On June 30th, the People’s Daily overseas edition reported that the Trump administration was waving a tariff stick, and the United States itself had already suffered "casualties": unemployed people, companies that had cut production and were about to stop production, and large companies that transferred some production outside the United States … All these made Trump very angry. Holding high the banner of "America first" and making great efforts to protect American companies, however, the protected people are obviously ungrateful. Can the differences at the decision-making level, the pressure from the American people and the appeals from all over the world make the Trump administration change its mind?
"backyard fire"
Trump is angry. The direct cause is the decision of Harley-Davidson, an American motorcycle manufacturer.
After the United States imposed retaliatory tariffs on the EU, the EU offered countermeasures. Among them, the tariff on motorcycles imported from the United States was raised from 6% to 31% on June 22. On June 25th, Harley-Davidson announced that this move would increase the company’s annual cost by 90 million to 100 million dollars. Therefore, the brand plans to move some motorcycle production lines out of the United States. On the same day, the market value of the five major technology giants in the United States evaporated by more than 80 billion US dollars, causing a "stock market bloody case".
The largest steel nail manufacturer in the United States is also hanging. Midland Nail Company, located in Missouri, recently laid off 60 of its 500 employees because the steel import tariff increased by 25%, which led to higher costs. After the company raised the price to cope with the rising steel price, the order was reduced by 50%. These unemployed employees were called "the first casualties" of Trump trade war by Washington post.
A spokesman for the company said on June 26 that unless the federal government exempts imported steel from high tariffs, the company may stop production before Labor Day in September. The spokesman told CNN that the company was "on the verge of disappearing". Another possibility is to move to Mexico, because most steel raw materials come from Mexico. There, it can buy steel without tariffs, and then export the finished nails to the United States without tariffs.
The American business community is worried that what happened to the nail factory in Central China is just the tip of the iceberg. The American Chamber of Commerce estimates that 2.6 million jobs in the United States are at risk because of the Trump administration’s tough trade policy. Moody’s, a research firm, estimates that 2.4 million jobs may be laid off.
Worry is spreading. Strategists at ING pointed out that tit-for-tat tariff escalation has led to the deterioration of the US economic prospects, and the US dollar may lose its status as a safe haven currency. Bostic, president of the Federal Reserve Bank of Atlanta, said that if the situation of trade disputes worsens, he may rule out the possibility of raising interest rates for the fourth time this year.
"self-defeating"
The analysis pointed out that in several trade wars launched in the United States at the same time, each side retaliated against the United States. Originally, it was just a war of words, but it has caused unexpected consequences.
For example, Oreshkin, Russian Minister of Economic Development, said that cars and American road-building equipment imported from the United States may become the target of Russian tariff increase. Canada decided to impose retaliatory tariffs on American goods with a total value of about $12.8 billion from July 1. In early June, Mexico imposed a tariff with the highest tax rate of 25% on some American goods. India also announced that the import tariff on chickpeas produced in the United States will be raised to 70% from August 4, and the tariffs on other American imports will also be raised. Turkey has imposed a total tariff of 267 million US dollars on 22 kinds of goods imported from the United States since June 21st.
Bowen, a senior researcher at the Peterson Institute for International Economics, said that the tariff trade war initiated by the United States is "easily self-defeating". He also said, "Like Harley’s corporate behavior this time, as long as Trump mentions tariff increases again, American companies will follow suit."
Some experts said that as the first "Made in America" to leave, the Harley incident indicates that the Trump administration’s economic policy and trade policy have sent a failure signal and will bring a series of chain reactions. At present, the energy, agriculture and manufacturing industries in the United States are suffering. As more and more countries such as the European Union, China, Indian, Turkish and Mexican countries impose retaliatory tariffs on American products, the White House may see more "Made in America" leaving home. If it wants to impose unprecedented high taxes on American enterprises that have left and start the "doomsday" procedure, there is no doubt that "trade terrorism" will first make its own family swallow the consequences.
The New York Times pointed out that Trump’s trade war affected the entire American economy, and it was difficult for American enterprises to get rid of the numerous tariffs imposed at home and abroad. Trump claimed that the trade policy he advocated was aimed at reviving the American manufacturing industry, but Harley’s trend showed that Trump’s trade war ignored the dependence of American enterprises on the world raw materials and production and marketing markets, which would make the American economy "catch fire in the backyard".
Sudden pressure increase
In the United States, the Trump administration began to face increasing pressure.
American industry strongly criticized the Trump administration’s new tariff policy. The Financial Times reported that world steel association and two of its member companies filed a lawsuit in the US International Trade Court on June 27th, arguing that the "Article 232" on which the Trump administration imposed a 25% tariff on imported steel products was unconstitutional, and asked the court to order the suspension of the above-mentioned steel tariffs.
In terms of automobile tariffs, Trump has also been opposed by several automobile manufacturer organizations. According to the American Automobile Manufacturers Union, the 25% tariff will make buyers pay an extra $5,800 when buying a new car, and consumers in the United States will pay nearly $45 billion in automobile tariffs.
Republican lawmakers in Congress who are in favor of free trade, with the support of the US Department of Commerce and other business groups, are working hard to strictly limit President Trump’s right to further impose tariffs from the legal level.
Utah Senator orrin hatch, the chairman of the Senate Finance Committee in charge of trade policy, said that he planned to promote independent legislation, and the focus would be on Section 232 adopted by Trump to impose tariffs on steel and aluminum on trading allies this year, so as to solve the concerns of lawmakers about Trump’s imposition of new tariffs.
Bob Corker, a senior Republican senator from Tennessee and chairman of the Senate Foreign Relations Committee, said that he would try to propose at the Senate meeting that a farm bill be added to restrict the president’s power, stipulating that the president would be subject to congressional review when imposing tariffs on national security grounds.
In addition, on June 26, more than 270 national and local commercial organizations in the United States issued a joint letter calling on Congress to pass legislation to restrict the power of US President Trump to impose tariffs on national security grounds.
The outside world is increasingly worried that Trump’s trade war practice may bite the industries and the overall economy of the United States. Such concerns have now overshadowed the optimism that the massive tax cuts passed at the end of last year will boost the economy.
Do you want to carry out the trade war to the end? Trump needs to think seriously.
(The original title is "Provoking a Trade War, the United States has been injured")