Trump ‘Tariffed’ US Into Recession and China War
We’ve now tariffed our way into a [manufacturing] recession in the US & globally, said Peter Boockvar in an exasperated tweet Tuesday.
Boockvar is the chief investment officer of Bleakley Advisory Group and a CNBC contributor.
We’ve now tariffed our way into a mfr’g recession in the US & globally. What’s the strategy now? Using tariffs as the tool to push back against China was a dumb idea & history will not look kind upon the strategy just as it didn’t for Reed Smoot, Willis Hawley & Herbert Hoover.
— Peter Boockvar (@pboockvar) October 1, 2019
The September ISM manufacturing index fell further into contraction at 47.8 vs 49.1 in August and below the estimate of exactly 50.
That is the weakest print since June 2009. New orders were little changed but still below 50 at 47.3. Backlogs fell 1.2 pts to 45.1 and that is the 5th time in a row it’s been below 50.
It’s indeed a perilous economic position we find ourselves in. Starting in January 2018, President Donald Trump has imposed a series of tariffs on some tens of billions of dollars in imports.
Many of these imports come from China, but the Trump tariffs have hit imports from the European Union, Canada, and Mexico as well.
The steel tariffs, for instance, drove up the price of raw steel by 25 percent. That hurts every American manufacturing business that uses steel to make its product.
In many cases, the tariffs don’t even make sense according to Trump’s own login.
Trump’s very first tariffs on solar panels were essentially a bailout for two companies that couldn’t keep prices competitive with Chinese manufacturers: Suniva and SolarWorld Americas.
But get this: while these companies have factories in America, they are foreign-owned companies. Suniva is Chinese, and SolarWorld is German.
Furthermore, the inevitable retaliatory tariffs have been a real bummer for American exporters.
China’s retaliatory tariffs on American agricultural exports hit farmers so hard Trump had to bail them out Or more precisely, American taxpayers had to bail farmers out to the tune of $12 billion.
U.S.-China Trade War?
The direct economic costs of the trade war have been devastating to businesses.
The indirect economic cost is the chilling effect of so much policy uncertainty.
Commerce abhors political chaos and volatile, unpredictable macro swings in supply, demand, and prices.
The trade war explicitly, intentionally creates that kind of unproductive environment.