Month: January 2020

Good afternoon – 

As we head into the Iowa Caucus, tariffs are an important issue that deserve significant attention as they directly impact many Iowans and Americans all across the country.

Since the trade war began, according to data from Tariffs Hurt the Heartland, Iowa taxpayers have paid $238 million in additional tariffs. At the same time, Iowa businesses, farmers, manufacturers, and consumers have faced $492 million in retaliatory tariffs, making the state’s exports less competitive.

This issue cannot be ignored, as Iowa ranks number one in producing corn, soybeans, hogs, eggs and ethanol. Yet, the majority of the Democratic candidates running for President – and asking for the votes of Iowans – are ignoring the damage the trade war is causing and refusing to comment on it or commit to ending the trade war if elected. 

It is vital that candidates recognize the importance of this issue, as trade supports 432,600 jobs across Iowa. New data shows the trade war with China could cost the state 23,500 jobs.

And to make matters worse, tariffs are contributing to the rise in farmer bankruptcies. John Newton, the Chief Economist at the Farm Bureau, summarized the farmer’s situation in Forbes as,

“The deteriorating financial conditions for farmers and ranchers are a direct result of several years of low farm income, a low return on farm assets, mounting debt, more natural disasters and the second year of retaliatory tariffs on many U.S. agricultural products.”

Under the Phase One deal, unfortunately, none of the retaliatory tariffs have been removed, only continuing to further harm Iowa farmers. In fact, the vast majority of the tariffs (94 percent) that have been enacted since the trade war began remain in place.

Additionally, due to the uncertainty of the trade war, farmers in Iowa have taken tremendous hits both financially and mentally. As reported in the Iowa State Daily, Associate Professor of Economics at Iowa State Chad Hart said,

“Let’s face it, when you’re worried about making that next rent payment or getting enough money to cover tuition next semester, that’s very stressful.”

Furthermore, the trade war is not just affecting farmers – manufacturers are suffering as well. For five months in a row now, the United States manufacturing industry has contracted and experts agree that the trade war and tariffs are a primary driver for this continued weakening. This is troubling because manufactures account for over 14 percent of the workforce in Iowa.

If you are interested in speaking with someone about the trade war and how it is hurting Iowans ahead of the caucus, please contact press@americansforfreetrade.com.

WASHINGTON, D.C., (January 30, 2020) – Due to a significant decrease in business spending and investment triggered by the trade war, the United States economy grew just 2.3 percent in 2019, marking the weakest year in terms of growth since President Trump took office. Americans for Free Trade, a coalition of more than 150 associations from every sector of the economy united in the fight against tariffs, released the following statement from spokesperson Jonathan Gold in response to today’s news.

“This stagnant growth only further emphasizes the direct correlation between the trade war and U.S. economic impact. Tariffs are paid by American consumers and businesses, and prevented the U.S. economy from reaching its full potential last year. It’s clear the trade war and tariffs are still impacting American businesses, workers, and consumers. In order to secure a higher GDP, all tariffs must be completely lifted. While the Phase One deal with China is a step in the right direction, a Phase Two deal must be negotiated and signed as soon as possible to promote economic growth, and to the benefit of all Americans.”

BACKGROUND

“Growth was held back by trade fears and a business investment slump” (Heather Long and Andrew Van Dam, “U.S. economy grew 2.3 percent in 2019, the slowest of Trump’s presidency,” Washington Post, 1/30/20)

“Tariffs imposed by President Donald Trump to restructure the United States’s top trade relationships have cost American companies $46 billion since February 2018” (Andrea Shalal, “Trump’s tariffs cost U.S. companies $46 billion to date, data shows,” Reuters, 1/9/20)

“Examining the fallout of tariffs in data through October, the authors found that Americans had continued paying for the levies — which increased substantially over the course of the year. Their paper, which is an update on previous research, found that “approximately 100 percent” of import taxes fell on American buyers.” (Jeanna Smialek and Ana Swanson, “American Consumers, Not China, Are Paying for Trump’s Tariffs,” The New York Times, 1/6/20)

American businesses, farmers and consumers will continue to pay billions in taxes each month even with the Phase One Deal

WASHINGTON, DC January 14, 2020 – President Trump and a trade representative from China are expected to sign the Phase One trade deal tomorrow. Ahead of the signing, Americans for Free Trade, a coalition of more than 150 associations from every sector of the economy that are united in the fight against tariffs, has released the following statement from spokesperson Jonathan Gold in response to the deal and to the latest report that some details of the deal may not be disclosed to the public.

“While the Phase One Deal does demonstrate some progress, it does not do nearly enough to relieve the burden created by the trade war. The vast majority of the tariffs – which are taxes paid by Americans, and not China – will remain in place, continuing to damage the American economy and hurt American businesses, farmers, workers and consumers. On top of that, it appears the White House will not release all of the plan details, contributing to the uncertainty faced by millions of Americans who are paying billions of dollars in tariffs each month. Americans for Free Trade strongly encourages the president to release the details of this Phase One Deal and immediately begin negotiating a final deal that removes all of the tariffs.”

BACKGROUND

The Administration May Not Release Details Of The Phase One Deal Before It Is Signed. “As China and the United States prepare to sign a phase one trade deal on Wednesday, doubts remain about whether all the details of the agreement will be released publicly and whether Beijing can meet the lofty purchasing demands.” (Finbarr Bermingham and Adam Behsudi, “U.S. and China may not release full details of trade deal that they’ll sign this week,” South China Morning Post and POLITICO, 1/14/20)

“Overall, Americans Have Paid An Additional $46 Billion Since The Trade War Began In February 2018 Through November 2019.” “In November alone, Americans paid a total of $6.2 billion in tariffs, compared to about $2.8 billion in November of 2017, before the start of the trade war. This significant increase in tariffs paid by Americans is primarily driven by tariffs implemented by the Trump administration, which account for over $3.5 billion of the total in November.” (Press Release: “Trade War Has Cost Americans Additional $46 Billion, Including $3.5 Billion in November 2019 Alone,” Tariffs Hurt the Heartland Website, 1/9/20)

Good afternoon – 

The Federal Reserve released a study over the weekend that found the trade war – and most notably the tariffs – have hurt American manufacturing rather than helping it. The study finds “the tariffs imposed by the Trump administration in 2018 led to higher prices and fewer manufacturing jobs.”

The authors of the report, two economists at The Fed, also explain how the argument that the negative impact of tariffs are “worth” the short-term pain because they are boosting American businesses is flawed:

“While one may view the negative welfare effects of tariffs found by other researchers to be an acceptable cost for a more robust manufacturing sector, our results suggest that the tariffs have not boosted manufacturing employment or output, even as they increased producer prices.”

This report is the most recent piece of proof of the significant damage the tariffs are causing American manufacturing — the industry they are supposedly trying to help. According to the Institute for Supply Management (ISM), the manufacturing industry has contracted four months in a row, with ISM Chairman Timothy Fiore, “Global trade remains the most significant cross-industry issue.” And as American manufacturer Dan Digre recently told NPR, the tariffs are slowly driving him out of business and potentially forcing him to move production overseas:

“‘We’re trying to keep building speakers here in the U.S., but there’s only a couple of us left in the country to do it,’ Digre says. ‘And if these tariffs go on a lot longer, I don’t know if there will be anybody left in this country to do it.’ Ultimately, Digre says, he might have to move his whole factory overseas — exactly the opposite of what the president said he wanted when he started this trade war.”

WASHINGTON, January 3, 2020 – For the fifth straight month, the U.S. manufacturing industry has contracted and experts agree that the trade war and tariffs are a primary driver for this continued weakness. The Institute for Supply Management’s (ISM) index dropped to 47.2, the lowest level since June 2009. Americans for Free Trade, a coalition of more than 150 associations from every sector of the economy that are united in the fight against tariffs, released the following statement from spokesperson Jonathan Gold in response to today’s ISM Manufacturing Report: 

“Rather than helping, like some continue to claim, tariffs are significantly damaging American manufacturers. That’s because American businesses like manufacturers are the ones paying the tariffs – not China. And they are the ones suffering from the uncertainty and volatility the trade war creates. While the Phase One Deal shows some positive movement, today’s ISM report reiterates the need for the president to come to a final deal with China that removes all tariffs on American companies.”

Today’s ISM report comes on the heels of a new study released by the Federal Reserve earlier this week, which found “the tariffs imposed by the Trump administration in 2018 led to higher prices and fewer manufacturing jobs.” It went further to explain that tariffs are not “worth” the short-term pain because they actually hurt American businesses:
“While one may view the negative welfare effects of tariffs found by other researchers to be an acceptable cost for a more robust manufacturing sector, our results suggest that the tariffs have not boosted manufacturing employment or output, even as they increased producer prices.”

BACKGROUND

ISM Drops To 47.2 In December 2019, The Lowest Level In More Than A Decade. “Manufacturing activity in the U.S. contracted to its lowest level in more than a decade last month even as China and the U.S. showed progress on the trade front. The Institute for Supply Management said Friday its manufacturing index fell in December to 47.2. That’s its lowest level since June 2009, whet it hit 46.3. Economists polled by Reuters expected a reading of 49 for December. Anything below 50 represents sector contraction.” (Fred Imbert, “Manufacturing economy weakest in a decade as December ISM index comes in at 47.2,” CNBC, 1/3/20)

American Manufacturing Company Pays A Higher Tariff Rate To Manufacture Speakers In The United States Than It Would To Manufacture Speakers in China. “His factory is still in Minnesota, but it depends on some components imported from China. Since last fall, the company has had to pay tariffs on those components — tariffs that are now 25%. Ironically, if Digre built whole speakers in China, like some of his competitors do, he’d have to pay only a 15% import tax…The trade war has contributed to a slowdown in manufacturing in recent months. U.S. factory activity has declined for four consecutive months.” (Scott Horsley, “His Company Makes Speakers. Now He’s Speaking Out, Opposing Tariffs,” NPR, 12/2/19)

Manufacturing Constricted For The Fourth Month In A Row In November. “November was the fourth consecutive month of PMI® contraction, at a faster rate compared to the prior month. Demand contracted, with the New Orders Index contracting faster, the Customers’ Inventories Index remaining at ‘too low’ levels and the Backlog of Orders Index contracting for the seventh straight month (and at a faster rate). The New Export Orders Index returned to contraction territory, likely contributing to the faster contraction of the New Orders Index.” (November 2019 Manufacturing ISM Report on Business, Institute for Supply Management, 12/2/19)

“Manufacturers Have Borne The Brunt Of The U.S. Trade War With China.” “Big picture: Manufacturers have borne the brunt of the U.S. trade war with China. The dispute between the world’s two largest economies have disrupted global supply chains and contributed to a broader global slowdown.” (Jeffry Bartash, “U.S. manufacturers still suffering from China trade fight, tepid global economy, ISM finds,” MarketWatch, 11/1/19)