As Recession Fears Grow, Trump Delays Tariffs On Some Chinese Goods
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.”
In The News
This week the Centers for Disease Control and Prevention National Center for Health Statistics released data that the U.S. birth rate is the lowest it’s been since 1979, and one theory on why this is happening is younger individuals who are of childbearing-age are putting off... Read More
An official from the International Monetary Fund argued this week that the Middle East and Central Asia regions should shift towards a new and inclusive economic model as they emerge from the pandemic, echoing IMF claims that this is the time for a world economic shift. ... Read More
With the US unemployment rate essentially unchanged from March to April from 6.0% to 6.1% respectively, the American state of employment seems to continue on its positive track, according to the Bureau of Labor Statistics latest report. Employment in nonfarm jobs increased by 266,000 in April,... Read More
The Small Business Administration began accepting applications on Monday for the Restaurant Revitalization Fund, a program authorized in March by the passage of the American Rescue Plan Act. To receive funding, businesses must submit their application to the SBA on a first-come, first-served basis at restaurants.sba.gov.... Read More
WASHINGTON -- The Biden administration’s pledge to up the wages and fair labor standards of low-income workers hit a roadblock among Republicans during a congressional hearing Monday. The intentions are good but the economics are bad, according to critics who say the plan would backfire by... Read More
WASHINGTON (AP) — President Joe Biden's massive proposed spending on infrastructure, families and education will not fuel inflation because the plans would be phased in gradually over 10 years, Treasury Secretary Janet Yellen said Sunday. New economic reports have portrayed a surging recovery from the recession... Read More