The United States President, Donald Trump’s, latest economic policies are the opposite of emergency aid. Nevertheless, Wall Street and Corporate America are clamoring for emergency aid.
It could be that Trump calculated that tougher stances on trade and immigration could score him points in November. Nevertheless, these could backfire, making it harder for the economy to recover from this deep recession.
Suddenly, Trump is ramping up trade fights with two of the nation’s biggest trading partners. Thus, this threatens to slap tariffs on goods from Europe like beer made malt, chocolate, and butter. Moreover, Trump is pushing to reimpose tariffs on aluminum imports from Canada. Meanwhile, Trump extended immigration restrictions this week. Thus, it could make it harder for businesses to find skilled foreign workers.
All of that is happing amidst the drumbeat of lousy coronavirus news. Moreover, infections are surging in several areas.
On Wednesday, the Dow plummeted 3% or 800 points. This happened because there are concerns about the pandemic and European tariff threat.
Joe Brusuelas is a chief economist at RSM International. He said that it is precisely the wrong move at the wrong time. They are inching toward the same mistakes that they made amidst the Great Depression.
The tariff policies worsened the Great Depression, and Economists agree on that. The Smoot-Hawley Act of 1930 imposed tariffs on all the countries that shipped products to the United States. These trading partners promptly retaliated by slapping tariffs on US goods.
Brusuelas said that, for many of them, Smoot Hawley was a joke in Ferris Bueller’s Day Off. It is not a joke, added Brusuelas. It is profoundly dangerous. This could be a significant policy error that will put at risk a nascent recovery.
Trump’s tariff threats are part of the US-European battle over government subsidies to aircraft makers. The WTO (World Trade Organization) ruled in 2018 that the European Union helped Airbus with unfair subsidies. Thus, it cleared the path for new tariffs from the United States. The Trump administration signaled this week that it is planning to retaliate by slapping tariffs on $3.1 billion of goods from Europe. The products include yogurt, gin, chocolate, and olives.
Nevertheless, those tariffs will only add to the vast uncertainty in the world economy right now. The IMF, on Wednesday, downgraded its global growth forecast. It warned of a contraction of nearly 5% in 2020.
Win Thin works at Born Brothers Harriman. On Wednesday, he wrote a note for clients. He said that it is not the time to engage in a trade war. They cannot believe that the World Trade Organization can not come up with a better solution.
The Trump administration is now pushing Canada to impose quotas to slow aluminum exports. If not, it will snap back a 10% tariff on the metal. That is what Politico reported.
Neil Herrington is senior vice president for the Americas at the United States Chamber of Commerce. On Tuesday, he made a statement. In the statement, he said that bringing back those tariffs would be like a bad horror movie.