Donald Trump’s trade policy has not delivered the results he promised. Even worse, it is hurting Americans.
Trump’s tariffs have raised the cost of imported components and they’ve put pressure on corporate profit margins that are likely to cause job loss, slower wage growth and decreased consumer spending (which makes up 72% of GDP.) Many sectors are hurting from dropping sales, and China is now adjusting by replacing American imports with goods coming from other countries.
Manufacturers for many Federal Reserve districts are reporting higher prices, major supply chain disruptions and decreasing margins attributable to Donald Trump’s terrible trade policies. Tariffs are hurting businesses and job growth, they’re causing job loss, and the tariffs are incentivizing companies to move their production offshore.
American manufacturers that use Chinese parts subject to tariffs are hurt because Chinese-made finished products with the same components can avoid U.S. tariffs and therefore are far less expensive.
The Tax Foundation has estimated that if all the terrible tariffs announced by June 22 were completely enacted, the U.S. GDP would drop by 0.59% ($148 billion), American wages would drop by 0.38% and employment would drop by 459,816 workers. Forbes recently concluded that should China and other countries decide to retaliate with tariffs against U.S. goods, output in all countries will drop and global GDP will contract.
Trump’s tariffs aren’t hurting the Chinese nearly enough for them to give in. The damage to China’s growth may be from 2% to 3.4% of exports, and 0.3% to 0.5% of nominal GDP. Many Chinese companies are moving production to countries such as Vietnam, Serbia and even Mexico to avoid Trump’s foolish tariffs.
Trump is not shrinking the American trade deficit with China or even globally as he foolishly promised. The 9-month China trade surplus against the U.S. is currently $225.79 billion, up 15% from the same time last year. Those deficits are projected to grow, spurred by both domestic demand and a very strong dollar. China’s trade surplus by month hit a record of $34.1 billion back in September, up from the $31.05 billion surplus from August.
More danger is waiting. Trump is an ignorant bully, not a statesman, and he is taking opposition personally and seeking revenge against those who oppose his terrible policies.