Impact of trade war in the U.S.

World
Europe

02:32

U.S. President Donald Trump says trade wars "are easy to win." But until now, the real “winner” is still unclear.

Trump's trade policies were meant to protect U.S. domestic businesses, but it seems they're likely to be the worst affected.

Companies and industries are already starting to feel the pinch. The tariffs are increasing input costs for the companies that import goods from China, making their operations less viable.

The manufacturing activity in the U.S. slowed to a six-month low in October. According to the data provided by the trading group, the Institute of Supply Management, the national factory index dropped over two percentage points to just above fifty-seven in October.

In a huge blow to Trump, General Motors on Monday announced plans to close two manufacturing plants in the U.S., axing over 14,000 jobs.

The company did not specifically mention tariffs, but in June, GM warned that trade tariffs could lead to job losses and lower wages.

U.S. industry figures aren't an aberration

Analysts believe that Trump's "leverage game" against China, seems to be backfiring. But during an interview by the Columbia Broadcasting System, Trump said: "Till now it doesn't appear there is a problem."

One of the most striking consequences of the trade war is its impact on U.S. farmers.

According to the Minneapolis Star Tribune newspaper, over eighty farms have filed for bankruptcy in five U.S. states in the upper Midwest region. Corn, soybeans, milk and beef producers are the worst affected due to a steep fall in global demand.

Last year, China accounted for about 60 percent of the total U.S. soybean exports. Since Trump imposed sweeping tariffs, prompting China to retaliate, prices for soybeans have plummeted to a 10-year low.

According to data analyzed by Louisiana State University, in 2018, almost 15 percent of soybean production in Louisiana is plowed under or is too damaged to sell. A rising trade deficit with China was at the core of Trump's trade war. But, the latest numbers prove that raising duties on goods isn't helping.

In September, the U.S. trade deficit with China reached a new high of over 34 billion dollars, a 13 percent increase compared to last year. The Chinese side says it hopes that the U.S. will realize the basic fact of an interconnected world. There are no winners in a trade war.