Business groups and industry associations that largely supported Donald Trump's candidacy for president because of the hopes of friendlier economic policies are now seeing that the blade definitely cuts both ways. And honestly, they really shouldn't be surprised.
After all, when on the campaign trail, besides promising to make the nation a more pro-business environment, now-President Trump also said he would be tough on any trade that was thought to be detrimental to the U.S. That included free trade agreements, being tougher with China on trade and taking whatever action he deemed necessary.
And while talks remain stalled on renegotiating the North American Free Trade Agreement, the Trump Administration has instigated a multi-front trade war. First, it was the tariffs on steel and aluminum imported from Canada, Mexico and the European Union, with each of those regions enacting retaliatory measure. And now, the trade battle with China, where both sides continue to go back and forth with an ever-escalating list of impacted goods and services.
All of these actions have a direct impact on the rubber and tire industry, and the markets they supply to.
Many of the same groups that hailed the tax reform bill they say was desperately needed have expressed differing views on the trade wars. Those have ranged from "no comment," to outrage (particularly with regards to the Canada, Mexico and EU actions), to hopefulness that the president is using the actions against China as leverage to bring a permanent binding bilateral trade agreement.
For his part, President Trump argues that the U.S. has been at the short end of the trading stick for a long time, and that China for years had stolen American technology and intellectual property.
Mike Pompeo, his secretary of state, even told the Detroit Economic Club that these trade wars can serve a purpose—that other countries have taken advantage of the U.S. under the framework of free trade.
But the actions the U.S. is taking may have serious consequences. The National Retail Federation claimed that $50 billion worth of tariffs against Chinese goods would reduce U.S. GDP by nearly $3 billion and cost the nation 134,000 jobs.
The Motor & Equipment Manufacturers Association argues that high tariffs disrupt the international supply chain for autos and auto parts. Many of its members, particularly when it comes to the steel and aluminum imports, often have access to only one or two global sources.
Much is at stake in these trade battles, but two things are clear. There likely will be no winners in a trade war between China and the U.S. And antagonizing long-standing allies such as Canada, Mexico and the EU will hurt the U.S. in the long run.