The Trade War Marches On
The escalating trade war between the U.S. and China is rippling through the global economy, hurting confidence among U.S. small businesses, crimping trade among industrial giants in Asia and hitting export-oriented factories in Europe.
On Sunday the U.S. imposed fresh tariffs of 15% on Chinese goods including clothing, tools and electronics. A round of retaliatory Chinese tariffs also took effect, targeting imports of U.S. soybeans, crude oil and pharmaceuticals. Beijing said on Monday it lodged a complaint with the World Trade Organization over the Trump administration’s tariffs.
The U.S. and China have increased tariffs on billions of dollars of each other’s goods since last year, and the latest round of levies kicked in on Sunday. Globally, the trade fight has roiled investment markets and dampened world economic outlook. Domestically, American businesses from farmers to manufacturers to tech firms have been hurt by the tariffs and are urging both sides to refrain from further escalation. “I have a hard time imagining that we will get to the 2020 election without seeing a significant impact to people’s pocketbooks,” Ashton said.
Economic confidence among small U.S. companies fell in August to the lowest level since November 2012, according to a monthly survey of more than 670 small companies conducted for The Wall Street Journal. The portion of respondents that expect the economy to worsen over the next 12 months rose to 40%, compared with 29% in July and 23% a year ago.
Japan, meanwhile, said Monday that capital spending by the country’s manufacturers fell 6.9% in the April-June quarter, the first decline in two years, as companies grappled with a nearly double-digit decline in exports to China. South Korea said Sunday its exports to China fell 21.3% in August compared with the same month a year earlier, driving an overall 13.6% decline in exports.
A U.S. survey of manufacturing purchasing managers to be released Tuesday will shed further light on how much the trade conflict is affecting the U.S. industrial sector. Several reports in recent days suggested the fallout was deepening globally. Tariffs are putting upward pressure on costs for multinational companies, forcing them to look for ways to offset it. Moreover, uncertainty about the outlook for negotiations between the U.S. and China is making it difficult for managers to plan.