Trade casualties are mounting in both the United States and abroad as President Trump’s tariffs against imports from China, as well as from our allies, begin to be felt. Earlier we reported that U.S. steel producing industries, which employ approximately 140,000 workers, likely would benefit at the expense of the much greater U.S. steel-using industries, which employ 5.5 to 6.5 million U.S. workers. But recent reports indicate that even these U.S. steel producers are experiencing new difficulties as a result of the tariffs.

Much of this is due to the fact that even companies that solely manufacture in the United States operate very sophisticated supply chains that stretch across the globe. And before materials, components and parts are imported, they often incur the addition of value in many countries and cross multiple boarders. Now, they’ll also incur multiple tariffs and taxes boosting their cost.

On a more positive note, the agreement in principle between President Trump and the European Union to reduce barriers to trade would go far in reversing the damage companies are experiencing on both sides of the Atlantic. Although the Devil’s in the details, a better working relationship with Europe would significantly strengthen our negotiating position with the Chinese.

Engaging China in a tit-for-tat trade war isn’t the solution.

In The Spotlight

Most analysts agree that China hasn’t implemented many of the reforms it had committed to implementing when it joined the World Trade Organization in December 2001. And since then, it has also engaged in predatory behavior.

So the question becomes: how do you change Chinese behavior?

Engaging China in a tit-for-tat trade war isn’t the solution. Instead, the United States needs to work closely with our European allies and other friends around the world in order to become a more effective negotiating force against the Chinese. And the good news: if the United States and European Union could put pen to paper, this could become a reality.

Nevertheless, the uncertainty caused by the emerging trade war has added greater volatility to the stock market. It’s also forced companies to take a wait-and-see attitude — which often results in companies delaying important investments. Unfortunately, this lack of activity does not support economic growth.

There are a number of strategies U.S. companies can employ to reduce risks in this volatile environment. Voicing your concerns to your Member of Congress is one of them — and a big one.

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John Manzella
About The Author John Manzella [Full Bio]
John Manzella is a world-recognized author and speaker on global business, emerging risks, and the latest economic trends. He's also founder of both the ManzellaReport.com and Manzella Trade Communications, Inc. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.




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