Free Minds & Free Markets

As Warning Signs Flash, Trump Again Escalates Trade War With China

Another $16 billion in Chinese good are facing tariffs, but Trump wants more. Meanwhile, more signs say the trade war will slow economic growth.

VNA Xinhua News Agency/NewscomVNA Xinhua News Agency/NewscomAmid warnings from economists and his own political base, President Donald Trump is pressing forward with a misguided trade war.

The White House on Thursday announced a new round of 25 percent tariffs on $16 billion of Chinese imports, and China immediately responded with more tariffs on American goods and another threat to drag the Trump administration before the World Trade Organization for violating global trade deals. The newest round of American tariffs will target motorcycles, railroad equipment, plastics, and various electrical components, among other things—the full list is 10-pages long.

Following an earlier round of tariffs that targeted $34 billion worth of Chinese imports, the Trump administration has now saddled American consumers with new taxes on $50 billion of imported goods.

The Trump administration has promised that these tariffs—which are legally and logistically separate from the tariffs on steel and aluminum imports—will force China to stop engaging in unfair trade practices and bring an end to the theft of American intellectual property. There is, so far, little indication that the tariffs are doing either of those things, but there is growing concern about how the escalating trade war will reshape the American economy.

Further escalation could have "consequential downside risk" to the economy, members of Federal Reserve warned in a statement issued Wednesday. If the White House continues to raise trade barriers, the purchasing power of U.S. households will be reduced, the officials said, according to a report from Agence France-Presse.

Meanwhile, a Reuters poll of more than 100 economists shows that most of them expect economic growth to slow over the next two quarters as the boost created by last year's tax cuts fades and Americans begin to feel the costs of the tariffs. While the U.S. economy grew by 4.1 percent in the second quarter of this year, the Reuters poll found that most economists believe growth will slow to three percent in third quarter and fall below that mark by the end of the year.

"While Trump has said these trade tariffs will benefit the U.S. economy, no economist polled by Reuters shared that view," the news service reported.

But it looks like this week's escalation of the trade war could soon be overshadowed by a much larger deployment of tariffs. The Office of the U.S. Trade Representative, which is responsible for the China-specific tariffs (but not the steel and aluminum tariffs, which are handled by the Commerce Department), is in the midst of six days of hearings about the prospect of raising import taxes on an additional $200 billion worth of Chinese goods. Representatives from more than 300 companies are scheduled to testify at those hearings. As has been the case at nearly trade-related hearing in previous months, the responses will likely been overwhelmingly negative.

Unlike the first two sets of tariffs targeting Chinese goods, this new proposal would hit thousands of consumer items, including parts for computers and phones, furniture, clothing, and luggage. If approved, the U.S. consumers would be paying new taxes on a total of $250 billion worth of Chinese items—roughly equal to half of all China-to-U.S. trade last year.

That means lots of Americans could soon feel the same sting of tariffs that farmers and manufacturers have already been dealing with.

"The Trump administration has attempted to limit the application of tariffs to manufacturing goods, so it's really masked the impact on consumers even though it raises the costs for inputs to American manufacturers and service providers, that will ultimately be felt by the consumers," Jake Colvin, a vice president at the National Foreign Trade Council and one of the people who testified at this week's tariff hearings, told NPR's David Greene.

Colvin projects that further tariffs will raise prices on everything from apple juice to air conditioners, and video game consoles to bicycles. Eventually, the combination of higher prices for consumer goods, mounting job losses in tariff-affected industries, and slower economic growth should create political push-back against the Trump administration's trade war. An NBC/Marist poll of Texas voters released this week shows that 40 percent believe tariffs will hurt the economy while only 31 percent say they will protect jobs. The needle will continue to shift in toward hurt as long as Trump stays on his current course.

"If you're going to impose tariffs on $200 billion worth of goods," Colvin told NPR, "You can't avoid harm to U.S. consumers."

Photo Credit: VNA Xinhua News Agency/Newscom

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  • loveconstitution1789||

    Any word on how the EU and Chinese economies are doing or what when their governments plan to cave some more?

  • Just Say'n||

    The Chinese and EU will inevitably have to give some concessions, but you're going to inflict a lot of damage to the domestic economy before you reach that point. Or, the Chinese and Europeans may try to hold out on concessions thinking that the current trade position is not politically palatable in the US. You never know how it will shake out. And that's the risk.

  • Echospinner||

    It is easy to take risks when you are playing with other people's money.

    Take a high powered economy and stock market we all built with our own labor and treat it like your personal game board.

    Scary stuff.

  • loveconstitution1789||

    Yeah, all those trade restrictions pre-Trump were stealing from Americans.

    Good think Trump offered free trade that our trading partners refused.

  • DiegoF||

    And that's assuming Trump's tariffs are entirely strategic. Ken seems to think that, at least with China, they are not. And that certainly seems plausible.

  • Juice||

    Any word on how the EU and Chinese economies are doing

    The EU economy is stagnant as fuck and has been for a long time. Would you like France levels of unemployment permanently? It's currently pushing 9% down from over 10% just a couple of years ago. Ten years ago those were crisis level in the US, but it's totally normal for France.

  • Oli||

  • Juice||

    2% "growth" with what level of inflation? 2%? That's stagnation.

  • Happy Chandler||

    Germany is at 3.4% unemployment and a budget surplus.
    Both the Yuan and Euro are about 9% weaker than before the tariffs started, just about fully cancelling out the aluminum tariffs and more than a third of the steel tariffs.

  • loveconstitution1789||

    All France has to do it lower trade restrictions.

  • Cathy L||

    Ken Shultz hardest hit.

  • Elilis Wyatt||

    ^ (LOL)

  • Dillinger||

    "Participants observed" what?

  • JeremyR||

    Every articles says something like this, consumers will soon notice the tariffs, but so far, nope.

  • I'm Not Sure||

    "It is definitely pushing us to make a purchase even though our washer hasn't completed died," said Collin Webster...

    Tariffs drive consumers to buy big items before prices hike

    I guess it depends on what you mean by "notice".

  • Dillinger||

    but Collin Webster is stupid.

  • ||

    consumers will soon notice the tariffs, but so far, nope

    On the shelf at Wallmart? Not yet.

    In construction (where I work)? Yes, we're already paying.

  • MWG||

    I work in manufacturing and we're already feeling the pain as well.

  • ||

    It's almost like it takes a little while for the premium on raw materials to work its way up the supply chain.

  • MWG||

    The unfortunate thing is that by the time the full effects of the tariffs are really felt, too much time will have passed for the average consumer to tie the higher prices back to the tariffs, complex systems/economies being what they are.

  • ||

    That's probably true. And by the time the effects ripple through the whole economy, they won't be quite nearly so drastic.

    On the front lines, however, we're taking five-digit hits on steel prices, with the caveat that you can't really trust people in construction to always tell the truth about why they deserve more money.

  • loveconstitution1789||

    Its almost like the Lefties make up anecdotes that are untrue.

  • gclancy51||


  • DiegoF||

    It took a protectionist Republican taking over for the press to finally pay some attention to workers and businesses hurt by trade restrictions. You had to search long and hard to find such a piece on the news every few years. Now they can't get enough of them. I guess this is a silver lining.

    It's going to be interesting to see how this interacts with the much-ballyhooed left-populism that is supposedly rising as a force nowadays. It's another reason I think the future will actually belong to Jiffy-Pop radicals like Gillibrand and Booker. Certainly someone like Sanders, famously maladroit and uncomfortable speaking the language of the true center of the rising radical influence--identity politics, not economic antiestablishmentarianism--or someone cut from similar cloth, will not do nearly as well as a standard-issue Democrat opportunist making the comparatively superficial necessary flavor-of-the-month shifts. One of the new mainstream Dem consensus's biggest problems will be that they seem to have genuinely convinced themselves that single-payer can be isolated and assimilated into the neoliberal social consensus, just because it has thoroughly been done so in the other industrialized countries.

  • Juice||

    OMG I hope you're right. I hope Trump gives protectionism a bad name. Anyone who tries it in the future will be seen as acting Trump-like. Of course, the media has absolutely no memory when it comes to shit like that, so of course they'll forget everything they said about it once the president changes.

  • ||

    "President Booker's tariff proposals, unlike Trump's, are carefully thought through, and will target the most effective industries with surgical precision."

  • DesigNate||

    You can guarantee that will be a headline one day, maybe with just a different name.

  • NotAnotherSkippy||

    "After Years of Trickle Down Trade, Trade Justice"

  • MWG||

    Did you ever imagine 'protectionism' would actually be a hotly debated topic among the commentariat with anyone other than Tony and other resident democrats/leftists?

  • Rev. Arthur L. Kirkland||

    Those who recognized that the commentariat featured plenty of poorly educated, authoritarian, bigoted, disaffected right-wingers posing as libertarians found it predictable, let alone imaginable, that conservatives' know-nothing protectionism would become popular in these threads. .

    Does anyone know where the libertarians -- who apparently were run off by the white nationalists, faux libertarians, intolerant conservatives, and superstitious zealots began to dominate the conversation here at the expense of libertarianism -- went when they left A little genuine libertarianism would be a welcome respite.

  • Echospinner||

  • Chipper Morning Baculum||

  • Leo Kovalensky II||

    Most misleading headline... Probably ever.

  • Rev. Arthur L. Kirkland||

    I hope most trading partners are patient and perspicacious enough to figure America will clear aside its uninformed, poorly educated, authoritarian, protectionist goobers soon enough.

  • Mithrandir||

    There are a ton of uninformed, poorly educated, and authoritarian assholes in the United States, and many of them aren't "goobers". Our electorate is pretty fucking stupid. Good luck "clearing out" a significant portion of the population.

  • DiegoF||

    Does someone actually have a rigorous definition of "goober," as used on HnR? I had always assumed something to the intended effect that

    uninformed, poorly educated, and authoritarian asshole in the United States - goober = 0!!!

  • Aloysious||

    The important question remains: is zero a number?

  • loveconstitution1789||

    Kirkland does want America destroyed, so this makes perfect sense.

  • gclancy51||

    As much as you want to destroy your economy because...lefties?

    Damn, you're the stupidest commenter on this site.

  • Tony||

    Luckily when the economy takes a hard south turn, Trump will have all the crime and impeachment talk to distract us.

  • loveconstitution1789||

    Luckily when the economy gets even stronger and stronger, the media still wont cover it and we will have our Lefty tears from their loses in election 2018 to make us laugh.

  • Elilis Wyatt||

    What are you high on?
    Who's your dealer?
    How do I contact him or her?

  • loveconstitution1789||

    MAGA. Its a little America, a little American, and a little sweet revenge.

  • Rev. Arthur L. Kirkland||

    MAGA: My Attorney Got Arrested!

    MAGA: My Advisors Going Away!

    MAGA: My Associates Getting Allocutions!

  • Elilis Wyatt||

    So THAT'S what it means!

  • loveconstitution1789||

    Hihn is back boys and girls.

  • Elilis Wyatt||

    Luckily, Trump's base is leading him off a cliff.

  • loveconstitution1789||

    Trump. Best president in over 100 years.

  • loveconstitution1789||

    Hihn is back boys and girls.

  • NoVaNick||

    Protectionism sounds great until they run out of cheap crap at Walmart

  • NoVaNick||

    Just hoping my car doesn't die until after these tariffs are revoked. In the meantime, used car prices will spike because many people will be priced out of buying a new one, kind of like how rent goes up when house prices get too expensive.

  • JD3||

    "Good" or "goods"?

    Just sayins

  • Clever Mosaics||

    So hate about the trade war, my peel and stick tiles business is going down thank to the Mr. Trumgou

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