What Happens When the Economy Collapses on Trump’s Watch?
President Trump doesn’t have many tentpole accomplishments to tout as his presidency enters its third year. He does have the economy, though, which has boomed since he assumed office back in January 2017. He might not have it much longer. On Wednesday, Apple CEO Tim Cook warned that the company wasn’t going to earn as much as expected in the coming financial quarter. “While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” he wrote in a letter to investors. “We believe the economic environment in China has been further impacted by rising trade tensions with the United States. As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed.”
On Thursday morning, the markets responded as expected. The DOW plummeted over 600 points, the S&P 500 fell 2.2 percent and the Nasdaq dipped 2.6 percent as concern swelled over the impact the president’s trade war will have on the global economy. Since Trump began imposing tariffs last year, economists, politicians and several corporations have warned of their impact, and it’s unclear how much longer the economy will be able to stand the strain of Trump’s trade policy. Over the past year, the president has excoriated suffering companies like Harley-Davidson and, most recently, GM for not having more patience.
As the markets sank on Thursday morning, Trump’s own economic adviser, Kevin Hassett, predicted that the tech giant that in 2018 was valued at $1 trillion won’t be the only American company to experience a downturn. “It’s not going to be just Apple,” he said Thursday on CNN. “There are a heck of a lot of U.S. companies that have sales in China that are going to be watching their earnings being downgraded next year until we get a deal with China.”
As David Frum of The Atlantic pointed out on Twitter, Hassett in June assured Americans that Trump’s tariffs were very much a good thing and that everybody should just remain calm. “There’s a massive amount of activity coming home,” Hassett said at a Washington Post event shortly after Harley-Davidson announced it was moving some of its production overseas as a result of the tariffs. “Harley-Davidson is an interesting story,” he continued, “but if you look at the data, the opposite is happening.”
Hassett is admitting Trump’s tariffs are hurting American companies because he, like Trump, believes things will rebound once a trade deal is worked out with China. This is a big “if,” though. China hasn’t budged since Trump first placed tariffs on Chinese imports in June. In September, he imposed another round of tariffs while threatening to raise import taxes on $200 billion in Chinese goods from 10 to 25 percent, and slap new 25-percent tariffs on an additional $267 billion in goods, if the two nations couldn’t come to a new trade agreement by January 1st. Trump and Chinese President Xi agreed to extend the deadline 90 days while dining at the G-20 summit in Argentina last month, and Trump has repeatedly assured Americans that a deal is imminent. He did so again on Thursday morning.
It’s true that the U.S. has taken in billions of dollars as a result of the tariffs on foreign imports, but it’s ultimately at the expense of American consumers, not “China and other countries.” The president has never seemed to grasp this, nor much of anything about how tariffs, which he has on multiple occasions referred to as “interest,” work. There’s also been little indication that progress has been made on a new trade deal. Trump and Hassett think that China’s economic troubles — and, in turn, those of Apple and other American companies that sell their products in China — are a good thing in that they will force China to give in to Trump’s demands. This hasn’t been the case so far.
According to the New York Times, U.S. trade representative and chief China negotiator Robert Lighthizer has told the president he may need to impose more tariffs in order to force China to surrender.
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