Attention Walmart shoppers: Better stock up now because some big price increases are heading your way. The cold, hard reality of President Donald Trump's tariff battle with China is that American consumers, farmers and workers in export-related jobs will be the ones footing the bill. And the effects of the trade war promise to ripple throughout the economy in negative ways Trump probably never envisioned when he started this war.
China on Monday announced plans for retaliatory tariffs that could affect $60 billion worth of American exports, including beer, petroleum products and clothing, after Trump boosted tariffs on Chinese imports last week. The dismal outlook for international trade, coupled with rising military tensions in the Persian Gulf, sent stocks plummeting Monday morning. Where Trump sees so much "winning," investors see looming disaster.
Working-class Americans by now should know better than to believe Trump's grandiose -- and unfounded -- assertions that his trade war has resulted in big gains for the U.S. Treasury. Import tariffs are a tax paid by the companies that import Chinese goods, and those companies have no choice but to pass the tax on to consumers.
Blue-collar supporters in Trump's base must be scratching their heads these days, wondering exactly when they'll start to see the payoff for voting him into office. Farmers are so financially stressed from the China tariffs, a recent survey found that 91% of respondents complain that it is affecting their mental health. Soybean sales to China, by far the Midwest's biggest export customer, have been in steep decline since the trade war began.
Three states that remain staunchly loyal to Trump -- Texas, Oklahoma and Louisiana -- will be particularly hard hit by China's upcoming tariffs on liquefied natural gas.
The harder America's export economy is hit by an inability to compete inside China, the harder it'll be for U.S. employers to keep labor staffing at their currently robust levels. If they start cutting back on production, an economic slowdown wouldn't be far behind.
When consumer prices on a vast array of imported goods from China start to jump higher, the inflationary effects could translate into higher interest rates. Higher rates eventually ripple across real estate markets, possibly even affecting construction jobs.
"Ultimately, tariffs can mean lower wages, fewer employees, deferred investments and higher prices for consumers," writes Karlie Frank of the National Retail Federation. As much as tariffs are sold to the American public as a way to protect American jobs, Frank says, "The reality is quite the opposite: Tariffs are a tax paid by American companies and consumers -- not by the foreign governments targeted by the tariffs."
American jobs hang in the balance as Trump allows ego-driven, broad-brush policy declarations to threaten an otherwise robust economic picture. How, exactly, does this translate into winning?
-- St. Louis Post Dispatch