On the eve of the implementation of United States tariffs against steel and aluminum imports from Canada, Mexico, and the European Union (EU), many political and financial experts are speaking out against the planned sanctions.
According to Tom Donohue, the president and CEO of the Chamber of Commerce, President Donald Trump’s decision to waive the tariff exceptions could potentially lead to the loss of 2.6 million American jobs. Donohue released a statement in a memo on Thursday, citing numerous outside studies to back up his projected data.
The job losses will come from a combination of the negative effects of the strict tariffs as well as a possible withdrawal from NAFTA, the long-standing trade agreement between the US and neighbors Mexico and Canada. The death of NAFTA could lead to the loss of as many as 1.8 million jobs alone.
In addition to today’s announcement that the US will be reinstating tariffs against three of the country’s biggest trade partners, the US is also involved in an escalating trade war with China that shows no signs of peaceful negotiation any time in the near future. Donohue used the memo to warn that tariffs waged against China could cost the US an additional 134,000 jobs plus 470,000 jobs lost to the steel and aluminum tariffs and an extra 157,000 jobs lost due to possible automobile tariffs.
Despite this report, the White House continues to assert that the tariffs will boost domestic industries while punishing other countries for unfair trade practices.
President Trump is playing with economic fire, and he thinks he’s not going to get burned. Last week, the Trump administration sent an economic delegation to China to make a deal. His trade sanctions started an economic sparing match, and that’s not good news for American consumers. The delegation wants China to reduce the trade deficit by $200 billion over the next two years. The trade deficit was $336 billion in 2017. And the U.S. delegation also asked China to stop taking U.S. intellectual property from the U.S. companies who sell that property in China. If China does what Trump wants, he will take away his tariff threat. That threat impacts about $50 billion worth of Chinese goods.
That sounds like an economic hardball at its finest, according to a BusinessInsider.com article. The head of the White House National Trade Council, Peter Navarro, is in charge of the negotiations. Navarro is not as cooperative and he is not as fair when it comes to negotiating as Larry Kudlow, Trump’s top economic advisor. The Chinese rejected Navarro’s offer. According to associate director of the Cato Institute’s Center of Trade Policy Studies, Simon Lester the delegation knew the Chinese would reject a deal like that.
Lester thinks the Trump administration is putting on a show so the Chinese will turn down the offer and Trump will enforce his tariff plan. There’s a big difference between what China will do and what the U.S. wants from China. And the Chinese are not backing down. A trade war with China will fuel inflation in the U.S., according to some economists and U.S. consumers will pay a heavy price for wanting to buy China products that other countries can’t produce.
Major financial officials in Asia are nervously watching recent trade tension between China and the United States brought on by President Donald Trumps proposal to levy stiff tariffs on Chinese exports.
If the Chinese economy ends up being negatively affected by a trade war with the U.S., China’s trading partners in developing Asian countries may also suffer. That’s why global economic analysts will be closely watching a meeting between U.S. and China negotiators in Beijing this week.
The major players in the meeting will be U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He. They will discuss an array of trade issues including what to do about tariffs. President Trump has made a significant issue about the U.S. trade imbalance with China.
Another factor that has China and many Asian countries on edge is the possibility of interest rate hikes in the U.S. by the Federal Reserve. Indonesian Finance Minister Sri Mulyani Indrawati said that higher interest rates in America ripple across the world with a “domino effect.”
U.S. Commerce Secretary Wilbur Ross will also play a major role at the Beijing meeting. He has made a point to lower expectations for any kind of major deal. Chinese officials have already been drawing some definite lines in the sand. For example, one Chinese minister said that his country “will not negotiate away its core interests” and will not accept “preconditions on issues.”
If the new U.S. tariffs get a green light from the White House, they will take effect in June after a 60-day consultation period.