As Recession Fears Grow, Trump Delays Tariffs On Some Chinese Goods

August 13, 2019 by Dan McCue

WASHINGTON — After days of growing indications the U.S. may lapse into a recession before the 2020 election, the Trump administration announced Tuesday that it is delaying some of the additional tariffs it planned to impose on Chinese goods on Sept. 1.

The announcement, which was made through the Office of the U.S. Trade Representative, said while some additional tariffs will be imposed on Chinese goods in just over two weeks, “certain products are being removed from the tariff list based on health, safety, national security and other factors and will not face additional tariffs of 10 percent.”

“Further,” the agency said, “it was determined that the tariff should be delayed to December 15 for certain articles. 

“Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing,” the trade representative said.

The agency said it will publish a Federal Register notice “as soon as possible” with additional details and lists of the tariff lines affected by Tuesday’s announcement.

The news was greeted with relief on Wall Street, which had been growing increasingly pessimistic in recent days.

Since Friday, economists at Bank of America, Goldman Sachs and Moody’s Analytics have all suggested the recession has become more likely between now and the 2020 elections, largely due to President Trump’s many trade disagreements.

On Tuesday morning, Mark Zandi, chief economist for Moody’s Analytics, told CNN, “I think if you look forward, the economy’s growth is going to be much slower. The trade war is doing a lot of economy damage — particularly in manufacturing.

“The manufacturing industries are now pretty close to recession, right on the precipice. And it goes right back to that trade war. So yeah, manufacturing has done pretty well up until now, but looking forward, the prospects aren’t nearly as good,” he said.

Zandi’s comments came just two days after Goldman Sachs announced the U.S.-China trade war is having a larger impact on growth than it originally estimated.

“We have increased our estimate of the growth impact of the trade war,” Goldman Sachs chief economist Jan Hatzius wrote in a note to clients Sunday. “The drivers of this modest change are that we now include an estimate of the sentiment and uncertainty effects and that financial markets have responded notably to recent trade news.”

Last week, economists at Bank of America said the chances of a recession occurring in the next 12 months has risen from 20 percent to 33 percent.

At the same time, they conceded “our model likely does not fully capture the threat of US-China trade tensions spiraling into a more severe trade war, which we view as the biggest downside risk for the U.S. economy.”

On Tuesday, as the president traveled to the Shell Pennsylvania Petrochemical Complex for an economic development announcement, he continued to insist that a U.S.-China trade deal could soon be in the offing.

“We had a very good talk yesterday with China — a very, very productive call,” he told reporters as he deplaned at Morristown Municipal Airport in New Jersey. “I think they want to do something.  I think they’d like to do something dramatic. I was not sure whether or not they wanted to wait until a Democrat has a chance to get in. Hopefully that’s not going to happen because the economy would go to hell in a handbasket very fast.”

At the same time, Trump acknowledged that he was delaying the tariffs so they would affect the always important and closely-watched Christmas shopping season.

“We’re doing this for Christmas season, just in case some of the tariffs would have an impact on U.S. customers, which, so far, they’ve had virtually none,” Trump said. “The only impact has been that we’ve collected almost $60 billion from China — compliments of China.  But just in case they might have an impact on people, what we’ve done is we’ve delayed it so that they won’t be relevant for the Christmas shopping season.”

David French, senior vice president for government relations for the National Retail Federation, welcomed the apparent holiday reprieve.

“While we are still reviewing the details, we are pleased the administration is delaying some tariffs ahead of the holiday season and acknowledging the impact on American consumers,” French said. “Still, uncertainty for U.S. businesses continues, and tariffs taking effect September 1 will result in higher costs for American families and slow the U.S. economy. During this delay period, we urge the administration to develop an effective strategy to address China’s unfair trade practices by working with our allies instead of using unilateral tariffs that cost American jobs and hurt consumers.”

Economy

Recession Fears Are Valid, But Predicting Timing Nearly Impossible, Economist Says Economy
Recession Fears Are Valid, But Predicting Timing Nearly Impossible, Economist Says
August 23, 2019
by HJ Mai

There are plenty of warning signs that the longest economic expansion in the history of the United States is coming to an end. While the signs indicate an impending recession, predicting the time of it is nearly impossible, Hoyt Bleakley, associate professor of economics at the... Read More

China Hits US With New Tariffs on $75 Billion Worth of Products Economy
China Hits US With New Tariffs on $75 Billion Worth of Products
August 23, 2019
by Dan McCue

WASHINGTON — China on Friday announced tariff hikes on $75 billion of U.S. products in retaliation for President Donald Trump's latest planned increase, deepening the trade conflict between the two nations at a time when the president insists "China wants to make a deal with us."... Read More

The Latest Casualty Of Trump’s Trade War With China? California Wine Trade
The Latest Casualty Of Trump’s Trade War With China? California Wine

HEALDSBURG, Calif. — Hank Wetzel’s vineyards stretch to the horizon, a swath of green straddling Sonoma County’s Russian River, farmed by generations of Wetzels for half a century. It is a long way from Shanghai. Nonetheless, seated outside his tasting room on a recent morning, the... Read More

Federal Deficit Growing Faster Than Expected, Will Top $1 Trillion Next Year, Budget Office Says Federal Budget
Federal Deficit Growing Faster Than Expected, Will Top $1 Trillion Next Year, Budget Office Says
August 21, 2019
by Dan McCue

WASHINGTON - The federal budget deficit is growing faster than expected and will reach $1 trillion next year, the non-partisan Congressional Budget Office said Wednesday. Worse, over the next decade, the federal government will rack up $12.2 trillion in deficits --  $809 billion more than the... Read More

Trump May Try To Bolster Economy With Payroll Tax Cut Economy
Trump May Try To Bolster Economy With Payroll Tax Cut
August 20, 2019
by Dan McCue

WASHINGTON - President Donald Trump said Tuesday that his administration is considering a temporary payroll tax cut as a way to bolster the U.S. economy though he continues to insist the nation is not inching toward a recession. "I’ve been thinking about payroll taxes for a... Read More

Nearly Three-Out-Of-Four Economists Believe US Will Be In Recession by 2021, Survey Finds Economy
Nearly Three-Out-Of-Four Economists Believe US Will Be In Recession by 2021, Survey Finds
August 20, 2019
by Dan McCue

WASHINGTON — Seventy-four percent of U.S. business economists participating in a new survey believe the United States will slip into a recession by the end of 2021, despite the White House's insistence that the "fundamentals" of the economy remain strong. The survey, released Monday, was conducted... Read More

Straight From The Well
scroll top