Tag Archives: tariffs

Despite Threat of Trade War US Economy Strong

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Courtesy of wikideas.

The major indicators did not falter the day after President Trump announced he was raising the threatened tariffs on China from 10% to 25% on $200 billion worth of products. The NASDAQ composite, the Dow Jones Industrial Average and the S&P 500 were all higher by a bit following the announcement.

The consensus among analysts is that US business will survive the latest signs of a coming trade war as well as they have previous similar threats from the president and from reactions from abroad.

In an interview Randy Frederick, vice president of trading and derivatives at Charles Schwab& Co. Inc said,

“The economy generally is so strong that, despite the challenges of the potential trade war, the strength of the economy is more than offsetting that. Corporations have posted record profits this quarter that we haven’t seen in over a decade.”

There have been warnings, however, from companies such as Coca Cola, General Motors, Caterpillar, Ford and Harley Davidson that the tariffs of 25% already imposed on steel and 10% on aluminum; and previous tariffs on $34 billion of Chinese goods, will have negative consequences on 2018 earnings, and further into the future. Retaliatory tariffs have already been imposed by China and US allies like the European Union, Mexico and Canada. There are also many smaller businesses that have suffered from the tariff policy.

Not everyone is suffering. Many companies have seen higher profits during Q2. Apple’s sales in China flew to 19 percent from March to June. Caesars Entertainment Corp showed an 89.3% increase in profits to $282 million. And even though Caterpillar predicted higher prices, the company’s net income rose 112% during Q2 to $1.7 billion.

These data points are not indicative of anything, since the tariffs will not be imposed until September at the earliest, and their effect will not be manifest until months later. US Business is still fearful of what tariffs will do to their bottom lines:

“We said before that this round of tariffs amounted to doubling down on the recklessness of imposing trade policy that will hurt U.S. families and workers more than they will hurt China. Increasing the size of the tariffs is merely increasing the harm that will be done,” National Retail Federation CEO Matthew Shay said in a statement. “Quite simply, there has been no better example of cutting off one’s nose in order to spite the face.”

Trade War Escalates as Trump Proposes 25% Tariffs on Additional Chinese Goods

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President Donald Trump announced that he will seek 25% tariffs on $200 billion of Chinese goods coming into the United States. The tariff was set to be 10%, but the White House is seeking to increase pressure on China to adhere to fairer trade policies.

On July 10 the administration said it would ask for 10% tariffs on thousands of Chinese products. Those imports include consumer goods such as furniture, dog food and baseball gloves to manufacturing materials like chemicals, steel and aluminum.

Before the tariffs can be imposed the proposal must wind through a period of public comment. The US Trade Commission has set the deadline for such comments to be filed by August 30 with hearings scheduled for August 20-23.

It is expected that a 25% tariff will be greeted with even less enthusiasm than the already beleaguered 10% tariff has been subjected too. It is expected that a 25% tariff will seriously escalate the trade war now already in progress.

Back in July China accused the US of bullying and threatened to hit back with tariffs of its own. Investors are afraid that a full-blown trade war could slow down global growth. Many key US business groups have criticized harshly Trump’s tariff policy.

GM Say Tariffs are Bad for Business and Bad for People

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General Motors explained to the US Commerce Department that broad tariffs such as the

Fábrica de General Motors en Rosario. Photo courtesy Baglieto.

kind the Trump administration is threatening to impose, could “lead to a smaller GM, a reduced presence at home and abroad for this iconic American Company, and risk is less-not more- U.S. jobs.” GM is the country’s largest automaker.

Back in May the Trump administration started an investigation to see if imported vehicles are a threat to U.S. national security. President Trump as many times stated that he would be happy to place a 20 percent import tariff on vehicles.

GM produces some of its cars overseas now for the U.S. market, including in Canada and Mexico. GM warned that tariffs could dampen sales and raise prices. Even if the company decided not to pass on their higher costs to consumers, this “could still lead to less investment, fewer jobs and lower wages for our employees. The carry-on effect of less investment and a smaller workforce could delay breakthrough technologies,” GM said.

The company employees about 110,000 people throughout the United States in 47 manufacturing plants. It purchases tens of billions of dollars’ worth of car parts from US suppliers annually. They have invested more than $22 billion in US manufacturing infrastructure since 2009.

The overbroad and steep application of import tariffs on our trading partners risks isolating U.S. businesses like GM from the global market that helps to preserve and grow our strength here at home,” GM said.

Also filing comments in opposition to the Tariffs was Toyota Motor Corp. They said that tariffs would, “threaten U.S. manufacturing, jobs, exports, and economic prosperity.”