The President is spending $1.5 trillion of our national wealth to get in an undiplomatic skirmish that is blowing up on the rest of us and ruining the holidays.
The boundless cruelty of the current White House in all of its policies, from ripping apart families to denying health care to millions to blood-libeling people who are different from the Administration, has echoed across its policy platform.
Now, as the November Election approaches, the ongoing Trump trade tantrum threatens to perpetrate another, ironic cruelty on The People of the United States:
It’s ruining Christmas.
By launching a trade war as our nation enters the holiday season, the Administration is jeopardizing jobs, wage growth, benefits and GDP directly on the backs of working families. All evidence points to Christmas 2018 being a season for bootstraps as families will have to scale back their original plans for the holiday season.
Retail Giants Warn: Trouble Ahead as Billions of Dollars are Bled
Walmart has directly stated that prices will go up on various items, from cribs to Christmas lights, including “Car seats… backpacks, hats, pet products, and bicycles.”
"Either consumers will pay more, suppliers will receive less, retail margins will be lower, or consumers will buy fewer products or forego purchases altogether,” the company said in a letter to the office of the US Trade Rep.
Target joined the chorus, stating the tariffs will "hurt American consumers," and that working families will pay more for school and college essentials like notebooks, calculators, binders, and desks.
From CNN Money:
“The National Retail Federation, a trade group, estimated that a 25% tariff on furniture would cost Americans $4.5 billion more per year, while a 25% levy on travel items like luggage and handbags would cost an additional $1.2 billion…
Washing machines were an early example of how tariffs filter down to shoppers. The Trump administration imposed a 20% trade penalty on washers earlier this year, and laundry equipment prices spiked close to 20% in recent months, according to the Bureau of Labor Statistics.”
Supply Chain Chaos Strikes Santa’s Sleigh
One chief cost driver forcing taxpayers to scale back Christmas costs this season is the nature of retail: most retailers order items six months in advance and are now scrambling to find new suppliers in time for Christmas. For example, 85% of Christmas lights imported to the US last year came from China, along with 80% of dog leashes.
The complexity of the global supply chain makes untangling the supply and demand mess extremely difficult.
As one Morgan Stanley analyst stated:
“Meanwhile, the role of services in GVCs has expanded to include R&D, design, and logistics. “Manufacturing firms are also increasingly bundling goods and services together as one product to be sold, such as installation services and follow-on servicing and maintenance contracts as additional value-added to customers," he adds. “Consequently, any shocks to global goods trade will impart disruptions to the services sector as well, amplifying the related impact on global growth."
Farmers Feel the Pain
American small farmers are suffering a particularly rough fate alongside retailers. The Administration has claimed farmers will benefit from the cut, and that the government will deliver aid to make up for any losses. Unfortunately, that has turned out to be false.
From the Wall Street Journal:
“The Trump administration has started compensating U.S. farmers for damage tariffs are doing to their business.
Many farmers say the payments won’t make up for lost sales to China and other foreign markets they were counting on to buy the huge amounts of crops and meat being produced across the Farm Belt.
Bumper corn and soybean harvests and record pork production have pushed down prices for agricultural commodities. U.S. farm income is expected to drop 13% this year to $66 billion, according to the Department of Agriculture, extending a year-long slump in the agricultural economy.”
From farmers of hogs to farmers of soybeans, the US agriculture industry is seeing the effect:
- Mike Paustian, an Iowa pork producer who sells some 30,000 pigs annually, expects to receive about $40,000. Depending on the size of his crops, Mr. Paustian said he could receive another $20,000 for his 1,400 acres of corn and soybeans. In recent years, a farm of that size could make some $4 million in annual sales on the livestock alone.
- Kristin Duncanson, a soybean, corn, and hog farmer in Mapleton, Minn., said 40 percent of the value of her soybean crop has been lost this year because retaliatory tariffs China imposed on U.S. agricultural products have reduced demand and lowered prices. Hog prices are also down, prices for seed and fertilizer for next year’s crop are up, and banks are less likely to loan her money because of the reduced cash flow, she said.
- Wisconsin dairy farmer Janet Clark “those tariffs threaten business relationships that farmers have spent years cultivating. "We have created relationships with the people that we're exporting with," Clark says. "Now they're going to back off, and not buy from us. So that opens the door for other people to create those relationships."
That holiday spread you wanted to put out is going to cost you an arm and a leg.
Consumers and Workers Alike Get the Shaft
If you aren’t willing to take the word of giant mega-conglomerate retailers or financial giants on the issue, that’s understandable. Corporations are not easy to trust, particularly when they are involved in an extensive public relations campaign headed into a highly commercial season.
Yet given that the retail industry is the largest private sector employer in the United States (employing 25% of the US), they have a unique inside look at the impact, large expectations to manage, and motive to shoot straight in this case. The National Tax Foundation has pointed out that workers will see wages stagnate, a $1.5 billion long-term GDP dip, and nearly half a million jobs eliminated from the workforce thanks to the policy as well. A cross-section of executives running companies in “protected” (read: propped up, bailed out, obsolete ) positions are going to walk away with publicly subsidized profits while families will feel the pain of privatized losses in the checkout line and the unemployment line. Smaller companies will feel the pain worse than larger companies, with employees getting hit the hardest as the effects of the plan are continually passed along the economic labor chain. Small businesses are already sending out press releases about the damage done to date.
That’s half a million people out of work thanks to Trump’s War on Christmas, one more skirmish in the “greatness” he has wrought upon the United States.