Donald Trump started an ill-advised trade war, inexplicably taking aim at our allies like Canada and Germany while also escalating tensions with China. From the beginning, experts warned the Trump administration they were wading into very dangerous economic waters. From NBC News in early March:
“The losers are plentiful, and there are actually way more losers than winners. The issue is that we’re not just talking about finished steel, but we’re talking about entire industries that use semi-finished steel to add value,” said Monica de Bolle, senior fellow at the Peterson Institute for International Economics.
The tariffs were predicted to ripple through industries small and large. From mom and pop companies to giants like Boeing.
The range of products incorporating these materials, either directly or somewhere along the supply chain, means consumer-facing sectors of the economy could be hit especially hard, said Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation.
“The other thing to remember for retailers is that it’s not just the products we sell, but it’s all of the equipment — between the buildings, the racks in the stores, the rebars in the distribution centers, the forklifts in the warehouse.”
The upshot, he said, could be lost jobs for workers and higher prices for customers.
Fast forward three months and the backlash to the tariffs are starting to take hold. Korean companies LG and Samsung tried to get out in front of it by announcing plans to manufacture in the U.S. But, as noted by the Washington Post, those jobs are being supplemented by a flood of tax credits. Real tariff consequences are unfolding as pricing for products like new washers and dryers have begun to spike, up 17% already. From the Washington Post:
When you aggregate all those price increases across the 10 million washers sold annually in the United States, consumers will collectively pay hundreds of thousands of dollars per year for each job supposedly created or saved. Which is many multiples of what factory workers typically earn.
And it’s not even clear how safe their jobs are at this point, given the rest of Trump’s trade agenda. After all, his tariffs didn’t stop with washing machines.Those metal tariffs have left steel prices more than 50 percent higher in the United States than they are in China or Europe. This is bad news for U.S. companies that purchase steel — including to manufacture washing machines, which are essentially big steel boxes.
Small business owner Bill Adler explain to WaPo how devastating the tariffs have already been on his business, with prices jumping 25-50% higher than what they were just six months ago. While he praised the Republican tax cuts, he warns the tariffs will be extremely damaging. Adler says a 2002 tariff from the Bush administration had similar negative effects.
Meanwhile, auto industry experts are warning the tariffs will have dire consequences on the auto industry and U.S. jobs. As noted in this explainer video from the Financial Post, experts warn an estimated 195,000 U.S. jobs could be lost.
If you don’t have one already, today is a good day to start a “rainy day” fund. Because the forecast looks ominous.