From housing to frozen meat: How Trump’s tariffs are hurting Americans
At first, Americans didn’t seem to mind U.S. President Donald Trump’s tariffs too much. Even duties on tens of billions worth of products, after all, don’t amount to much in a $19-trillion economy, which happens, incidentally, to be growing at record speed.
That, though, appears to be changing. U.S. businesses from construction companies to farmers are beginning to feel the pain of the counter tariffs triggered by Trump’s policies. And as the White House broadens its target for potential tariff from materials and intermediate inputs to things like autos, seafood and handbags, American families will increasingly feel the pinch as well.
The U.S. economy grew by a whopping 4.1 per cent between April and June, the fastest pace in four years and a clear win for the president, who eagerly gloated about it before it was even released to the public. Still, U.S. businesses affected by the administration’s growing tariffs list have a bleak outlook on what might come next.
“The threat to the U.S. economy is less about a question of ‘if’ and more about ‘when’ and ‘how bad,’” David French of the National Retail Federation (NRF), which represents America’s retailers, said in a recent statement.
Here’s a look at some of the effects that the trade war has had and the further damage it could do if the White House follows through with its threats of tariffs on autos and more Chinese imports.
WATCH: What is a trade war? How does it work? And how will it impact Canadian consumers?
Pricier homes and fewer of them
The Trump administration’s 20 per cent tariff on Canadian softwood lumber has been pushing up the cost of new houses. That is adding nearly $9,000 to the cost of a detached home and more than $3,000 to that of a multi-family unit, the National Association of Home Builders (NAHB) said in June.
This is happening at a time when U.S. homebuyers are being squeezed by both climbing interest rates and home prices that have now bounced past their pre-recession peak.
Trump’s duties, which have caused lumber prices to rise “sharply higher than the tariff rate would indicate,” NAHB said, adding that this is “hurting housing affordability in markets across the nation.”
And as home prices soar beyond the reach of American families, demand for new homes is ebbing. U.S. housing starts plunged by over 12 per cent in June, according to U.S. government data.
“The lumber tariffs Trump imposed on Canadian lumber that went into effect last year impacted those numbers considerably,” Ross Litkenhous of real estate consulting giant Altus Group told Global News.
Canadian lumber imports are currently the largest supplier to the annual U.S. softwood lumber market, accounting for about 28 per cent of U.S. sales per year over the past decade.
WATCH: What Trump hopes to accomplish with trade war
Unhappy farmers and frozen meat stacks
U.S. farmers have been hit hard by counter-tariffs imposed by China, Mexico and other countries on products like pork and soybeans.
More than 1-billion kilograms of frozen meat are piling up in U.S. warehouses as sales in key export markets slow, the Wall Street Journal has reported.
This prompted the Trump administration to announce this week up to $12 billion in emergency aid for the sector.
But the emergency money seems to have done little to assuage farmers in politically key states like Iowa, Missouri and Wisconsin.
“We don’t want payments,” Dave Warner, the spokesman for the National Pork Producers Council said of the proposal. “What we really want is the trade disputes to end, and then the tariffs will go away.”
That was the sentiment that echoed through the statements Midwest farmers gave to the media after the White House announced its relief package.
“We, as farmers, don’t want handouts. ”Neal Bredehoeft, a corn and soybean farmer in Missouri, said.
But unpopular as the move has proven to be so far, the White House may soon be forced to replicate it.
Fishermen may need soon need a bailout, too. China’s retaliatory duties, for example, have also hit U.S. lobster exports (and, incidentally, helped Canada’s exports), prompting Democrats in Congress to push for assistance for the industry.
Still, America’s seafood woes may be about to get a lot worse.
The tentative list of $200 billion worth of Chinese imports on which Trump would like to slap new tariffs includes a baffling amount of fish and seafood products. Wholly nine pages of the 205-page document provided by the Office of the U.S. Trade Representative are devoted to fish – anything from tilapia, catfish and carp to shrimp, smoked salmon and prawns.
While the trade war has so far mostly hurt U.S. exporters, American consumers are likely to get caught in the crossfire.
Sharply higher prices for cars, trucks and SUVs
The White House is still evaluating whether to impose a 25 per cent tax on all imports of cars, trucks, SUVs and auto parts. But the mere threat of those tariffs, along with the impact of duties already imposed on steel and aluminium, is already hurting U.S. automakers.
Stocks of General Motors and Fiat Chrysler Automobiles took a dive on Wednesday as both companies lowered their 2018 profit forecasts and investors fretted about what might be yet to come.
If the auto tariffs take effect, Americans would end up paying between $1,400 and $7,000 more for a new ride, according to estimates from the Peterson Institute for International Economics (PIIE).
“Increased import tariffs could lead to a smaller GM, a reduced presence at home and abroad for this iconic American company, and risk less – not more – U.S. jobs,” GM recently said in a submission to the U.S. Department of Commerce.
The industry would shed over 600,000 jobs in the U.S. if the White House imposed the tariffs and other countries retaliated in kind, the PIIE has estimated.
President Trump did walk back the idea of imposing duties on car imports from Europe after meeting with European Union (EU) officials in Washington this week.
But while the rendezvous could be the first step in a significant de-escalation of trade tensions, both White House and the EU have yet to provide firm commitments.
WATCH: What Trump’s auto tariffs would do to car prices in Canada
Unaffordable clothes, laptops and smartphones
The auto tariffs aren’t the only trade duties threatened by the Trump administration that would directly target consumer goods. The White House proposal for tariffs on $200-billion worth of Chinese imports would raise the price of a number of everyday items, from shampoo and petroleum jelly to baseball gloves.
Speaking for U.S. retailers, French called the proposal “a reckless strategy that will boomerang back to harm U.S. families and workers.”
And yet the president has already mentioned the idea of extending the tariffs to all Chinese imports, a move that would affect an additional $262-billion worth of goods, according to PIIE. This time, it would affect products like sweaters, sneakers and even laptops and smartphones.
How much can the U.S. economy take?
It may take a while for the effect of tariffs to show up in the U.S.’s GDP figures. Many of the recent duties didn’t take effect until close to the middle of the year and didn’t really register in the latest data release.
On the contrary, exports provided an additional boost to GDP, partly because the prospect of upcoming tariffs prompted a temporary surge in soybean exports.
And corporate tax cuts and record-low unemployment are helping to keep both businesses and workers happy.
But an ever-expanding list of tariffs could soon sour the mood on both Wall Street and Main Street.
– With a file from Global News online reporter Jessica Vomiero
© 2018 Global News, a division of Corus Entertainment Inc.