U.S. stocks have now fallen for a third consecutive week[1], and registered this year’s biggest one-day fall this week, as President Trump’s tariff war with China has taken its toll on economies from Asia to Europe and the U.S., including the American farmer, but the White House is refusing to accept responsibility.
“This is basically the Federal Reserve’s problem,” White House Director of the Office of Trade and Manufacturing Policy, Peter Navarro told Fox News.[2] “They are causing this because when Jay Powell got in as chairman he proceeded to rein in interest rates by 100 basis points, too far too fast. Even though the Trump economy is rock solid, it slowed us down a bit because of those higher interest rates.”
Former Fed chair, Janet Yellen, begged to differ in an appearance on Fox Business. Noting that uncertainty about trade “is having a marked impact on business confidence,” Yellen said she thought the U.S. economy was still strong enough to avoid a recession, but she added, “But the odds have clearly risen, and they are higher than I’m frankly comfortable with.”
Businesses and investors agree and clearly think Trump’s tariffs on $250 billion worth of imports from China now at 25%, and another 10% levy due on the remaining $300 billion imports expected later this year, are raising business costs and disrupting supply lines as companies try to source raw materials and components from cheaper sources in other countries.
“It’s a dangerous game,” Dan Ivascyn, the chief investment officer at the fund manager Pimco, said. “We think some economic damage is dealt every day that this uncertainty lingers.”
For those looking for evidence of the US-China trade war hurting the economy, one only need to look at the U.S. farm sector this week.
Heavy agricultural equipment giant Deere & Company DE, +3.84%[3] cut its earnings guidance for a second straight quarter and announced a review of costs as U.S. farmers,[4] hit by China’s reaction to Trump’s trade policies and spring weather disruptions, were unable to afford new tractors.
Farmers are hesitating to upgrade their aging fleets of Deere’s iconic yellow and green tractors as the U.S.-China trade war stretches into a second year and after China reduced its purchases of U.S. soybeans in particular.
The quarterly results “reflected the high degree of uncertainty that continues to overshadow the agricultural sector,” Deere Chief Executive Officer Samuel Allen said. “Concerns about export-market access, near-term demand for commodities such as soybeans, and overall crop conditions, have caused many farmers to postpone major equipment purchases.”
While the White House this week delayed tariffs on consumer products imported from China until December, it decided to push ahead with 10% tariffs on Chinese agricultural products...