Instead, as a result of Mr. Trump’s trade policies, Mr. Skarich said his nail company may soon be out of business.
.. Mid Continent, the largest American producer of nails, imports steel from Mexico to make its nails. That steel is now subject to the 25 percent tariffs that Mr. Trump imposed on dozens of countries, forcing Mid Continent to raise its prices by nearly 20 percent.
.. Orders have plummeted by 50 percent this month as the company tries to compete with cheaper foreign-made nails. Those foreign manufacturers are not facing higher steel costs, giving them an advantage over Mid Continent.
.. While Mr. Trump might propose that Mid Continent simply buy American-made steel, it might not be so simple: Mr. Skarich notes that the cost of American-made metal is much higher than what the company had been importing from Mexico, meaning it would still have to raise prices for its nails if it used domestic steel.
.. “He ran on ‘Make America Great Again,’ and the point was to defend and protect jobs in the United States,” Mr. Skarich said. “Now here is an action he decides to take that has the potential to cost 500 U.S. citizens their jobs.”
.. China is expected to impose an additional 25 percent tariff on American lobster.. Trump’s policy was having the unintended effect of further helping Canada’s lobster market, which doesn’t face the same duties when selling to China... For several years, the cranberry industry has been struggling with an oversupply problem that has been eased somewhat by exporting juice and berries to Europe and elsewhere... Wisconsin is one of the world’s biggest cranberry producers and is the home state of Representative Paul D. Ryan.. exports to Europe were about $127 million last year.. European tariffs on peanut butter will be a blow for the makers of Peter Pan and Skippy spreads, but it is peanut farmers in Republican-leaning states like Georgia, Alabama, Florida and Mississippi who could struggle the most... The United States and China are the biggest peanut butter exporters in the world, according to the Department of Agriculture, and European tariffs would likely give China an edge in expanding its market share... “If this can give him some leverage to get a deal made, they’d be all for that,” Mr. Broome said. “If it doesn’t work and he’s miscalculated, then it could be a different story.”
Trump is betting American families are willing to pay for his trade war
The result is that Americans will almost certainly face higher costs as companies pay more for parts they need to build cars, dishwashers and tractors, and then firms turn around and pass those higher prices onto consumers.
.. All of Trumps tariffs so far — on China, on steel and aluminum, on washing machines and on solar panels — will end up costing the average U.S. family $80 a year
.. If Trump continues to pile tariffs on China (he has threatened to do another $100 billion) and China retaliates, then the cost to the average family would rise to $210
.. 45,000 jobs will be lost because of the tariffs Trump has issued so far.
.. They also forecast a small hit to the economy and wages.
.. tariffs will hurt the economy because prices will rise, reducing profits for companies and costing consumers more.
Alternatively, tariffs could cause the U.S. dollar to rise, which usually makes it more difficult for American companies to sell their products abroad, another potential hit to jobs and the economy.
.. “When we lose $500 billion a year … in a trade deficit. When we lose hundreds of billions of dollars in intellectual property theft, not only China but others, we have to stop it. We can’t allow this to happen. So in a certain way, I call people patriots because … short-term you may have to take some problems. Long-term, you’re going to be so happy. You’re going to be so happy.”
.. Trump is calling on Americans to pay higher prices for a while because he thinks it will be worth it if he gets concessions from China and the E.U. It’s what economists and business leaders call a cost-benefit analysis, and Trump is arguing it will be worth it in the end.
.. higher costs don’t hit everyone equally.
The reality is every family isn’t going to pay $80. Some families are likely to pay hundreds or thousands or be the ones losing jobs and livelihoods, while most others probably won’t notice the price increases.
.. Gary Cohn, Trump’s former top economic adviser, went as far as to say Trump’s tariffs could wipe out the entire economic gains of the tax cuts
.. Trump and (most of) his top advisers say this is about winning the big economic war of the 21st century.
China and the United States are fighting for dominance in technology and biotechnology. Trump and his team say the United States won’t win if China keeps stealing American intellectual property and technology secrets.
.. But for the farmer or the small auto parts manufacturer that may have a terrible year or go out of business during the tariff battle, it probably won’t feel worth it.
Trump Looks to Assuage Trade Critics With Farm Package
The aid package, which could climb into the billions of dollars, is still being developed
The Trump administration is seeking to blunt domestic opposition to its trade policies with a relief package for farmers affected by the U.S. trade spat with China, say officials involved in the discussions... Agriculture and congressional officials are examining Depression-era programs like the Commodity Credit Corp., which was created in 1933 to stabilize farm incomes, and which permits borrowing of as much as $30 billion from the Treasury to finance its activities. Using the CCC would also give the administration an existing program to tap, rather than having to devise something new that would need to clear Congress.
.. Many farm groups say they aren’t looking for a handout and would rather have unimpeded trade with China. “Farmers are more interested in negotiation (with China) than mitigation,” said Davie Stephens, vice president of the American Soybean Association and a farmer who raises crops near Clinton, Ky. “Let’s get an agreement where tariffs don’t have to be implemented.
Trump’s Tax on America
It would seem that for the Republican Party, an incompetent, erratic kleptocracy might just be the best form of government.
Or at least it was until March 1, 2018, the day Trump signaled his intention to impose across-the-board import tariffs of 25% on steel and 10% on aluminum. That decision, notes Pat Roberts, a Republican senator from Kansas, “is not going to go down well in farm country.”
.. His worry now is that Trump will pursue “a trade policy that will basically result in all the benefits of the tax reform being taken away by higher manufacturing costs being passed on to consumers.”
.. In the end, American consumers will pay for Trump’s tariffs. Such broad protectionist measures will affect every sector of US manufacturing in one way or another, and manufacturers certainly will not eat the full costs of higher-priced steel and aluminum inputs.
.. So, Trump has essentially proposed a new tax on US consumers and export industries, the costs of which will be borne largely by his own supporters in the American heartland and Rust Belt.
.. It turns out that Trump’s decision was taken against the advice – indeed, over the objections – of not just his
- chief economic adviser, Gary Cohn, but also his
- national security adviser, General H.R. McMaster, his
- treasury secretary, Steven Mnuchin, and his
- defense secretary, James Mattis.
On the other hand, Secretary of Commerce Wilbur Ross apparently favors the tariffs. But it is not at all clear why. The Department of Commerce itself surely recognizes that more Americans benefit from lower steel and aluminum prices than from higher prices.
Another supporter of the tariffs is Peter Navarro, who was recently promoted to Director of Trade and Manufacturing Policy and Director of the White House National Trade Council. That comes as no surprise. Navarro has written a number of alarmist books about America’s trade relationship with China, including one titled Death by China. Nevertheless, Navarro has not yet been able to explain how creating a larger domestic steel industry through tariffs will yield a net benefit for the US economy.
A final key supporter of the tariffs is US Trade Representative Robert Lighthizer, who formerly worked as a lawyer for the steel industry. As with Ross, it is not entirely clear what Lighthizer is thinking. He has to know that Trump’s tariffs will have little to no chance of boosting the US steel and aluminum industries without also imposing substantial costs on the economy. Doesn’t he realize that his own reputation will ultimately depend on whether the administration has a successful trade policy or an obviously stupid one?