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Uncertainty from Trade War ‘Has Eroded Business Confidence

Good afternoon – 

Growth slowed in the third quarter, with the numbers showing tariffs and the uncertainty created by the trade war have caused business investment to contract. Diane Swonk, chief economist at Grant Thornton best summed up the news, saying:

“Businesses don’t know where to place their bets and don’t know where to invest when they don’t know where the next tariffs are going to come from. That’s been one of the biggest weights on the U.S. economy.”

Small business owners, other analysts and experts agree:

“As business owners, we’re all a little bit scared of tariffs. China is a huge part of the global economy and the only place where some parts can be made.”

Grady Cope, President of Reata Engineering

“President Trump’s trade war is doing significant damage to the economy.”

Mark Zandi, Chief Economist At Moody’s Analytics

“The Trump Administration’s trade war with China has eroded business confidence, contributing to the second straight quarterly contraction in business investment.” 

Reuters

“Rattled by the uncertainty of Trump’s trade wars and a global economic slowdown, business investments tumbled the most in nearly four years, according to the report.” 

 Agence France-Presse

“The White House’s aggressive trade tactics, especially the back-and-forth tariff battle with China, have been a drag on business sentiment, with executives expressing concern in surveys and earnings calls.”

CNBC

“The trade deficit, which has widened as Chinese retaliatory tariffs have hurt farm sales, trimmed GDP growth by about 0.1 percentage-point in the third quarter.”

Associated Press

“The festering trade war with China has disrupted supply lines, raised raw material costs, hurt exports and made companies hesitant to spend.”

MarketWatch

And, as Moody’s chief economist Mark Zandi points out, President Trump isn’t doing himself any favors either:

“So ironically, the president’s trade war is doing the most damage to the economies of those states that will matter most to his reelection bid.”


If you are interested in speaking with a company that has been impacted by tariffs and the trade war, please don’t hesitate to reach out. 

UPDATED: Americans for Free Trade: Mini Trade Deal with China a ‘Positive Step Forward,’ But ‘A Final Deal That Removes All Tariffs’ Still Needed

WASHINGTON, October 11, 2019 – Americans for Free Trade released the following statement from spokesperson Jonathan Gold after the United States and China reported progress in trade negotiations and announced a partial deal to de-escalate the trade war.

“The progress made today is a positive step forward, and we are encouraged by the President delaying the anticipated tariff increase in October. We hope the news today demonstrates a renewed focus on ending the trade war and removing all tariffs. However, until tariffs are completely repealed, American businesses, farmers and consumers – not China – will continue paying the price of this trade war. We strongly encourage the Trump Administration to continue negotiating with China and come to a final deal that removes all tariffs as quickly as possible.”

Americans for Free Trade is a coalition of more than 150 associations from every sector of the economy that are united in the fight against tariffs.

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Americans for Free Trade: ‘There Is a Lot at Stake’ in Upcoming Trade Negotiations

WASHINGTON, October 9, 2019 – As a delegation from China heads to Washington tomorrow to resume trade negotiations, Americans for Free Trade, a coalition of more than 150 associations from every sector of the U.S. economy, has released the following statement from spokesman Jonathan Gold.

“As trade negotiations resume in Washington, there is a lot at stake for the U.S. economy. We are more than a year into this trade war, and so far all we’ve seen is fewer American jobs, slower economic growth, significant uncertainty and rising costs for businesses of all sizes. China must be held accountable, but we cannot afford to continue down this path. We urge the administration to come to the negotiating table ready to make a deal, and if necessary, look for new tools to rein in China’s trade abuses by working with our allies. It’s time to put a stop to job-killing tariffs.”

The impact of the trade war and the immediate need for these negotiations to be successful was on full display today as a lumber mill in Washington state announced it will close its doors and lay off the mill’s 70 workers because of the trade war. This news follows a recent Wall Street Journal story that highlighted the terrible impact the trade war was having on the lumber industry. In addition, the American economy has seen a wave of bad news related to the trade war, including:

  • “Tariffs are expected to cost American households up to $1000 a year.” (Yahoo! Finance, 9/20/19)
  • “Escalating trade tensions with China undermined consumer confidence in September, underscoring the dangers of a conflict that has harmed key business sectors such as manufacturing and farming and poses a threat to a record U.S. economic expansion. The consumer confidence index fell to a three-month low of 125.1 this month from 134.2 in August, the privately run Conference Board said Tuesday.” (MarketWatch, 9/24/19)
  • “In the surest sign yet that the trade war is hurting the American economy, manufacturing activity contracted for the second month in a row in September, falling to a level not seen in 10 years.” (CNN Business, 10/01/19)
  • “ISM at 47.8 is bad but new export orders at 41 is even worse … There is no end in sight to this slowdown, the recession risk is real.” (Fox Business, 10/01/19)
  • “Forecasting firm Moody’s Analytics estimates that Trump’s trade war with China has already reduced U.S. employment by 300,000 jobs, compared with likely employment levels absent the trade war.” (Yahoo! Finance, 9/10/19)
  • “Consumers slowed spending and businesses cut back on investment in August, signs that a wobbling global economy and rising tariffs are sapping U.S. economic momentum.” (Wall Street Journal, 9/27/19)

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Latest Economic Numbers Another Indicator of Tariffs’ Harmful Impact on American Economy

Americans for Free Trade, a coalition of more than 150 businesses and associations, has released the following statement after the U.S. economy added a lower than expected 136,000 jobs in September, according to the Bureau of Labor and Statistics. Economists say job creation would have been more robust without the U.S.-China tariffs.

“Uncertainty caused by trade continues to threaten the economic expansion we’ve seen over the last few years. Trump’s tariffs have cost 300,000 American jobs, led to the worst manufacturing numbers in a decade and driven thousands of farmers into bankruptcy. American workers have a lot at stake as trade talks resume next week. Americans need a real solution that holds China accountable and ends these harmful tariffs.” – Jonathan Gold, Americans for Free Trade spokesperson

BACKGROUND

Manufacturing Declines For Second Month In A Row To Lowest Level In Ten Years. “In the surest sign yet that the trade war is hurting the American economy, manufacturing activity contracted for the second month in a row in September, falling to a level not seen in 10 years.” (Anneken Tappe, “America’s factories just suffered their worst month in a decade”, CNN Business, 10/01/19)

Consumer Spending In August Show Signs That “Rising Tariffs Are Sapping US Economic Momentum.” “Consumers slowed spending and businesses cut back on investment in August, signs that a wobbling global economy and rising tariffs are sapping U.S. economic momentum.” (Sarah Chaney & Paul Kiernan, “Global Slowdown Spreads Across U.S. Economy,” Wall Street Journal, 9/27/19)

Trade War Causes Consumer Confidence Index To Fall To A Three-Month Low In September. “Escalating trade tensions with China undermined consumer confidence in September, underscoring the dangers of a conflict that has harmed key business sectors such as manufacturing and farming and poses a threat to a record U.S. economic expansion. The consumer confidence index fell to a three-month low of 125.1 this month from 134.2 in August, the privately run Conference Board said Tuesday.” (Jeffry Bartash, “U.S. consumer confidence sinks to 3-month low on trade worries, softer jobs market,” MarketWatch, 9/24/19)

As Of September, Trade War Has Killed 300,000 Jobs. “Forecasting firm Moody’s Analytics estimates that Trump’s trade war with China has already reduced U.S. employment by 300,000 jobs, compared with likely employment levels absent the trade war. That’s a combination of jobs eliminated by firms struggling with tariffs and other elements of the trade war, and jobs that would have been created but haven’t because of reduced economic activity.” (Rick Newman, “Trump’s trade war has killed 300,000 jobs,” Yahoo! Finance, 9/10/19)

Trade War Has Triggered A Global Manufacturing Recession. “The trade tensions have rattled financial markets and triggered a global manufacturing recession. The trade-driven downturn in manufacturing is threatening the longest U.S. economic expansion in history.” (Lucia Mutikani, “U.S. trade deficit shrinks, gap with China remains elevated,” Reuters, 9/4/19)

Response to President Trump Blaming American Companies Hurt by His Trade War

Americans for Free Trade, a coalition of business organizations from every sector of the U.S. economy, issued the following statement today after President Trump blamed Americans companies hurt by his trade war. The tweet from the President came one day after Americans for Free Trade sent a letter signed by over 160 of America’s leading business associations calling on him to postpone upcoming tariff increases.

“Tariffs are taxes that cost American jobs and hurt consumers, creating a problem for the entire U.S. economy. The fact that companies find extra taxes as high as 30 percent challenging is not an excuse, it’s an economic reality. Unfortunately, small businesses on Main Street are the ones that are really suffering – many have slowed hiring or laid off employees and some will even be forced to close their doors. At the same time, farmers across the country are losing income every day as this trade war threatens their entire livelihoods.”

Over 160 Business Associations Implore President Trump to Delay Tariff Increases that ‘Come at the Worst Possible Time’

(WASHINGTON) – Americans for Free Trade, a coalition of over 160 business organizations from every sector of the U.S. economy, today sent a letter to President Trump calling on him to postpone tariff increases scheduled to take effect starting next week. In the letter, the associations note that the proposed tariff increases come in the middle of the holiday shipping season, threatening to raise costs for consumers in the coming months.

“These tariff rate increases — some starting as early as Sunday — come at the worst possible time, right in the middle of the busy holiday shipping period,” the letter states. “U.S. consumers are driving the growth of the U.S. economy. Let’s ensure consumer confidence remains high and economic prosperity continues for the American families we serve and the American workers we employ every day.”

Americans for Free Trade, which unites business associations opposed to tariffs, represents many of the sectors and products that will be hit hardest by the recent trade war escalation. Beginning September 1, roughly $112 billion in goods will be hit by 15 percent tariffs, including on products ranging from apparel and footwear to televisions and Christmas decorations. The majority of apparel products (92 percent), footwear (52.5 percent) and home textile products (68.4 percent) from “List 4” will be subject to tariffs on the September 1 round, along with televisions and Christmas decorations. Additional 15 percent tariffs targeting $160 billion in imports will take effect December 15.

The full text of the letter sent today: View all signers HERE

ICYMI: Business Groups Warn Administration to Avoid Tariff Increase

National Retail Federation 

“Tariffs are taxes paid by American businesses and consumers, not by China. A sudden tariff increase with less than a week’s notice would severely disrupt U.S. businesses, especially small companies that have limited resources to mitigate the impact. If the administration follows through on this threat, American consumers will face higher prices and U.S. jobs will be lost.  “We want to see meaningful changes in China’s trade practices, but it makes no sense to punish Americans as a negotiating tactic. If the administration wants to put more pressure on China, it should form a multinational coalition with our allies who share our concerns. We urge the administration to reconsider this tax hike on Americans and stay at the bargaining table until a deal is reached.” – NRF Senior Vice President for Government Relations David French

Consumer Technology Association 

“The president is seeking a better trade deal with China. But he must understand the Chinese don’t pay for these U.S. tariffs – American families, workers and companies pay for tariffs. “Tariffs are taxes. And implementing these 25% tariffs on just five-days’ notice would roil our markets, damage U.S. businesses and do serious harm to Americans’ retirement funds and pensions.” – CTA President and CEO Gary Shapiro

Information Technology Industry Council 

“Increasing tariffs would only continue to harm American consumers and businesses of all sizes and across all sectors, as well as threaten American economic growth and leadership in innovation. We support the Trump Administration in seeking to fundamentally redefine the trade relationship with China; however threats to increase tariffs at this juncture in the negotiations could negatively affect the important progress both sides have made to resolve these complex and longstanding issues. We urge the president and his team to stay focused on striking a deal that meaningfully and sustainably addresses China’s problematic policies and provides stability and greater opportunity for U.S. businesses in China.” – ITI Senior Director of Policy Naomi Wilson

Retail Industry Leaders Association

“Tariffs are taxes American families pay — $24 billion and counting. Raising tariffs means raising taxes on millions of American families and inviting further retaliation on American farmers which jeopardizes domestic jobs. We want President Trump to successfully reach a deal with China that puts a check on anti-competitive behavior. But a deal that increases tariffs on everyday goods will be a loser for middle class families.” – RILA Vice President of International Trade Hun Quach

American Apparel & Footwear Association

“We strongly oppose the President’s announcement that he will continue to penalize American families, and add additional obstacles to economic growth, by imposing further tariffs on U.S. imports from China. As has been made clear by the Administration’s use of tariffs during the past year, tariffs are an additional tax burden placed on Americans. These taxes are not paid by foreign nations and they result in higher costs that are simply passed on to the American consumer. The tariffs described by the President – both those that would be increased to 25% on Friday, and those that would be added to consumer goods like clothing and shoes that are not currently being charged with punitive tariffs – will only hurt U.S. families, U.S. workers, U.S. companies, and the U.S. economy.

“We urge the President to refrain from imposing these additional tariffs and instead focus on negotiating and concluding the trade deal with China.” – AAFA President and CEO Rick Helfenbein

Outdoor Industry Association

“Raising current tariffs to 25 percent and targeting a new group of products totaling $325 billion will be devastating to American families and businesses. Increased tariffs will greatly raise out-of-pocket costs on nearly everything Americans wear on a daily basis and put thousands of small and medium sized businesses at risk of going out of business. It’s critical that the trade dispute with China end quickly and fairly, and that we see all the tariffs removed. We urge the Administration to stay at the negotiating table to get it done.” – OIA Vice President of Government Affairs Patricia Rojas Ungar

Auto Care Association

“The Auto Care Association urges President Trump not to follow through on his threat to increase tariffs on $200 billion in imported goods from China as soon as this week. The proposed sudden increase from 10% to 25% would have an immediate negative impact on not only the U.S. businesses that manufacture and distribute these parts, but the motoring public who will see higher prices on a wide range of products, including important safety-related components. In 2018, China was the second largest source of auto parts imported into the U.S., second only to Mexico and totaling over $20.1 billion worth of product. Furthermore, the president’s suggestion that a 25% tariff could be levied on an additional $325 billion in imports from China, without knowing which goods would be impacted, creates even more uncertainty for the business community. “While the Auto Care Association supports the Trump administration’s efforts to address China’s unfair trade practices and is encouraged by recent progress made through trade talks, we oppose the use of tariffs as a negotiating strategy. U.S. companies and consumers end up bearing the brunt of these ‘taxes’ on imported product through disrupted supply chains, increased prices and job losses.” – Auto Care Association President andCEO Bill Hanvey

American Chemistry Council

“U.S. chemical manufacturers support comprehensive and sensible trade policy solutions that help us maximize our competitive advantage, grow our exports and create jobs. The risks of continuing to use tariffs as a negotiating tactic with China are simply too high – and any potential benefits still unclear. China supplies the United States with several chemicals which are not available anywhere else and which are critical inputs to U.S. manufacturing. China is also the third-largest export market for U.S. chemicals manufacturers. Future growth for our industry depends on a strong trading relationship with China and a trade policy that creates certainty and predictability for investors – not a looming threat of more or higher tariffs. 

“We are starting to see signs that the tariffs are disrupting supply chains, cutting off markets, and eroding U.S. chemical manufacturing competitiveness. Although chemical imports from China grew by 22.7 percent in 2018, the retaliatory tariffs significantly dampened U.S. chemical exports to China, resulting in only a 2.7 percent increase in 2018 – nearly tripling the chemicals trade deficit, from $1.4 billion to $4.0 billion. Year-over-year performance deteriorated most dramatically in the fourth quarter, with chemical exports declining 24 percent to our industry’s third largest export market in China. We believe the surge in imports is a direct result of companies stocking inventories before each new Section 301 tariff hike went into effect.  “ACC and its members strongly urge President Trump to remain focused on sensible solutions with China this week and forgo the imposition of higher tariffs.” – ACC President and CEO Cal Dooley

Footwear Distributors & Retailers of America

“The facts of the matter have not changed — import duties are taxes on Americans and will take away disposable income from U.S. consumers. Higher costs for our consumers will hurt our ability to sell shoes and directly impact jobs in our industry. With this most recent tariff threat, the President seems to be trying to create some urgency in the trade talks and provide last-minute leverage for U.S. negotiators. This is a big week with the potential of a comprehensive trade deal between the U.S. and China. We strongly urge both countries to put an end to this trade war and develop a concrete agreement that restores some certainty to this vitally important trade relationship.” – FDRA President and CEO Matt Priest

Precious Metals Association of North America

“The PMANA is deeply concerned with the President’s tweets indicating a tariff increase on imports and raw materials critical to our domestic supply chain.

“We fully support the President in his mission to hold China accountable for their many unfair trade practices – including the rampant production of counterfeit precious metals bars, coins, and jewelry. However, placing a tax on domestic refiners and manufacturers is counterproductive to accomplishing this goal.

“Tariffs are not paid by China. They are taxes paid by American families and businesses. Placing an additional tax on hard-working Americans in the precious metals industry will put thousands of jobs at-risk and weaken our domestic supply chain. “We urge Members of Congress to call on the President to carefully reconsider his plan, and that they work expeditiously to safeguard American families and businesses from any future tariff increase.”

Snowsports Industries America

“We know that increased tariffs will lead to higher prices, passed from manufacturers to retailers, and ultimately to consumers. This is not a pro-growth strategy.  Snowsports Industries America (SIA) feels strongly that if the list three tariffs are enacted, we’ll see our local retail businesses suffer the most so we strongly urge the Administration to continue discussions to avoid this reactive and dangerous approach.”  – SIA President and CEO Nick Sargent

The Toy Association

“The return of a dark tariff cloud threatening the toy and retail communities would sharply increase the cost of toys and cause irreparable harm to companies of all sizes – particularly American small businesses. “We have not relented in our fight against the threat of tariffs and will continue to push back on these damaging tactics that amount to nothing more than a tax on American families and their children and will lead to projected losses of tens of thousands of U.S. jobs. To be clear, China is not paying a penny of tariffs; rather, U.S. companies and American families are, through decreased profits and higher consumer prices.”
The Toy Association President and CEO Steve Pasierb

Juvenile Products Manufacturers Association

If the President follows through on his threat to increase tariffs on Chinese goods to 25 percent, the consequences will be dire and could cost lives. The real effect of these tariffs is that essential and often life-saving baby products will become prohibitively expensive for many or even unavailable, forcing families to choose options that aren’t as safe for their babies, like secondhand products or unsafe sleep environments. JPMA urges the President to consider the potentially catastrophic impact of these tariffs on America’s children. JPMA Executive Director Kelly Mariotti

Multi-Industry Coalition Calls for Tariff Elimination as Part of U.S.-China Negotiations 

FOR IMMEDIATE RELEASE  4/22/19         CONTACT: melanie@tariffshurt.com

WASHINGTON — Americans for Free Trade, a coalition of business organizations from every sector of the American economy, today sent a letter to President Trump urging five specific outcomes from U.S.-China trade talks, which the White House has said are nearing completion. The letter, which was signed by 151 coalition association partners representing companies that employ tens of millions of American workers and provide goods and services to virtually every corner of the United States, asks for:

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Americans for Free Trade Applauds Introduction of Bipartisan Legislation to Create a Tariff Exclusion Process for Tariffs on $200 Billion in Goods

(WASHINGTON) – Americans for Free Trade, a coalition of business organizations from every sector of the American economy, today released the following statement on introduction of the Import Tax Relief Act. The bipartisan bill would provide American businesses with much-needed relief by providing an exclusion process for recent tariffs on $200 billion in goods.

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Over 150 Business Groups Call for Certainty and Highlight Rising Costs of Tariffs

Coalition launches Cost of the Trade War Ticker showing Americans are paying $1,046 per second for recent import tariffs 

(WASHINGTON) – Americans for Free Trade, a broad coalition of American businesses and trade associations united against tariffs, today sent a letter to President Donald Trump commending the administration for making progress on trade negotiations and recognizing the negative impact of tariffs on American Businesses by avoiding a tariff hike on March 2. The coalition emphasized the urgency of concluding trade talks as existing tariffs and ongoing uncertainty continue to hurt businesses across the country. 

Continue reading “Over 150 Business Groups Call for Certainty and Highlight Rising Costs of Tariffs”