On Saturday, the conservative Wall Street Journal editorial board blasted President Donald Trump for kneecapping the U.S. economy with an open-ended, sweeping trade war — and warned that the “trade uncertainty principle” is wiping out the economic gains of the previous few years.
“President Trump tweeted Friday that ‘The Economy is great. The only thing adding to ‘uncertainty’ is the Fake News!’ Sorry, sir. The economy is fair to good, but it’s no longer as great as it was last year, and a major reason is the uncertainty caused by Mr. Trump’s trade policy,” wrote the board.
Citing Friday’s lackluster jobs report, the board pointed out that much of the slowing of job creation came from sectors of the economy impacted by the new tariffs.
“Friday’s labor-market report for August shows that job creation in the goods-producing economy has slowed to a trickle,” wrote the board. “Mining and logging lost jobs for the third month in a row while manufacturing produced a mere 3,000, after only 4,000 in July. This reflects declining demand for U.S. goods around the world due to slower growth abroad caused in part by Mr. Trump’s protectionist shock to the global trading system.”
On top of the jobs report, said the board, new Federal Reserve data supports the idea that protectionism is causing major pain.
“The economists did a statistical analysis of newspaper articles and earnings-call transcripts to measure what they call ‘trade policy uncertainty,’ or TPU. They then used that and other data to estimate the impact of TPU on economic growth and industrial production in the U.S. and the world,” wrote the board. “‘We find that the rise in TPU in the first half of 2018 accounts for a decline in the level of global GDP of about 0.8 percent by the first half of 2019,’ the economists write. That damage would be diminishing now if trade tension had abated, the study shows.”
“Mr. Trump and Republicans should be especially worried about the Fed’s estimate that the trade damage will continue through early 2020,” concluded the board. “He may not want to believe anything from the Fed. Then again, we predicted this result two years ago. Bad policies have negative consequences, whether they come from the right or left.”
You can read more here (subscription required).