Trump Says Companies, Not Trade Policies, to Blame for Business Setbacks

President defends trade policies ahead of new round of tariffs set for this weekend

WASHINGTON—President Trump rejected the notion that his trade policies were having a negative impact on the U.S. economy, instead blaming “badly run and weak companies” for any business setbacks and again urging the Federal Reserve to cut interest rates.

Mr. Trump said Friday that the U.S. doesn’t “have a tariff problem…we have a Fed problem.” He added: “Badly run and weak companies are smartly blaming these small Tariffs instead of themselves for bad management…and who can really blame them for doing that? Excuses!”

The comments on Twitter come as more U.S. businesses and farmers say they are suffering amid the prolonged U.S.-China trade war, ahead of a new round of tariffs set to take effect Sunday.

U.S. household sentiment fell in August from the earlier month amid concerns over a trade war, according to the University of Michigan’s index, released Friday. The gauge posted its largest monthly drop since December 2012, with about a third of consumers surveyed seeing tariffs as a negative driver, said Richard Curtin, the survey’s chief economist.

“The data indicate that the erosion of consumer confidence due to tariff policies is now well under way,” he said.

Fed officials cut interest rates last month for the first time in a decade, citing risks that included slower global growth, trade-policy uncertainty and muted inflation. Mr. Trump has called for the magnitude of rate cuts typically reserved for a period where the economy is slowing into a recession.

Fed officials have said businesses are increasingly citing trade-policy uncertainty—and not their own cost of capital—as a drag on sales, profits and investment, which is one reason officials are likely to cut interest rates again at their Sept. 17-18 policy meeting.

There are “no recent precedents to guide any policy response to the current situation,“ said Fed Chairman Jerome Powell in a speech last week. While monetary policy is a powerful tool to support economic growth, “it cannot provide a settled rulebook for international trade,” he said.

The trade war is set to escalate this weekend. Mr. Trump, disappointed by what he described as Beijing’s failure to follow through on prior commitments, earlier this month called for tariffs on nearly all of the imports from China not hit by prior rounds of punitive duties. The administration later split the tariffs into two groups, with some products affected starting on Sunday and the rest on Dec. 15. Beijing also plans a new round of tariffs.

Mr. Trump last week said he “hereby” ordered American companies to find alternatives to Chinese operations, including in the U.S. Mr. Trump has broad powers to raise costs for businesses operating internationally and could use emergency powers to crack down on commerce, trade lawyers say, but he can’t unilaterally direct companies where to invest.

On Thursday, Best Buy Co. reported disappointing second-quarter sales and narrowed its revenue forecast for the year, citing the impact of U.S. tariffs on Chinese-made goods. Chief Executive Corie Barry said televisions, smartwatches and headphones will be subject to tariffs set to take effect on Sept. 1. Computing products, mobile phones and gaming consoles will be hit by tariffs planned for Dec. 15, she said.

China’s Ministry of Commerce said Thursday that Beijing and Washington remain “in effective communication” about their continuing trade dispute, adding that the two sides are still discussing whether to proceed with talks previously scheduled for September.

The euro on Friday plunged to a one-month low against the dollar as poor eurozone economic data this week has bolstered the view by some observers that the European Central Bank will cut its benchmark interest rate at its September meeting.

Business Groups Warn of Peril as Trump’s Trade War Spirals

The latest whipsawing escalations in the United States’ trade war with China prompted a wide array of business organizations to warn over the weekend that American consumers and workers would soon be caught in the crossfire.

It is now looking increasingly likely that few large American companies will be able to sidestep the toll exacted by the new tit-for-tat tariffs that China and President Trump rolled out on Friday.

Many business leaders have kept a low profile as the trade war intensified, for fear of attracting President Trump’s ire, and in the hope that the threats of tariffs could be negotiating tactics that will lead to some sort of trade agreement.

But with several tariffs already in place, and President Trump staking out an even more aggressive stance on Friday, many industries are reckoning with just how serious the situation has become.

Joshua Bolten, the president and chief executive of the Business Roundtable, an organization representing the leaders of the largest American companies, said on Sunday that many C.E.O.s were already “poised right on top of the brake.”

“The risk is that everybody’s going to slam on the brake, and that would be a disaster,” Mr. Bolten said on “Face the Nation” on CBS.

President Trump’s latest moves, Mr. Bolten said, could “disrupt trade and commerce in a way that would cause huge damage — not just to the Chinese economy, but to the global economy and the U.S. economy.”

The American manufacturing sector shrank in August for the first time since 2009.
CreditRoss Mantle for The New York Times

The American economy has so far been relatively resilient as the two sides battle. But several recent signs suggest that the tit-for-tat is beginning to broadly hit American businesses.

The American manufacturing sector, for instance, shrank in August for the first time since 2009, according to data released last week from the research group IHS Markit.

“America’s manufacturing workers will bear the brunt of these retaliatory tariffs, which will make it even harder to sell the products they make to customers in China,” the president and chief executive of the National Association of Manufacturers, Jay Timmons, wrote on Twitter on Friday.

While corporate earnings have held strong, several companies said last week that they were trimming their profit expectations as a result of the trade war.

On Friday, after China announced new tariffs and Mr. Trump ordered American companies out of China, the Standard & Poor’s 500 index slid 2.6 percent and the tech-heavy Nasdaq composite fell 3 percent. After the markets closed, the president announced more tariff increases.

China said on Friday morning that it would impose new tariffs on $75 billion of American imports. A few hours later, President Trump announced on Twitter that he would be raising tariffs further on $550 billion of goods coming from China.

The biggest shock was from Mr. Trump’s statement that he was ordering American companies to “immediately start looking for an alternative to China.”

The president said he had the power to do so as a result of a 1977 law that has traditionally been used to deal with security and military threats.

President Trump on Sunday at the G7 summit in Biarritz, France.
CreditErin Schaff/The New York Times

Over the weekend, some of Mr. Trump’s advisers tried to somewhat soften the blow of the president’s words.

Treasury Secretary Steven Mnuchin, speaking on “Fox News Sunday,” said that Mr. Trump had the authority to make such a demand if he declared a national emergency but that he had not yet done so.

“I think what he was saying is he’s ordering companies to start looking because he wants to make sure — to the extent we are in an extended trade war — that companies don’t have these issues and move out of China,” Mr. Mnuchin said. “And we want them to be in places where they are trading partners that respect us and trade with us fairly.”

There is still significant uncertainty on how many of the steps that China and Mr. Trump have announced will come into effect. The president has stepped back or delayed previous tariffs. And on Sunday the president said he was having “second thoughts” about the threats he made last week. But shortly thereafter, the White House press secretary, Stephanie Grisham, said that the president’s regret was that he had not raised tariffs even further.

American businesses have already begun taking steps to respond. The toymaker Hasbro said last month that it was planning to shift a significant portion of its manufacturing from China to other Asian countries by 2020.

The American toy industry is particularly reliant on Chinese factories, which account for 88 percent of its production, according to the National Retail Federation. But the figures are also large for other major portions of the retail industry.

David French, the senior vice president for government relations at the retail federation, said this weekend that companies were facing a difficult road because it could take years to make the kind of moves that the president has demanded.

It’s impossible for businesses to plan for the future in this type of environment,” Mr. French said in a statement. “The administration’s approach clearly isn’t working, and the answer isn’t more taxes on American businesses and consumers. Where does this end?”

Hasbro toys at a Target store in Manhattan. The toy company said last month that it was planning to shift a significant portion of its manufacturing from China to other Asian countries by 2020.
CreditJeenah Moon for The New York Times

President Trump has said that he expects China to pay the costs of the tariffs he has imposed. But the direct costs of the tariffs are generally paid by the companies importing goods from China, who can then pass them along to consumers.

The Consumer Technology Association, which represents the largest electronics companies, has said that the tariffs are already costing the American tech sector $1.3 billion a month, and could raise the price of cellphones by $70 and the price of

The latest whipsawing escalations in the United States’ trade war with China prompted a wide array of business organizations to warn over the weekend that American consumers and workers would soon be caught in the crossfire.

It is now looking increasingly likely that few large American companies will be able to sidestep the toll exacted by the new tit-for-tat tariffs that China and President Trump rolled out on Friday.

Many business leaders have kept a low profile as the trade war intensified, for fear of attracting President Trump’s ire, and in the hope that the threats of tariffs could be negotiating tactics that will lead to some sort of trade agreement.

But with several tariffs already in place, and President Trump staking out an even more aggressive stance on Friday, many industries are reckoning with just how serious the situation has become.

Joshua Bolten, the president and chief executive of the Business Roundtable, an organization representing the leaders of the largest American companies, said on Sunday that many C.E.O.s were already “poised right on top of the brake.”

“The risk is that everybody’s going to slam on the brake, and that would be a disaster,” Mr. Bolten said on “Face the Nation” on CBS.

President Trump’s latest moves, Mr. Bolten said, could “disrupt trade and commerce in a way that would cause huge damage — not just to the Chinese economy, but to the global economy and the U.S. economy.”

The American manufacturing sector shrank in August for the first time since 2009.
CreditRoss Mantle for The New York Times

The American economy has so far been relatively resilient as the two sides battle. But several recent signs suggest that the tit-for-tat is beginning to broadly hit American businesses.

The American manufacturing sector, for instance, shrank in August for the first time since 2009, according to data released last week from the research group IHS Markit.

“America’s manufacturing workers will bear the brunt of these retaliatory tariffs, which will make it even harder to sell the products they make to customers in China,” the president and chief executive of the National Association of Manufacturers, Jay Timmons, wrote on Twitter on Friday.

While corporate earnings have held strong, several companies said last week that they were trimming their profit expectations as a result of the trade war.

On Friday, after China announced new tariffs and Mr. Trump ordered American companies out of China, the Standard & Poor’s 500 index slid 2.6 percent and the tech-heavy Nasdaq composite fell 3 percent. After the markets closed, the president announced more tariff increases.

China said on Friday morning that it would impose new tariffs on $75 billion of American imports. A few hours later, President Trump announced on Twitter that he would be raising tariffs further on $550 billion of goods coming from China.

The biggest shock was from Mr. Trump’s statement that he was ordering American companies to “immediately start looking for an alternative to China.”

The president said he had the power to do so as a result of a 1977 law that has traditionally been used to deal with security and military threats.

President Trump on Sunday at the G7 summit in Biarritz, France.
CreditErin Schaff/The New York Times

Over the weekend, some of Mr. Trump’s advisers tried to somewhat soften the blow of the president’s words.

Treasury Secretary Steven Mnuchin, speaking on “Fox News Sunday,” said that Mr. Trump had the authority to make such a demand if he declared a national emergency but that he had not yet done so.

“I think what he was saying is he’s ordering companies to start looking because he wants to make sure — to the extent we are in an extended trade war — that companies don’t have these issues and move out of China,” Mr. Mnuchin said. “And we want them to be in places where they are trading partners that respect us and trade with us fairly.”

There is still significant uncertainty on how many of the steps that China and Mr. Trump have announced will come into effect. The president has stepped back or delayed previous tariffs. And on Sunday the president said he was having “second thoughts” about the threats he made last week. But shortly thereafter, the White House press secretary, Stephanie Grisham, said that the president’s regret was that he had not raised tariffs even further.

American businesses have already begun taking steps to respond. The toymaker Hasbro said last month that it was planning to shift a significant portion of its manufacturing from China to other Asian countries by 2020.

The American toy industry is particularly reliant on Chinese factories, which account for 88 percent of its production, according to the National Retail Federation. But the figures are also large for other major portions of the retail industry.

David French, the senior vice president for government relations at the retail federation, said this weekend that companies were facing a difficult road because it could take years to make the kind of moves that the president has demanded.

“It’s impossible for businesses to plan for the future in this type of environment,” Mr. French said in a statement. “The administration’s approach clearly isn’t working, and the answer isn’t more taxes on American businesses and consumers. Where does this end?”

Hasbro toys at a Target store in Manhattan. The toy company said last month that it was planning to shift a significant portion of its manufacturing from China to other Asian countries by 2020.
CreditJeenah Moon for The New York Times

President Trump has said that he expects China to pay the costs of the tariffs he has imposed. But the direct costs of the tariffs are generally paid by the companies importing goods from China, who can then pass them along to consumers.

The Consumer Technology Association, which represents the largest electronics companies, has said that the tariffs are already costing the American tech sector $1.3 billion a month, and could raise the price of cellphones by $70 and the price of laptops by $120, on average.

JPMorgan Chase analysts recently predicted that the overall costs to American families of the tariffs were likely to be between $1,000 and $1,500 a year.

“Tariffs are taxes on Americans, putting us on the wrong economic path and compromising our global leadership,” the president and chief executive of the technology association, Gary Shapiro, said on Friday. “How much longer will our families, companies and economy be forced to bear the financial burden of this misguided trade policy?”

China appears to be aiming its tariffs at parts of America where support for President Trump is particularly strong, like farm country in the Midwest. China’s actions on Friday, for instance, add 5 percentage points to the 25 percent tariff already paid on American soybeans.

The president of the American Farm Bureau, Zippy Duvall, said after the latest announcements that “continued retaliation only adds to the difficulties farm and ranch families are facing and takes the situation in the exact wrong direction.”

China also added new tariffs to cars made in America. Tesla, as well as the Germany carmakers Daimler and BMW, are the most vulnerable to the additional levies. Six of the top 10 vehicle models exported from the United States to China, the world’s biggest car market, are from the two German brands, according to the forecaster LMC Automotive.

In private, auto executives say that, for now, the uncertainty is a greater concern than the potential material impact of the tariffs. One auto executive who spoke on the condition of anonymity said the industry was more worried that it cannot predict what might happen next or how bad it might get.

JPMorgan Chase analysts recently predicted that the overall costs to American families of the tariffs were likely to be between $1,000 and $1,500 a year.

“Tariffs are taxes on Americans, putting us on the wrong economic path and compromising our global leadership,” the president and chief executive of the technology association, Gary Shapiro, said on Friday. “How much longer will our families, companies and economy be forced to bear the financial burden of this misguided trade policy?”

From Trump Boom to Trump Gloom

The smart money thinks Trumponomics is a flop.

Last year, after an earlier stock market swoon brought on by headlines about the U.S.-China trade conflict, I laid out three rules for thinking about such events.

  1. First, the stock market is not the economy.
  2. Second, the stock market is not the economy.
  3. Third, the stock market is not the economy.

But maybe I should add a fourth rule: The bond market sorta kinda is the economy.

An old economists’ joke says that the stock market predicted nine of the last five recessions. Well, an “inverted yield curve” — when interest rates on short-term bonds are higher than on long-term bonds — predicted six of the last six recessions. And a plunge in long-term yields, which are now less than half what they were last fall, has inverted the yield curve once again, with the short-versus-long spread down to roughly where it was in early 2007, on the eve of a disastrous financial crisis and the worst recession since the 1930s.

Neither I nor anyone else is predicting a replay of the 2008 crisis. It’s not even clear whether we’re heading for recession. But the bond market is telling us that the smart money has become very gloomy about the economy’s prospects. Why? The Federal Reserve basically controls short-term rates, but not long-term rates; low long-term yields mean that investors expect a weak economy, which will force the Fed into repeated rate cuts.

So what accounts for this wave of gloom? Much though not all of it is a vote of no confidence in Donald Trump’s economic policies.

You may recall that last year, after a couple of quarters of good economic news, Trump officials were boasting that the 2017 tax cut had laid the foundation for many years of high economic growth.

Since then, however, the data have pretty much confirmed what critics had been saying all along. Yes, the tax cut gave the economy a boost — a “sugar high.Running trillion-dollar deficits will do that. But the boost was temporary. In particular, the promised boom in business investment never materialized. And now the economy has reverted, at best, to its pre-stimulus growth rate.

At the same time, it has become increasingly clear that Trump’s belligerence about foreign trade isn’t a pose; it reflects real conviction. Protectionism seems to be up there with racism as part of the essential Trump. And the realization that he really is a Tariff Man is having a serious dampening effect on business spending, partly because nobody knows just how far he’ll go.

To see how this works, think of the dilemma facing many U.S. manufacturers. Some of them rely heavily on imported parts; they’re not going to invest in the face of actual or threatened tariffs on those imports. Others could potentially compete with imported goods if assured that those imports would face heavy tariffs; but they don’t know whether those tariffs are actually coming, or will endure. So everyone is sitting on piles of cash, waiting to see what an erratic president will do.

Of course, Trump isn’t the only problem here. Other countries have their own troubles — a European recession and a Chinese slowdown look quite likely — and some of these troubles are spilling back to the United States.

But even if Trump and company aren’t the source of all of our economic difficulties, you still want some assurance that they’ll deal effectively with problems as they arise. So what kind of contingency planning is the administration engaged in? What are officials considering doing if the economy does weaken substantially?

The answer, reportedly, is that there is no policy discussion at all, which isn’t surprising when you bear in mind the fact that basically everyone who knows anything about economics left the Trump administration months or years ago. The advisers who remain are busy with high-priority tasks like accusing The Wall Street Journal editorial page of being pro-Chinese.

No, the administration’s only plan if things go wrong seems to be to blame the Fed, whose chairman was selected by … Donald Trump. To be fair, it’s now clear that the Fed was wrong to raise short-term rates last year.

But it’s important to realize that the Fed’s mistake was, essentially, that it placed too much faith in Trumpist economic policies.

  • If the tax cut had actually produced the promised boom,
  • if the trade war hadn’t put a drag on growth,

we wouldn’t have an inverted yield curve; remember, the Fed didn’t cause the plunge in long-term rates, which is what inverted the curve. And the Trump boom wasn’t supposed to be so fragile that a small rise in rates would ruin it.

I might add that blaming the Fed looks to me like a dubious political strategy. How many voters even know what the Fed is or what it does?

Now, a word of caution: Bond markets are telling us that the smart money is gloomy about economic prospects, but the smart money can be wrong. In fact, it has been wrong in the recent past. Investors were clearly far too optimistic last fall, but they may be too pessimistic now.

But pessimistic they are. The bond market, which is the best indicator we have, is declaring that Trumponomics was a flop.

Donald Trump Is Not a Sinister Genius

His race-baiting is impulsive and unpopular, not a brilliant strategy to win white votes.

Some columns spring from inspiration, some from diligent research. And some you’re prodded into writing because of what the other columnists are arguing about.

This is the third kind. With the Democratic debates in the spotlight, there has been a lot written on this op-ed page about the Democratic Party’s ideological evolution, its leftward march on many issues, and how this might help Donald Trump win re-election. Which in turn has prompted a recurring argument from certain of my liberal colleagues that anyone writing about the supposedly extremist Democrats should be writing about Trump’s extremism and unpopularity instead.

So this will be, as requested, a column about Trump’s extremism and unpopularity. But it’s not going to be a mirror image of the columns about the Democrats’ move leftward, because I don’t think policy substance matters as much to Trump’s prospects as it might to the party trying to unseat him.

It matters less because Trump in 2020 won’t be a change candidate. Instead, like every incumbent, he’ll be a candidate of the policy status quo — only much more so in his case, because his legislative agenda dissolved earlier than most presidents and the prospects for continued gridlock are obvious.

That means Trump probably won’t be campaigning on what he promised across 2016 — the kind of infrastructure-building, “worker’s party” conservatism whose ambitions vanished with Steve Bannon. But he also won’t be campaigning on the Paul Ryan agenda that the Republican Congress pushed in his first year, or reviving unpopular Ryan-era ideas like entitlement reform on the 2020 trail.

Instead Trump’s policy argument in 2020 will be, basically, let’s keep doing what we’re doing. That status quo includes a

  • deregulatory agenda,
  • a tariff push and a
  • harsh border policy that are all unpopular.

But it also includes:

  • free-spending budgets,
  • easy money and a more
  • anti-interventionist (for now) foreign policy than past Republicans, all of which are relatively popular.

And in the context of a strong economic expansion, a Trump re-election effort that rested on this record while warning against Democratic radicalism could be plausibly favored.

Except that this isn’t the kind of campaign that Trump himself wants to run. He wants the

  • racialized Twitter feuds, the
  • battles over Baltimore and Ilhan Omar, the
  • media freak-outs and the
  • “don’t call us racist!” defensiveness of his rallygoing fans.

He feeds on it, he loves it, and he’s as obviously bored by the prospect of a safe, status-quo campaign as he is obviously uninterested in the conservative intellectuals trying to transform Trumpism into something intellectually robust.

And here I agree with the left that there’s a media tendency to give Trump’s race-baiting impulses more credit as a strategy than they actually deserve. After each Twitter outburst his advisers try to retrofit a strategic vision, to claim there’s a master plan unfolding in which 2020 will become a referendum on Omar’s anti-Semitic tropes or the Baltimore crime rate. And the press gives them credence out of an imprinted-by-2016 fear that the president has a sinister sort of genius about what will help him win.

But this is paranoia, and the retrofitting is Trumpworld wishful thinking. There was, yes, a sinister genius at work when Trump used birtherism to build a primary-season constituency in 2016. But since then, his race-baiting has clearly contributed to his chronic unpopularity, and his re-election chances would almost certainly be far better if he talked like George W. Bush on race instead.

Second, in 2016 Trump won many millions of voters who disapproved of him. But in recent 2020 polling, Trump is performing below his job approval rating in many head-to-head matchups, which suggests that voters who would be responsive to the “policy status quo” argument keep getting turned off by the president’s rhetoric. The supposedly-brilliant strategy of racial polarization, then, is probably just a self-inflicted wound.

None of this means that Trump cannot be re-elected. But it means that if he wins again, it will likely be in spite of his own rhetoric, not as the dark fruit of a white-identitarian campaign.

In this sense both NeverTrump-conservative and liberal columnists can be right about the basic situation. The liberals are right that Trump is defiantly outside the mainstream — that every day, in a particular way, he proves himself extreme.

But this is a fixed reality for 2020, and the NeverTrump side is right about the variable: The campaign may turn on how successfully the Democrats claim or build an anti-Trump center, as opposed to appearing to offer an unpalatable extremism of their own.