President Donald Trump’s trade war economy is tanking, with growth rates sinking into Obama-era levels and the U.S. stock market in a nosedive.
The nation’s economy was growing by little more than 2.1 percent in the second quarter, levels reminiscent of former President Obama’s lackluster economy. U.S. core inflation has hit a six-month high. And there is growing talk of a recession.
And Trump, after suggesting a brief pause in his tariff tax increases on China’s imports, says he will soon slap 10 percent tariffs on $300 billion of Chinese goods.
Business associations across the country say Trump’s tariffs are hurting the economy. Farmers, especially, are hit hard. Consumers, too, are paying more as the tariffs drive up prices.
“The U.S. and global economies are headed for a downturn unless President Trump backs away from his latest tariff threat,” writes Mark Zandi of Moody’s Analytics.
According to noted economics columnist Robert J. Samuelson of The Washington Post, Zandi estimates the combination of higher tariffs, higher prices and other factors have already cost nearly 300,000 U.S. jobs.
In his Post column Monday, Samuelson points out the most striking characteristic of Trump’s presidency, something you don’t hear much about on the nightly news shows: “Trump’s approval ratings have stubbornly remained well below 50 percent. Typically, they’ve hovered in the high 30s and and the low 40s.”
A Washington Post-ABC News poll taken in late June and early July showed Trump’s overall approval rating at 44 percent, but his disapproval at 53 percent. This poll, however, showed approval of his economic stewardship at 51, with 42 percent disapproving.
While Samuelson observes most economists “aren’t yet predicting a recession,” he thinks they are “drifting in that direction.” Joel Prakken of IHS Markit has economic models that place the odds of a recession within a year at 1-in-3.
Trump keeps defining the tariffs on imports as a win-win for the U.S., repeating his claim they are raking in billions for the U.S. But U.S. economists do not see it that way.
A Post analysis by Jonnelle Marte, headlined “Workers will suffer in long trade war,” makes clear consumers are the ones who will pay the tariffs.
“The tariffs could cost the average household another $650 a year, according to estimates from Kathy Bostjancic, chief U.S. financial economist for Oxford Economics,” Marte writes. “And the larger price tags could compel people to cut back on spending or make it tougher for them to pay their bills,” Bostjancic said.
Meantime, economists like Peter Morici at the University of Maryland are pointing out how Trump’s trade war has hurt U.S. exports.
“Multinationals are divorcing supply chains from China. Despite the promises of Trump trade adviser Peter Navarro, factories have moved to Asian locations, not America. Consequently, American businesses are investing their tax cut money abroad and U.S. imports of manufacturers are shifting their origins rather than creating new jobs here,” Morici writes in his weekly column.
“Meanwhile, Chinese retaliation has pushed down U.S. exports,” he explains. “Chinese companies are investing in indigenous technologies. The net effect is an even bigger trade deficit that drags on good-paying jobs in the U.S., more dollars for high-tech innovation in China and fewer in the United States.”
Trying to micromanage the global economy by taxing it is a fool’s errand. America grew its way into the world’s largest economy by selling its inventions and other goods to the world.
It’s called free trade and employs millions of Americans. Someone in Washington needs to explain this to Trump.