Economy

Trump’s Trade War Already Disrupting Commerce

“As the Trump administration imposes tariffs on allies and rivals alike, provoking broad retaliation, global commerce is suffering disruption, flashing signs of strains that could hamper economic growth. The latest escalation came on Friday, when President Trump announced fresh tariffs on $50 billion in Chinese goods, prompting swift retribution from Beijing,” the New York Times reports.

“As the conflict broadens, shipments are slowing at ports and airfreight terminals around the world. Prices for crucial raw materials are rising. At factories from Germany to Mexico, orders are being cut and investments delayed. American farmers are losing sales as trading partners hit back with duties of their own.”

Trump’s Tariffs Are Already Backfiring

Catherine Rampell has a great case study on how President Trump’s tariffs on washing machines isn’t working.

“When you aggregate all those price increases across the 10 million washers sold annually in the United States, consumers will collectively pay hundreds of thousands of dollars per year for each job supposedly created or saved. Which is many multiples of what factory workers typically earn.”

“And it’s not even clear how safe their jobs are at this point, given the rest of Trump’s trade agenda. After all, his tariffs didn’t stop with washing machines.”

Trump Approves Tough Tariffs on China

President Trump “has approved a plan to impose punishing tariffs on tens of billions of dollars of Chinese goods as early as Friday, a move that could put his trade policies on a collision course with his push to rid the Korean Peninsula of nuclear weapons,” the AP reports.

“Trump met Thursday with several Cabinet members and trade advisers and was expected to impose tariffs on at least $35 billion to $40 billion of Chinese imports… The amount of goods could reach $55 billion.”

New York Times: “Beijing has said it will retaliate by imposing its own tariffs on a list of roughly $50 billion in American exports, a list likely to include agricultural products and manufactured goods.”

Cohn Says Trade War Could Wipe Out Tax Cut Gains

Former Trump economic adviser Gary Cohn said that an escalating trade war could wipe out the benefits of the Republican tax law passed last fall, the Washington Post reports.

Said Cohn: “If you end up with a tariff battle, you will end up with price inflation, and you could end up with consumer debt. Those are all historic ingredients for an economic slowdown.”

Trump Tariff Jacked Up U.S. Newsprint Prices

“A single tariff benefiting one paper factory in Washington state could prompt the loss of thousands of U.S. newspaper jobs,” the Philadelphia Inquirer reports.

“The ripple effect started with One Rock Capital Partners, a New York private equity firm that bought a paper mill in Longview, Wash., and then petitioned the Trump commerce department for tariffs against Canadian paper. That one mill employs about 250 people.”

“The result? The equity firm won punishing newsprint tariffs that have pushed up newsprint prices by about 30 percent. Already newspapers around the U.S. have begun making thousands of layoffs.”

The One Policy Trump Really Believes

Jonathan Swan: “The biggest key to understanding Trump’s dogmatism on trade is that even as he switched political parties and changed his views on issue after issue, his one consistent stance over 40 years is that other countries are ‘ripping off the United States’ in trade deals, as he put it in 1987.”

“This is the one thing the president really believes, with his protectionist roots going back to the union-friendly environment where his father, Fred, courted Democratic pols.”

“Nobody can claim to be surprised about what Trump is now doing. It’s everything he promised during the campaign.”

The Washington Post quotes Trump at the G7 meetings: “We’re the piggy bank that everybody is robbing. And that ends.”

Donald Trump vs. the Economy

Axios: “The party in power tends to do well in the House during midterm elections when voters are happy with the economy, but it does poorly when the president’s approval rating is low. There’s no recent precedent in which the economy is doing well but the president’s approval rating is underwater.”

“Anyone who talks about the election as if it’s only about Trump, or only about the economy, is only telling you half the story. We won’t really know what’s going to happen with the House until we know which half matters the most to the voters.”

Koch Brothers Take on Trump Over Free Trade

“Another trade war is brewing – one between President Trump and the Koch brothers,” ABC News reports.

“Days after the president moved forward with imposing steel and aluminum tariffs on the European Union, Canada and Mexico, three political groups affiliated with the billionaire Koch brothers are launching a multi-year, multi-million dollar campaign to tout free trade and oppose tariffs.”

Economists Worry About Possible Recession In 2020

“A group of top business economists believes the major tax cuts President Donald Trump pushed through Congress will give a significant boost to economic growth this year and next year. But they worry that by 2020, the country could be entering a new recession,” the AP reports.

“Part of the drop-off in optimism reflects growing worries about what Trump’s get-tough approach on trade might do to U.S. growth prospects.”

Trump Moves to Unravel International Trade

“President Trump appears prepared to unravel 70 years of pain­staking effort that the United States has led to build an inter­national system of trade based on mutually accepted rules and principles,” the Washington Post reports.

“Ever since an agreement on trade emerged in 1947 from the ashes of World War II, presidents of both parties have pushed this system as a way to strengthen alliances and promote the expansion of democracy and prosperity in Europe and Asia.”

“But with Trump’s decision last week to enact aluminum and steel tariffs against U.S. allies in Europe and North America, he is subverting previously agreed-­upon trade pacts. The result is a brewing trade war with Canada, Mexico and Europe, which are expressing shock and bitter frustration while enacting tariffs of their own on a bevy of American products.”

Trump Sent Market Early Signal on Jobs Report

President Trump “broke with decades of protocol and commented publicly about the highly anticipated jobs report data 69 minutes before they were released by the Bureau of Labor Statistics,” the Washington Post reports.

Treasury yields moved sharply higher within seconds of a Twitter post from President Trump that said he was “looking forward to seeing the employment numbers at 8:30 this morning.”

“The jobs data come out once a month, and often can lead to massive buying or selling trends on Wall Street depending on how the information is received. It is extremely closely held and kept under tight control until it is released at 8:30 a.m. on the first Friday of each month. The Chairman of the Council of Economic Advisers is traditionally given the report the day before it is released, and it can often be shared with the president after that time. But the president – and other administration officials – never tip their hand about what the numbers reveal.”

Tariffs Will Likely Cancel Out Impact of Tax Cuts

John Harwood: “President Trump has embarked on an unorthodox follow-up to cutting the taxes American families pay: raising the prices of goods they buy.”

“Higher prices will result directly from tariffs the White House plans to impose on steel and aluminum imports from allies such as Canada, Mexico and the European Union as well as other countries… But combined with additional tariffs against other imports from China and retaliatory steps by our trading partners, the measures Trump announced promise to make an impact. And mainstream economists across the political spectrum agree it will be negative.”

Said Douglas Holtz-Eakin, a Republican economist who advised President George W. Bush: “Unambiguously bad. The only question is how big.”