On April 12, Bloomberg reported on the (some would say urgently) formed coalition of industry groups to fight Trump tariffs. Organizations representing technology, retail, manufacturing, and various other industries teamed up, announcing that “everyone loses in a trade war.”
This coalition of diverse business groups even signed a letter, urging the president to act.
“There’s a sense of urgency on this issue, and the growing coalition is a sign that the business community is united against the proposed tariffs,” Bethany Aronhalt, a spokeswoman for the National Retail Federation, told Bloomberg.
One of the coalition’s main goals, in their words, is to ensure that American workers are not the ones forced to pay the price for China’s actions.
Who’s actually paying the price? According to the Federal Reserve’s most recent survey of U.S. businesses, all 12 regions of the United States reported robust job growth and good overall economic growth. The Federal Reserve’s Beige Book report, also summarized by Bloomberg, is based on anecdotal information collected by the Federal district banks in March and early April.
Stated in the report is the following.
“Outlooks remained positive, but contacts in various sectors including manufacturing, agriculture and transportation expressed concern about the newly imposed and/or proposed tariffs.”
The same report also shows most businesses still struggle to fill open jobs and find skilled workers. The wage growth, however, remains modest. Hourly earnings rose by 2.7 percent. These labor shortages were compensated with the use of automation and overtime. Furthermore, the unemployment rate in March of 2018 remained at 4.1 percent.
Perhaps most importantly, all 12 districts reported good overall economic growth; “modest” or “moderate.” Consumer spending increased as well, but so have the prices. Input prices, in construction and transportation in particular, continued to rise. Apart from that, as stated in the report, “business generally anticipate further price increases in the months ahead, particularly for steel and building materials.”
Some companies were hurt by tariffs on Chinese aluminum, and prices of steel also rose quite dramatically. One company reported to the Federal Reserve that “these tariffs are now killing high-paying American manufacturing jobs and businesses.”
In short, the Federal Reserve’s most recent report indicates that both sides of the debate might be right: it might be a challenge to prevent the labor market from sparking inflation while continuing to gradually raise interest rates.
According to Rand Paul, a famous libertarian-minded opponent of the Fed and Trump tariffs, his team’s public polling shows that between 70 and 75 percent of the public thinks auditing the Federal Reserve would be a good idea.
The bill Mr. Paul is proposing is, in his words, incredibly popular with the public.
“If you look at what’s happened in recent history — for example, the crisis we had in 2008, the housing boom and then the eventual housing bust — I think there is a strong argument for it being entirely the Federal Reserve’s fault,” Paul told MarketWatch in March.
It might be too soon to say exactly how Trump tariffs will affect American citizens, but it is highly likely that they would cause at least some price instability. For example, the North American CEO of Toyota told Fortune that tariffs could increase car prices; steel and aluminium tariffs would be responsible for the increase.