Last Friday, the Trump administration deployed tariffs as a weapon in the increasingly tense diplomatic spat with Turkey over detained paster Andrew Brunson.
While not surprising, it was notable that the President is now using tariffs to punish countries for things other than “unfair” trade practices. It’s now readily apparent that sanctions and tariffs are the same thing in Trump’s eyes: tools for implementing what amounts to a unilateral approach to dealing with global “bad actors”.
That bodes ill for global commerce, as it suggests the White House doesn’t distinguish between diplomatic feuds and trade disputes. On Wednesday, Turkey responded, slapping additional tariffs on a host of U.S. goods including liquor, cars and rice.
Hours later, Trump again took to Twitter to defend his obsession with tariffs. “Our Country was built on Tariffs, and Tariffs are now leading us to great new Trade Deals – as opposed to the horrible and unfair Trade Deals that I inherited as your President”, he said, adding that “other Countries should not be allowed to come in and steal the wealth of our great U.S.A.” As usual, that’s a verbatim quote, so you know, [sic].
This approach is leading to disastrous outcomes for American workers. On Tuesday, data released by the Labor Department showed agricultural export prices slumped 5.3% in July from June – that’s the largest drop in nearly seven years. Simply put: farmers are not “great again”.
And neither are the 126 people who were laid off this month in Winnsboro, South Carolina, where Element Electronics, one of Fairfield County’s largest remaining employers, shuttered a factory citing the tariffs.
On the corporate front, General Motors, Harley-Davidson and Whirlpool all explicitly cited the tariffs on the way to explaining either earnings misses, guidance cuts or in some cases both last month and three Mondays ago, Caterpillar said it will likely be forced to raise prices to compensate for as much as $200 million in tariff-related costs. For its part, Tyson Foods slashed guidance citing “changing global trade policies [at home] and abroad and the uncertainty of any resolution.”
Well, in yet another example of what I’ll dare call “the Harley phenomenon” Stack-On Products, a maker of storage safes, will now close two factories in Illinois and move production to Mexico thanks to Trump’s metals tariffs. 150 people will lose their jobs as a result of the move.
The company, which has been in business in Chicago for four decades, makes everything from tool boxes to gun vaults and had already offshored some production to Mexico and China prior to the tariffs.
The factories in the Chicago area were the last two remaining American facilities.
Asked by the Chicago Tribune to explain the decision, Al Fletcher, human resources director for Alpha Guardian, Stack-On Products’ Las Vegas-based parent company, said the following:
The operation is really not profitable. Mr. Trump is part of this.
Asked for specifics, Fletcher told the Tribune the decision was made months ago after Trump announced the metals tariffs.
Not to put too fine a point on it, but the verdict is in on Trump’s trade policies – they are a disaster. And it’s only going to get worse from here.