IfTrumpcontinueshistariffgame,thenmorebusinessesintheUnitedStatesarelikelytobecomecaughtinthecrossfireoftheensuingtradeconflicts
RickKimberly,afarmerinDesMoines,Iowa,saysonMarch27thatheisconsideringadjustinghisfarm’ssoybeanacreageinthewakeoftheChina-U.S.tradewarXINHUAForthoseCaliforniaresidentswholosttheirhomesinrecentwildfires,therecouldbemoretroubleonthewayasU.S.PresidentDonaldTrumpcontinuestowageatradewaronseveralfronts.Trump’stariffsaredrivingupthepriceofimportedtimber,drywall,nailsandotherkeyconstructionmaterialsneededtorebuildhomes,resultinginthecostsofbuildingastandardnewhouseinthestaterisingbyupto$20,000.
ButtheyarenottheonlyvictimsofthetariffsimposedbytheTrumpadministration.Therisingpriceofindustrialmaterialsandcomponentsissqueezingtheprofitsofmanufacturerstoo.Companiestryingtoabsorbthenewfeesareseeingtheirprofitmarginsdepletedandbeingforcedtolayoffworkers.
Businessessuffer
Smallbusinessesaresufferingthemost.DuetoTrump’s25-percentimporttariffsintroducedinJulythatincludeChinesecomponentsfortelevisionandvideoequipment,ElementTVCo.,atelevisionmanufacturerbasedinSouthCarolina,announcedthatitwaslayingoff126workers,thevastmajorityofitsemployees,leavingaworkforceofonlyeightpeopletorunitsplant.
Increasingtradetensionsarealsoplaguingsteelandaluminumconsumersinthecountry.Trump’smovetoimposetariffsonsteelandaluminumismeanttoprotectanindustrythatemploysabout140,000Americansathome.YetthetariffsthemselveshurtafarlargergroupofU.S.workers—the6.5millioninindustriesthatrelyonsteelandaluminum—rangingfromautomakersandaircraftmanufacturerstothesuppliersofbuildingmaterials.
InearlyMarch,theBeerInstitute,anindustrytradegroup,predictedthatthe10-percenttariffonimportedaluminumwouldleadtothelossof20,300jobsatbars,breweriesandalongtheindustrialchaininbetween.Tariffsarebitingbigcompaniestoo,withGeneralMotors,WhirlpoolandFordallperformingworsethanexpectedinthesecondquarterofthisyear.
TheincreasingburdenonmanufacturerswilleventuallytranslateintohigherpricesforAmericanconsumers,especiallythosewithlowerincomes.Moreover,theUnitedStatesisstartingtofindtheretaliationofforeigngovernmentsparticularlytroublesome.
ChinahasannouncedtariffsprimarilyfocusedonagriculturalgoodsimportedfromtheUnitedStates.PanichasspreadamongU.S.farmers,especiallythe300,000insoybeanproduction,whofearthattheywillbearthebruntofChina-U.S.tradetensions.RoughlyonethirdofthesoybeansgrownintheUnitedStates,valuedataround$14billion,aredestinedforChina.ButnowsoybeanfuturepricesareinsharpdeclineandfarmerslooklikelytolosethemassiveChinesemarket.
TheEuropeanUnion’s(EU)retaliatorytariffs,whichtargetmotorcycles,bluejeansandbourbon,havealsotakeneffect.TheEUraiseditstariffsonU.S.motorcyclesfrom6percentto31percent,withlegendarymotorcyclemanufacturerHarley-Davidsononesuchenterprisethathasbeguntofeeltheimpact.TheEU’smovehasledtoapricehikeof$2,200permotorcyclesoldinitsmemberstates,amajorblowtothecompany’ssalesintheEuropeanmarket,whichaccountfor17percentofHarley-Davidson’sglobaltotal.Inresponse,thecompanyhasalreadyrevealedplanstomovesomeofitsproductionoverseastoavoidtheduties.
AvisitortriesoutaHarley-DavidsonmotorcycleataninternationalmotorcycleshowinToronto,Canada,onJanuary9,2016XINHUANowinner
IfTrumpcontinueshistariffgame,thenmorebusinessesintheUnitedStatesarelikelytobecomecaughtinthecrossfireoftheensuingtradeconflicts.AtapublichearingheldbytheOfficeoftheU.S.TradeRepresentativeonJuly24and25,representativesfromvariousindustriesspokeoverwhelminglyagainsthighertariffson$16billionworthofgoodsimportedfromChina.Yetonlyfiveoutofthe284originaltarifflineswerescrappedafterthelistwaspublished.
ChineseexportersarealsosufferinginthefaceofmountingpressuresinceTrumpstartedhistradewar.China’sexportstotheUnitedStatesamountedtoalmost$430billionin2017,makingupnearly20percentofitstotal.HouseholdspendinginChinaisalsosettoriseasmoreretaliatorytariffsareimposedonimportsfromtheUnitedStates.Itisalreadyclearthatincreasingtradetensionssimplyhurtsbothsides.
China,CanadaandtheEUhaveallwarnedthatthistradewarcanyieldnowinner.Still,Trumphasbeenpersistentinunilateralmovesto“protect”theUnitedStatesfromitsclosesttradingpartners.Asabusinessman,hemustknowthateverythingcomesataprice,butheseemsnottocarewhetheritisAmericanpeopleorcompanieswhofootthebill.
JosephBrusuelas,chiefeconomistataccountingfirmRSM,comparedtariffmeasurestokillingatsetseflyonadeskwithananvil:“Youmightkillthefly,butyouusuallyenduptotalingthedeskanddamagingthefloor.”
TheauthorisareporterforChinaPictorialCopyeditedbyLaurenceCoulton
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