President Donald Trump’s trade policy could “backfire” — and middle America could take the fall, according to a Bloomberg Law report.
“Overall, it is going to be a drag on the U.S. economy,” Gus Faucher, chief economist for PNC Financial Services Group in Pittsburgh, told the outlet.
As many have said, he believes Trump’s tariffs are more like a tax that will raise prices.
But he added that by pursuing the policy, Trump is stabbing himself in the back by ostracizing his strongest supporters.
“In particular, it’s going to be a drag on the Midwestern economy," he said.
Trump’s policy put a 10% tariff on nearly every country the United States does trade with, and certain products and countries face higher tariffs.
This means if a TV is made outside of the United States and is valued at $100, it would have a $10 tax on the company that is importing the item into the country.
Some people believe this tax would be passed on to the consumer, making the consumer pay $110 for the TV. Others believe the company should be absorbing that $10 tax.
Under no tariff circumstances, if it costs $70 to make, ship, and sell the TV, the company would be making $30 profit. If the import company were to absorb the 10% tariff, the company would now make $20.
Trump believes increasing tariffs is going to revive “US manufacturing in the American Rust Belt.” His administration is now working with countries around the world to develop trade deals to alleviate the tariffs.
However, the Chief Executive Officer of Autodesk Inc., Andrew Anagnost, believes the tariff moves have “gotten people spooked.”
“The current operating mode is just the death to long-term investment,” Anagnost said, later adding that the tariff uncertainty “is stalling future projects.”
“If there’s a slowdown in consumer spending, it doesn’t matter if you’re making products domestically or overseas, and that’s not good for anybody,” CEO Ross Widmoyer told Bloomberg.
