Economic allies and the private sector acknowledging the impact of Trump's tariffs
In a summer marked by trade turbulence, President Donald Trump has announced new universal tariff rates, aiming to address unsustainable trade deficits that threaten the economy and national security. However, the impact of these tariffs on U.S. jobs and the economy remains a subject of debate.
The July jobs report revealed a loss of 11,000 jobs in the manufacturing sector, adding to a downward trend in the industry. Retailers, too, have expressed concerns about their ability to stay in business due to the impact of new tariffs on merchandise. The National Retail Federation and other associations and trade groups are urging the administration against any trade action that will result in higher tariffs.
The unemployment rate ticked up to 4.2% and the economy added just 73,000 jobs, raising questions about the effectiveness of the tariffs in stimulating job growth. According to analysis by Equitable Growth, manufacturing is the most vulnerable sector to tariffs, affecting over 23 million U.S. workers who could face negative wage and employment effects. These impacts might disproportionately affect key Midwestern states important in electoral politics.
However, the White House justifies the use of tariffs as a necessary tool to counter unfair trade practices and incentivize reshoring investments and job growth in manufacturing. President Trump believes that the new tariff rates have made the U.S. "respected again" on the world stage.
Trump claims that exporters and importing companies will fully absorb the cost of tariffs. Yet, some experts argue that these costs could be passed onto workers, leading to wage stagnation or job losses.
The tariffs have also created uncertainties in international relations. Senate Finance Committee Ranking Member Ron Wyden, D-Ore., reports that Canadian officials are focusing on making alliances with nations other than the U.S. due to the uncertainty surrounding tariffs.
The actual process of negotiating trade deals with the Trump administration seemed less important to Trump, who instead sent letters to world leaders about the new tariff rates. Sen. Tim Kaine, D-Va., argues that Trump's trade agenda is hurting Americans more than others.
Sen. Chris Coons, D-Del., remains skeptical about Trump's commitment to his tariffs through further turbulent data. Meanwhile, Sen. Wyden states that Canada, traditionally a close ally, is showing disinterest in certain deals due to the tariff uncertainties.
The July jobs report and recent stock market movements do not provide concrete statistics specifically tied to the tariffs. However, the Equitable Growth study suggests that tariffs increase costs during production, which could dampen manufacturing growth and employment, while the White House focuses on long-term gains from reshoring initiatives.
In a twist of events, President Trump fired the Bureau of Labor Statistics Commissioner Erika McEntarfer after claiming the jobs report numbers were "rigged" to make him look bad. This decision has raised concerns about the independence of the Bureau and the credibility of the jobs data.
As the summer unfolds, the impacts of the tariffs on U.S. jobs and the economy continue to be a topic of intense debate and uncertainty. The tariffs have raised costs and risks for manufacturing firms and workers, with mixed evidence on their net positive effects. The official government narrative and independent research diverge somewhat, and more data is needed to fully understand the implications of the tariffs on the U.S. economy.
- The National Retail Federation and other associations are urging the administration against any trade action that will result in higher tariffs, as retailers express concern about the impact of new tariffs on merchandise and their ability to stay in business.
- According to analysis by Equitable Growth, manufacturing is the most vulnerable sector to tariffs, with over 23 million U.S. workers potentially facing negative wage and employment effects, disproportionately affecting key Midwestern states in electoral politics.
