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WASHINGTON – From the security of a resilient US economy, President Donald Trump set fire to Friday's punctures on a high-risk trade war with China.
The story suggests that a cycle of tariffs and retaliation may end up stifling economic growth. But for the moment, US employers, investors and consumers are weighing the dangers of prolonged disagreement between the world's two largest economies in a much more positive context: the healthiest US job market For years.
Confidently confident despite the risks ahead, US employers added jobs this year to a robust monthly average of 214,500. Many businesses say that they have reached the point where they can not even find enough people to fill positions. Unemployment is at a low 4 percent.
All this recruitment is done in an economic expansion that enters its 10th year – the second longest recorded sequence. US financial markets, while wary of Trump's trade struggles, hovered between modest gains and losses this year, but avoided any sustained panic.
"The robustness of the economy – and it is stronger than it has been for decades – inoculates a deeper examination of Trump's trade policies," said Daniel Ikenson , director of commercial policy studies at the Libertarian Institute Cato.
Most employers consider that the economy has reached a comfortable cruising speed and have continued to hire. In business climate surveys, they have expressed concerns about tariffs, but their mistrust has not yet disrupted their business plans.
The United States added 213,000 jobs in June, and the influx of new jobseekers, apparently optimistic about their prospects but not finding work immediately, pushed the unemployment rate up. from 3.8% to 4%, the government reported Friday.
To help spur growth, businesses and consumers received $ 136 billion in stimulus this year from tax cuts. Quarterly economic growth is expected to be the strongest since 2014. Housing starts have increased 11% since the beginning of the year.
From this position of strength, President Donald Trump is playing that he can deploy tariffs to his advantage, even if they will inflict suffering on the businesses and consumers who lick him. supported in 2016. The Trump team's calculation seems to be that no choice but to trade with the world's largest economy and will eventually have to yield.
The president hopes to obtain concessions not only from China but also from longstanding allies such as the European Union, Canada and Mexico. Its stated goal is to reduce US trade imbalances and create more manufacturing jobs in the United States.
Up to now, the economy can absorb the costs of the new tariffs, including separate taxes on the importation of steel and aluminum, without suffering an overwhelming shock. But the pain could intensify. Trump has threatened a 20 percent tariff on auto imports of about 50 billion dollars from the European Union. These tariffs could result in reciprocal taxes from other countries that could harm American automakers and lead to layoffs.
Trump warned that he could possibly impose duties on more than 500 billion dollars of Chinese imports. He said in a speech in Montana last week that other countries would accept his terms – "and if they do not, we will actually do better."
"Our allies, in many cases, were worse than our enemies," said the president. "We opened our country to their wares, but they put up huge barriers to keeping our products and products out of their country because they did not want that competition."
Soybean producers and from pork to motorcycle manufacturer Harley Davidson, many US exporters are facing upset tariffs.
Yet some American companies benefit. Braidy Industries, for example, has just started construction of an aluminum plant near Ashland, Kentucky. He says that he has already sold twice the capacity of the factory for the first seven years of production, after the measures taken by the US government to protect the aluminum industry to United States.
Craig Bouchard, CEO of Braidy, said that the expansion of US tariffs on imported aluminum helps add 600 million jobs in the Appalachians and the thousands jobs indirectly supported by the factory.
"There are 10,000 families resting on my shoulders," he said.
Up to here, most economists consider Trump as mocking more favorable trade rules rather than hosting a protracted conflict with America's trading partners. Government officials encouraged this view.
"He's going to deliver better deals," said Kevin Hbadett, president of the White House Council of Economic Advisers, on FOX Business Network. "He's called the bluff of other countries that are fundamentally abusing … our workers for a long time and – but he wants better deals."
Bill Adams, Senior Economist at PNC Financial Services, stated that The Commercial War "is still not our basic expectation, but it is less far-fetched than it appears" more early this year.
A calamitous trade war would likely be the "result of a miscalculation or unintended consequences, rather than an explicit goal," Adams added.
If that happened, the Trump-led economy could end up under the weight of protectionist trade policies.
"The longer the tariffs and the longer they become, the more they will slow down the hiring and investment of US companies engaged in global value chains," added Adams.
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