The Economy

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💵 Harris closes economic trust gap

Data: Morning Consult. Chart: Kavya Beheraj/Axios Vice President Harris appears to have closed the economic "trust gap," Axios' Emily Peck writes from a Morning Consult poll out this morning. Why it matters: In polling throughout this election cycle, President Biden had been losing on the issue, with voters consistently saying they preferred former President Trump on the economy. 🧮 By the numbers: 46% of voters said they trust Harris to handle the economy — the same share as Trump, according to Morning Consult. That number was 41% when Biden was still in the race. A separate poll by the Financial Times and University of Michigan's Ross School of Business, taken after last week's debate and released Sunday, shows Harris with a slight edge over Trump on the economy. Voters who watched the debate were even more apt to go for Harris.

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💰 Rate cuts = market drama

Data: FactSet. Chart: Axios Visuals At 2:01 p.m. yesterday, right after the announcement that the Fed had cut rates by half a point, the S&P 500 hit an all-time high of 5,678, Axios' Felix Salmon writes. Over the next two hours, it dramatically see-sawed before closing modestly lower on the day. Screenshot: The Wall Street Journal Why it matters: The size and speed of future rate cuts, and the all-important level at which rates will settle, remain highly uncertain — and the market doesn't love uncertainty. While the Fed has deliberately and successfully been extremely predictable over much of the past 15 years, chair Jerome Powell is now happy being opaque and unforeseeable.

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Economy

 

In a significant shift for the US economy, the Federal Reserve on Wednesday announced a jumbo-sized interest rate cut for the first time in four years. The half-point move is a major economic milestone in the central bank's long fight against inflation and for Americans battling a higher cost of living since the Covid-19 pandemic. In a news conference after the announcement, Fed Chair Jerome Powell said the decision did not represent any new pattern for the central bank but that Fed officials want to keep the economy, and especially the labor market, in good shape. Markets surged in response to the central bank's announcement, but all three major indexes — the S&P 500, the Nasdaq and the Dow — had moved into the red by the closing bell.

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Is the US economy strong?

How does the government measure the economy? By tracking GDP, unemployment numbers, and the prices people pay for goods and services.

https://usafacts.org/just-the-facts/economy/?

What is the US federal budget?

Steve talks about the federal budget, including how the government makes money (namely, income taxes) and how revenue collection and spending decisions impact the US federal deficit and debt, military spending, and American daily life.

https://usafacts.org/just-the-facts/budget/

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Stock market

 

Stocks closed at record highs Thursday after the Federal Reserve's long-awaited interest rate cut. The Dow gained 522 points, or 1.3%, reaching a new record after passing the 42,000 level for the first time. The S&P 500 rose 1.7%, topping 5,700 for the first time, while the Nasdaq Composite added 2.5%. Tech stocks Nvidia, Meta and Apple also surged, as well as shares of Tesla. On Wednesday, the Fed cut rates by half a point, bringing rates down from a 23-year high. Lowering borrowing rates should take pressure off companies and everyday Americans, including potential homebuyers. Analysts say housing demand will likely increase dramatically after the Fed signaled that more rate cuts could come by year's end.

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📈 New S&P 500 record

Data: Yahoo Finance. Chart: Axios Visuals The S&P 500 finished up 1.7% a day after the Fed announced its half-point rate cut. The Dow (+1.2%) also hit a new high. Stunning stat: It was the S&P 500's 39th record day of the year, Bloomberg notes.

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Trump's Proposed Tariffs: What Are They, and How Would They Affect US Economy?

During the Sept. 10 debate, U.S. Vice President Kamala Harris lambasted the former president's plans to increase tariffs on China and other countries.

https://www.snopes.com/news/2024/09/19/trump-tariffs-explainer/?

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📈 Markets soar despite chaos

Illustration: Eniola Odetunde/Axios

It's finally time to bury the canard that "markets hate uncertainty," Axios Pro Rata author Dan Primack writes. No one knows who'll be the next president — or has all that much detail about the candidates' economic policy. No one knows who will control Congress four months from now. There's an expanding war in the Middle East and an ongoing war in Europe. Data: Yahoo Finance. Chart: Axios Visuals 💸 Yet the S&P 500 hit yet another record high yesterday, just 43 days out from what's still a coin-flip election. So did the Dow. The Nasdaq remains off its 2024 high, but it's still higher than at any point in any prior year. The Russell 2000 is up 25.5% over the past year, including 7% in the last six months. CEOs and investors don't know what the next administration will hold for antitrust enforcement, but new merger announcements are on the rise. Go deeper. ps:Interesting isn't it?? Where we not told that the stock market will crash under Biden??????????

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⛴️ Pre-election economic threat

Shipping containers are seen at the Port of Houston last week. Photo: Brandon Bell/Getty Images It's increasingly likely that thousands of dockworkers at major ports along the East and Gulf coasts will strike on Oct. 1, people close to the parties tell Axios Markets co-author Emily Peck. Why it matters: Americans would feel this one. A strike would snarl the economy only weeks before the election. A strike could cost the economy $5 billion a day, per a JPMorgan analysis. 📦 Zoom in: The 14 ports stretching from Maine to Houston are responsible for more than half of all the goods shipped in containers in and out of the U.S., Bloomberg notes. A shutdown would affect everything from cars and car parts to vegetables and fruits to furniture and all kinds of things Americans will want to buy for the holidays. For every day of a strike, it will likely take another five or six days to get the ports operating normally again, experts say. Go deeper.

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Gold rush

The precious metal is setting records again and gaining momentum. Here’s what that means for the US economy on the heels of the Federal Reserve’s interest rate cut last week.

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CEO pay declined in 2023

But it has soared 1,085% since 1978 compared with a 24% rise in typical workers’ pay

https://www.epi.org/publication/ceo-pay-in-2023/?

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Fed’s favored inflation gauge shows cooling price pressures, clearing way for more rate cuts

WASHINGTON (AP) — The Federal Reserve’s preferred inflation measure on Friday provided the latest sign that price pressures are easing, a trend that is expected to fuel further Fed interest rate cuts this year and next.

https://apnews.com/article/inflation-prices-election-federal-reserve-rates-economy-a7ee5de7e244cdd6c35dc7ba366ec669?

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What lower rates mean

Illustration: Brendan Lynch/Axios

Those golden handcuffs aren't coming loose yet. Why it matters: Easing mortgage rates offer house hunters some relief. But experts say it's going to take a bigger drop to revive the sluggish home market. Rates need to move closer to 5% to bring those reluctant buyers and sellers off the sidelines, D.C. agent Avi Adler tells Axios. What they're saying: "In 'my day,' you could buy a home that was three to five times your annual salary. You could stay in that 30% range for all housing costs," says DMV Compass agent Connie Carter. That's not the case today, especially in an urban market like Washington. This environment is hardest on first-time buyers. Yes, but: Cash buyers are less sensitive to rates. The latest: Mortgage rates are hovering around 6%, and analysts don't expect them to fall much further after last week's interest rate cut. Realtor.com chief economist Danielle Hale tells Axios she isn't expecting them to dip below 6% this year. The bottom line: Record U.S. home prices and low inventory continue to sideline many shoppers. Plus, homeowners remain reluctant to give up their less expensive mortgages. Nearly 86% of U.S. mortgage holders have a rate under 6%, per Redfin.

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🚢 Dockworkers strike, threatening economy

🚨 Breaking overnight: Thousands of unionized dockworkers at 14 major ports stretching from Maine to Texas went on strike at midnight, Axios' Emily Peck writes.

• Why it matters: A work stoppage that lasts more than a few days raises the prospect of higher prices and shortages of everything from auto parts to bananas as the U.S. heads into the holidays — and a presidential election.

This is the first port strike on the East Coast since 1977 — well before the rise in global trade that's made shipping an even more critical piece of the country's supply chain.

• The strike halts the flow of about half the nation's ocean shipping.

Follow the money: Companies have known this strike was coming for months, and many have rerouted shipments to the West Coast or shipped goods early.

• But perishable goods, including fruits and vegetables, remain vulnerable.

Keep reading.

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Stock market

 

The stock market is off to its best start to a year since 1997 but a massive dockworkers strike underway in the US could muck up some of that progress, economists say. Investors remain bullish for now: the S&P 500 has scored 43 record highs so far in 2024. But the ripple effects of the port workers' strike could mean tens of thousands of other workers across various industries could find themselves temporarily unemployed if the strike is prolonged. Those job losses, coupled with an ongoing Boeing strike and the effects of Hurricane Helene, could massively distort the October jobs report (released on November 1) at a time when the Fed is heavily scrutinizing employment data for signs of a weakening labor market, economists tell CNN.

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Frozen labor market

Illustration: Gabriella Turrisi/Axios

The labor market is frozen, Axios Macro co-author Courtenay Brown writes. The big question: Will hiring pick up the pace? Or will layoffs? 💼 Where it stands: Workers are quitting their jobs at the slowest pace since 2015, if you strip out the plunge at the onset of the pandemic — a sign of low confidence in finding a new gig. In recent years, it paid — literally — to switch jobs. Demand for workers was high and supply of them was low, so those changing jobs could demand (and were likely to get) higher pay. But that premium is vanishing as the labor market loosens up and employers are less motivated to hire. What they're saying: "Dissatisfied workers looking for a different job may need to hang tight with their current employer longer than they'd like," Elizabeth Renter, senior economist at NerdWallet, wrote in a recent note. Go deeper.

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💰 Americans' growing reliance on government

Data: Economic Innovation Group. Chart: Axios Visuals Residents in more than half of America's counties now draw a substantial share of their total income — more than a quarter — from the government, according to an Economic Innovation Group analysis. In 2000, that was the case in just 10% of counties, Axios' Noah Bressner writes. Three big factors — an aging population, soaring health-care costs and declining economic opportunity in rural America — help explain this trend. 🐘 The vast majority of those counties are rural and vote overwhelmingly for Republicans, The Wall Street Journal notes. Go deeper.

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America's one-two punch of good economic news

A blowout jobs report Friday suggests the labor market is thriving, bucking fears that a recession was ahead. And the port strike — feared to cause widespread economic damage — is over.

https://www.axios.com/2024/10/04/jobs-report-economy-port-strike?

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Inflation falls to 2.4%, lowest in three years

The Consumer Price Index rose 2.4% in the 12-month period that ended in September, while a gauge that strips out food and energy prices was 3.3%, the government said Thursday.

https://www.axios.com/2024/10/10/cpi-report-september-inflation-economy?

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📊 Consumers still skittish

Data: University of Michigan. Chart: Axios Visuals The Michigan Consumer Sentiment Index ticked down in October (within the margin of error) after two months of gains. Sentiment is 8% stronger than a year ago, and almost 40% above the trough reached in June 2022. Why it matters: "While inflation expectations have eased substantially, ... consumers continue to express frustration over high prices," survey director Joanne Hsu said. 🚨 Red alert for Harris campaign: In an ABC News/Ipsos poll out this morning, 59% of U.S. adults say the economy is getting worse — more than twice as many as say it's getting better, 23%. (Explore the data.) 🎃 An orange flag about continuing consumer worries about the cost of living: The National Retail Federation's forecast of Halloween spending is down 5% from last year's record-setting level, with greeting cards and costumes likely to take the biggest hit. (Bloomberg)

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Most AAPI adults think legal immigrants give the US a major economic boost: AP-NORC/AAPI Data poll

WASHINGTON (AP) — Asian American, Native Hawaiian and Pacific Islander adults are more likely than the overall U.S. population to view legal immigration as an asset to the country’s economy and workforce, according to a new poll.

https://apnews.com/article/poll-aapi-kamala-harris-donald-trump-election-immigration-3ea9472f4742e15e3979c38c68c1e59c?

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Energy bills

For consumers still scarred by jumps in their energy bills in recent years, the International Energy Agency has good news: Oil and natural gas prices will probably be lower over the next five years. Energy prices soared in the wake of Russia's full-scale invasion of Ukraine in February 2022, which followed a rise in global demand as economies reopened after Covid lockdowns put lives on hold. According to the IEA, oil and natural gas supplies will increase in the second half of this decade as long as the conflict in the Middle East and Russia's war in Ukraine don’t derail current trends. In a wide-ranging report, the agency also said that investing in clean energy isn't just necessary to prevent a climate catastrophe — it also makes financial sense because it will "remove inefficient fossil fuel subsidies."

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‘Off the charts’: How Trump tariffs would shock U.S., world economies

Jeff Stein and David J. Lynch, (c) 2024 , The Washington Post

Wed, October 16, 2024 at 9:31 PM EDT·11 min read

 

Former president Donald Trump is campaigning on the most significant increase in tariffs in close to a century, preparing an attack on the international trade order that would probably raise prices, hurt the stock market and spark economic feuds with much of the world.

Trump’s trade plans, a staple of his stump speeches, have fluctuated, but he consistently calls for steep duties to discourage imports and promote domestic production. The former president has floated “automatic” tariffs of 10 percent to 20 percent on every U.S. trading partner, 60 percent levies on goods from China, and rates as high as 100, 200 or even 1,000 percent in other circumstances.

These proposals would go far beyond the disruptive trade wars of his first term even if they are only partially implemented. They would wrench the nation out of the system of global interdependence that arose in recent decades, making the U.S. economy much more isolated and autonomous, like it was in the late 19th century. (Trump last week falsely claimed that the United States was never richer than in the 1890s, when it had high trade barriers.)

“To me, the most beautiful word in the dictionary is tariff. And it’s my favorite,” Trump said in Chicago on Tuesday. “I'm a believer in tariffs.”

The consequences would be far-reaching: Americans would be hit by higher prices for grocery staples from abroad, such as fruit, vegetables and coffee. Domestic firms dependent on imports would need to either figure out new supply chains or raise costs for consumers. U.S. manufacturers would almost certainly see sharp declines in orders from abroad as foreign nations impose retaliatory tariffs.

“We are talking about a plan of historic significance: It would be enormous, and the blowback would be even more enormous,” said Douglas A. Irwin, an economist at Dartmouth College who wrote a 2017 book on the history of U.S. trade policy. “This would stand way off the charts.”

Companies and governments around the world have begun preparing contingency plans for the potential Trump tariffs. Diplomats and business leaders from Latin America, Europe, Asia and even Canada have in recent weeks asked their U.S. counterparts about Trump’s intentions and authorities, according to interviews with several domestic and international economic advisers, some of whom spoke on the condition of anonymity to reflect private planning.

While some business leaders and congressional Republicans remain optimistic that the former president is engaged in election-year posturing, Trump has repeatedly insisted that tariffs represent an unmitigated positive for the U.S. economy, recently calling them “the greatest thing ever invented.” Tariffs have been a constant bedrock of his economic agenda since he first ran in 2016, along with lower taxes, increased energy production and deregulation.

Trump says his plan would force other countries to back off what he has claimed are abusive trade practices. And while high tariffs could force many firms to move jobs and production to the United States to access the world’s largest market, doing so would come at a high, disruptive cost.

“The world economies are now so interwoven with each other - to rip and pull that apart would be incredibly disruptive to the U.S.,” Irwin said. “It would really ripple through the economy in ways that are very hard to predict.”

Brian Hughes, a Trump campaign senior adviser, dismissed the nonpartisan and Wall Street assessments of the tariffs’ likely effects.

“Just like 2016, Wall Street and so-called expert forecasts said that Trump policies would result in lower growth and higher inflation, the media took these forecasts at face value, and the record was never corrected when actual growth and job gains widely outperformed these opinions,” Hughes said in a statement. “These Wall Street elites would be wise to review the record and acknowledge the shortcomings of their past work if they’d like their new forecasts to be seen as credible.”

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‘We’re not talking about caviar’

Trump and his running mate, Sen. JD Vance of Ohio, have defended higher tariffs as good for the working class, arguing they will bring back jobs to the United States that had moved abroad.

Trump’s plan would automatically apply a minimum tariff rate on imports from every country that trades with the United States, known as a universal tariff. The Coalition for a Prosperous America, which supports higher tariffs, has projected that a 10 percent universal tariff would generate 3 million additional jobs and lead to a surge in U.S. manufacturing output. It would also bring in trillions in revenue to the federal coffers. Even as the economy overall has grown, U.S. manufacturing has dramatically declined since the 1950s as a share of the workforce. Trump has said tariffs would bring those kinds of jobs back to the United States.

On Tuesday, however, Trump said that 10 percent tariffs would be insufficient for bringing jobs back and that the rate would have to be closer to 50 percent.

“When they have to pay tariffs to come in, but they have incentive to build here, they’re going to come roaring back,” Trump said in Georgia last month.

More than half of registered voters said they would be more likely to back a candidate who supported imposing both a 10 percent tariff on all imports and a 60 percent tariff on imports from China, according to a mid-September Reuters-Ipsos poll. Republicans were more than twice as likely as Democrats to support higher tariffs, but 56 percent of independents also endorsed Trump’s plan.

However, the most immediate impact of Trump’s plans might be to raise costs for U.S. consumers, in a way likely to prove particularly painful for low-income Americans.

During his first term, Trump imposed tariffs on roughly $360 billion in Chinese imports, as well as on steel and aluminum imports, washing machines and solar panels. The Biden administration has largely maintained those policies, but Trump is now eyeing a more than ninefold increase in the volume of affected imports, which economists say would lead to widespread price hikes.

The United States annually imports more than $1 trillion worth of goods used directly by consumers: inexpensive electronics from China; food from Latin America and Canada; pharmaceuticals produced in India and Mexico. Tariffs of 20 percent on all imports could amount to a more than $4 trillion tax hike over the next decade, according to the Committee for a Responsible Federal Budget, a nonpartisan think tank. (Trump has insisted that tariffs raise costs only for foreign nations, though economists say the duties, usually paid by importers to the government, are typically passed on to consumers in the form of higher prices.)

Gas prices would increase by as much as 75 cents per gallon in the Midwest, where most refined products come from Canada, according to Patrick De Haan, an analyst at GasBuddy. Overall, the Peterson Institute for International Economics said, Trump’s tariffs would cost the typical household $2,600 per year; the Yale Budget Lab said in an estimate released Wednesday that the annual cost could be as high as $7,600 for a typical household. As a share of their income, the poorest Americans would pay 6 percent more with 20 percent tariffs, compared with 1.4 percent more for the richest 1 percent, according to the Institute on Taxation and Economic Policy, a left-leaning think tank.

“We’re not talking about caviar - these are things that people have to buy. They’re essentials,” said Neil Saunders, a managing director at the analytics company GlobalData.

Economists say it would take several painful years for alternative domestic producers to emerge for many goods. For instance, almost all shoes and 90 percent of tomatoes sold in the country are imported, according to the Peterson Institute. And the United States does not even have the climate necessary to produce many food items - such as coffee, bananas, avocados, to say nothing of Chilean sea bass - at the necessary scale to meet domestic demand, said Joseph Politano, an economic analyst who has written on the subject on Substack.

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‘Higher interest rates, slower growth, higher inflation’

Trump’s tariffs would also reverberate through Wall Street and global markets, inviting turmoil that would affect investors and companies worldwide. Those effects would probably be felt quickly.

During Trump’s first term, stocks fell on nine of 11 days in 2018 and 2019 that the United States or China announced new tariffs, according to a study this year by economists with the Federal Reserve and Columbia University. Comprehensive tariffs would cause a swift one-time jump in prices before reducing economic growth about six months later, according to economist David Page, head of macro research for AXA Investment Managers in London.

Many analysts are hopeful that a stock market panic would dissuade or prevent Trump from carrying out his plans. The investment bank UBS projected that a 10 percent universal tariff could lead to a 10 percent contraction in the stock market. U.S. multinationals are heavily dependent on foreign subsidiaries, and retailers, auto manufacturers and other industrial sectors would be hit the hardest, according to UBS. Chris McNally, an analyst at Evercore, said Trump’s 10 percent tariff plan could cause a more than 20 percent decline in General Motors’ earnings, with slightly smaller declines for Ford and Stellantis.

Stephen Miran, who served in the Treasury Department during Trump’s administration, said he expects Trump would gradually phase in the tariffs, mitigating any stock market volatility. Miran echoed Trump’s comments that dozens of countries have higher import tariffs on the United States than it has on those countries - and sees the former president’s proposals as a first step toward fairer trade agreements.

But other nations may not agree to trade deals that are friendlier to the United States. And if that happens, the new tariffs would depress global merchandise trade and disrupt the corresponding financial flows among the United States, China and Europe, experts say.

As the United States buys fewer goods from China and Europe, they, in turn, could buy fewer Treasury bonds. That would cause yields to increase on long-term U.S. government debt; American consumers would feel the impact with higher mortgage rates.

Trump has spoken of finding ways to lower the value of the dollar to make U.S. exports more attractive to foreign customers. But global tariffs would undermine that goal, pushing the dollar higher. In 2018, as Trump implemented the first several rounds of tariff hikes, the dollar rose more than 10 percent against the Chinese yuan.

“We’d be facing higher interest rates, slower growth, higher inflation - that stagflation scenario that people talk about,” said Marc Chandler, managing director of Bannockburn Global Forex, referring to a combination of high inflation and anemic growth.

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‘Every capital around the world’ may respond

Trump and his advisers express confidence that tariffs can be an effective tool to cajole other countries into complying with his demands. But many may respond by imposing trade restrictions of their own on U.S. exports.

During Trump’s first term, the European Union imposed retaliatory tariffs on everything from U.S. corn to Harley-Davidson motorcycles. China reduced purchases of food products made in the Midwest, leading the Trump administration to approve a $30 billion bailout for farmers. That preceded a China-U.S. trade deal, but there is no guarantee a similar resolution could be reached again.

While the discussions are preliminary, officials in Canada, the European Union, China, India and elsewhere are already working through options to respond to another potential Trump trade war. The retaliation could be harsher this time: Canada, for instance, could cut off access to lumber, aluminum and steel. Boeing aircraft and U.S. vehicle exports could be threatened. Some analysts believe China could devastate U.S. farming exports.

“They’re thinking through their leverage points, and I’m sure every capital around the world is doing the same,” said one person in touch with senior Canadian officials preparing potential responses, speaking on the condition of anonymity to discuss private conversations.

A new universal tariff would violate U.S. commitments to the World Trade Organization. Other nations would almost certainly file WTO complaints. But experts said trade partners would not wait for that cumbersome judicial process, which can take years to yield a conclusion.

“Day one, if there’s a 10 percent tariff put in place, day two, there’s going to be retaliatory tariffs from all of our trading partners,” said John Veroneau, a trade attorney with Covington & Burling, who served as deputy U.S. trade representative under President George W. Bush.

Here's How Trump's Aggressive Tariff Plan Affect the Stock Market

As the 2024 election draws near, Republican Donald Trump on his economic and social visions has always argued that job creation is one of the most important levers for solving problems in the economy, and the latest plan to impose tariffs is designed to bring jobs back to the United States.

The idea is to set high tariffs 10% to 20% on all trading partners of the US and from 60% or higher on China to reduce reliance on imports. Critics raised that the plan could cause global trade wars and increase the prices for daily consumption such as foods, gasoline and finally cause more burden on American consumers.

Investment bank UBS cautions that a 10% universal tariff might lead to a 10% stock market decline with major U.S. companies such as General Motors (NYSE:GM) and Ford (NYSE:F) could have their 2015 earnings decrease. They see that setting higher prices to consumers could slow spending, reduce economic growth rate and make stock prices drop.

Meanwhile, Coalition for a Prosperous America projected that if the plan works, a 10% universal tariff could generate millions of jobs and boost U.S. manufacturing. By doing so, Americans are expected to cut on consumption of foreign goods and boost local industries. As Trump says, this approach will let many factories rise from the dead and bring employment back to the U.S., particularly in the fields that had been overseas for decades.

This article first appeared on GuruFocus.

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Would Trump's tariffs trigger a global trade war? Experts weigh in.

MAX ZAHN

Fri, October 18, 2024 at 8:16 AM EDT·5 min read

 

Former President Donald Trump has proposed tariffs as the solution for a host of perceived ills: the decline of U.S. manufacturing, the arrival of undocumented immigrants and the costs of childcare, among others.

"To me, the most beautiful word in the dictionary is 'tariff,'" Trump said this week during an appearance at the Economic Club of Chicago.

On the campaign trail, Trump has rarely mentioned the threat of a potential trade war, in which foreign nations could respond to tariffs by slapping U.S. imports with taxes of their own.

Economists who spoke to ABC News said Trump's tariff proposals would all but certainly trigger a global trade war, diminishing sales for U.S. exporters, which account for about 10% of the nation's economy. The disruption would likely trigger job cuts and slow the nation's economic performance, economists added.

On the other hand, the move would bring more of the supply chain back to U.S. soil, economists said, and it would likely spur growth and hiring at some firms by protecting them from foreign competition. But the same experts cautioned that such benefits would be far outweighed by the consequences.

"The essence of a trade war is you impose tariffs and other countries respond by putting high tariffs on your exports. It's tit for tat," Douglas Irwin, a professor of economics at Dartmouth College who specializes in the history of U.S. trade policy, told ABC News.

"Tariffs are easy to impose but hard to remove," Irwin added.

In response to ABC News' request for comment, the Trump campaign pointed to a series of statements about tariffs made by Trump and his allies, including remarks from Trump Campaign Senior Advisor Brian Hughes.

"Time warp alert! Just like 2016, Wall Street and so-called expert forecasts said that Trump policies would result in lower growth and higher inflation, the media took these forecasts at face value, and the record was never corrected when actual growth and job gains widely outperformed these opinions," Hughes said.

"These Wall Street elites would be wise to review the record and acknowledge the shortcomings of their past work if they'd like their new forecasts to be seen as credible," he added.

On the campaign trail, Trump has promised a sharp escalation of tariffs during his first term. He has proposed tariffs of between 60% and 100% on Chinese goods.

Envisioning a far-reaching policy, Trump has proposed a tax of between 10% and 20% on all imported products. On Tuesday, he told the audience at the Economic Club of Chicago that such a tariff could reach as high as 50%.

Economists widely expect that tariffs of this magnitude would increase prices paid by U.S. shoppers, since importers typically pass along the cost of higher taxes to consumers. Trump's tariffs would cost the typical U.S. household about $2,600 per year, according to an estimate from the Peterson Institute for International Economics.

Meanwhile, there could be a second wave of consequences if foreign countries were to impose retaliatory tariffs, economists said.

"You might see a dramatic decrease in U.S. exports, which could then have employment effects for people working in those sectors," Kara Reynolds, an economist at American University, told ABC News. She pointed to the manufacturing and farming as industries especially vulnerable to a trade war.

For evidence of such an outcome, one need look no further than Trump's first term, during which a slew of tariffs often induced a retaliatory response.

Tariffs imposed during Trump's first term often induced retaliatory tariffs. The European Union and Canada responded to tariffs on steel and aluminum with tariffs of their own. Trump slapped tariffs on about $360 billion worth of Chinese goods, but China responded with tariffs on tens of billions of dollars worth of U.S exports.

Chinese tariffs on U.S. soybean exports caused a steep decline in sales to Chinese customers, dropping exports from $12.3 billion in 2017 to $3.1 billion in 2018, according to the Georgetown University Journal of International Affairs. In response, the Trump administration paid billions of dollars in direct aid to farmers to make up for the losses.

"He felt obligated to bail out the farmers," Robert Lawrence, a professor of trade and investment at Harvard University's Kennedy School of Government, told ABC News. "Now, we're talking about potential actions on a much grander scale."

Alongside retaliatory tariffs, many countries would seek suppliers in places where such tariffs are not on the books, Lawrence added.

"Trump is likely to isolate the U.S. and drive other countries to do business with each other," Lawrence said. "This would have a very adverse effect."

On the campaign trail, Trump has sharply disagreed with such fears, saying large-scale tariffs would rejuvenate U.S. manufacturing and propel economic growth.

At the Chicago Economic Club on Tuesday, Trump said tariffs would force companies to locate factories in the U.S. as a way of circumventing the tariffs, which in turn would boost domestic production and employment.

"We're going to have thousands of companies coming into this country," Trump said. "We're going to grow it like it's never grown before, and we're going to protect them when they come in because we're not going to have somebody undercut them."

Economists said higher tariffs could expand certain areas of U.S. manufacturing that face stiff competition from abroad, but the policy also risks raising input costs and slowing output at U.S. producers that import their raw materials.

Trump's tariffs decreased U.S. employment by 166,000 jobs, according to a study from the nonprofit Tax Foundation, which cited an increase in import costs for U.S. employers. A separate study from the U.S.-China Business Council estimated up to nearly 250,000 lost jobs as a result of the tariffs.

"It certainly would make the U.S. more self-reliant, but it would come with far greater costs," Lawrence said.

Would Trump's tariffs trigger a global trade war? Experts weigh in. originally appeared on abcnews.go.com

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Trump Can't Impose Tariffs On China, Says Peter Schiff: 'He Can Only Impose Tariffs On Americans Who Buy Chinese Products'

Shivdeep Dhaliwal

Thu, October 17, 2024 at 2:30 PM EDT·3 min read

 

Peter Schiff, a renowned economist and financial commentator, has expressed his views on former President Donald Trump’s tariff strategy, advocating instead for lower taxes and fewer regulations.

What Happened: On Wednesday, Schiff took to X to criticize Trump’s approach to tariffs, stating, “Trump can’t impose tariffs on China. He can only impose tariffs on Americans who buy Chinese products.”

He further responded to a user advocating for the return of production to the U.S., stating, “We need to. But tariffs won’t make that happen. We need lower taxes and fewer regulations, particularly related to employment.”

This comes amidst a broader discussion on the impact of tariffs on the U.S. economy, with various influential figures expressing their views on the matter.

Schiff said the point that was lost in all “China bashing” was that the country was one of the “main reasons the [Fed] has been able to create so much [inflation] under the guise of QE without pushing consumer prices and long-term interest rates much higher.”

He said in a separate post on X, “We exported our inflation and imported their consumer goods.”

Why It Matters: Schiff’s comments add to the ongoing debate on the effectiveness of tariffs as a tool for economic policy. His views contrast with those of Trump, who has been vocal about the use of tariffs to revitalize U.S. manufacturing. Mark Cuban, billionaire and “Shark Tank” star, recently expressed skepticism about Trump’s approach, suggesting that a law requiring all manufacturing to be done in the U.S. within a decade would be more effective.

Trump defended his tariff strategy in a recent interview at the Economic Club of Chicago, asserting that tariffs have a “massive effect” on economic growth.

The debate on tariffs versus taxes continues to be a key issue ahead of the 2024 presidential election, with potential impacts on various sectors, including luxury real estate.

This article Trump Can't Impose Tariffs On China, Says Peter Schiff: 'He Can Only Impose Tariffs On Americans Who Buy Chinese Products' originally appeared on Benzinga.com

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