The Trump administration's growing trade war will raise prices for US consumers, but it will not bring back many manufacturing jobs that have been transferred abroad.
When the administration increased rates in July, President Donald Trump insisted that higher fees would encourage US manufacturers to bring jobs overseas to their homes.
Instead, more than 4 out of 10 respondents surveyed said they planned to raise prices to offset higher production costs. Only one in ten said that they planned to reduce the share of total production produced outside the United States. About the same number of people said that tariffs would encourage them to transfer more jobs abroad.
Trump touted the occasional job creation announcements in the United States as proof of the effectiveness of his strategy. On Wednesday, he cited the project of a steel fabrication company to create 600 new jobs.
But those gains would be belied by news earlier in the week that General Motors was planning to cut some 14,000 jobs as part of a massive restructuring, partly forced by slower sales growth. Although the company did not specifically mention Trump's administration fees, US automakers were hit hard by rising steel prices driven by higher US duties on imported steel. .
Although many companies have tried to limit price increases, the cost of higher prices will eventually be borne by consumers. A recent study estimated the economic impact of lost wages and price increases at $ 2,400 per household in 2019.
Citing unfair trade practices, Trump imposed tariffs of 10% on Chinese imports at $ 200 billion in September. China has responded by imposing taxes on US goods worth $ 60 billion.
US tariffs are expected to increase to 25% in January. Trump also threatened to charge $ 267 billion more if Beijing failed to meet its requirements. This would extend US tariffs to virtually all Chinese exports to the United States.
When Trump first triggered global trade tensions with major US trading partners in July, US companies had hoped that disputes would be resolved quickly. But if the United States, Canada and Mexico are on the verge of signing an updated trade agreement on Friday, negotiations with China have made little progress.
Just days before a meeting with Chinese President Xi Jinping in Argentina, Mr. Trump announced Monday that he planned to raise tariffs on Chinese imports for $ 200 billion, from $ 10 billion. % to 25% of current costs. from China.
Trump told the Wall Street Journal that it was "very unlikely" that he would accept China's request to delay the increase, which is expected to come into effect on Jan. 1.
"The only deal would be for China to open up its country to US competition," Trump told the Journal. "As for other countries, it belongs to them."
Trump, who is scheduled to meet Xi at the G-20 summit in Buenos Aires this weekend, said if negotiations fail, he will also impose tariffs on the rest of China's imports.
"If we do not agree, then I will add another $ 267 billion," at a 10% or 25% duty rate, Trump told the Journal.
While Chinese tariffs are reducing our profits more and more, the American manufacturers operating there are scrambling to find alternatives. However, few people repatriate these operations home, according to a separate study conducted in October by the US Chamber of Commerce in southern China.
Instead, over 70% of US companies in southern China decide to invest more in this country and relocate some or all of their manufacturing activities to other countries. Sixty-four percent of the more than 400 companies surveyed said they would consider relocating their production lines outside of China, but only 1 percent said they intend to establish manufacturing bases in North America.
Nearly half of the companies surveyed also stated that there had been an increase in non-tariff barriers, including increased bureaucratic oversight and slower clearance. Analysts have warned of such risk for US companies, as China is less able to match US measures to a dollar to a dollar.
Chinese manufacturers are also squeezed by the trade war. Earnings growth in China's industrial enterprises slowed for a sixth consecutive month in October, as sales growth continued to slow.