Financial observation： trade policy is ＂fiercer than tiger＂. American enterprises are miserable and embarrassed
Xinhua News Agency, Washington, June 13 th, financial observation: Trade policy is "fiercer than tiger" and American enterprises are miserable and embarrassed
Xinhua News Agency reporter Xu Yuan
The destructive trade policy of the American government is becoming the biggest threat to the development of American enterprises. In recent days, from enterprises to trade associations, from large companies to small and medium-sized enterprises, business people have criticized the US government’s protectionist measures.
On behalf of 661 American enterprises and trade associations, the American lobbying organization "Tariffs Hurt the Hinterland of the United States" sent a letter to US President Trump on 13th, urging the US government not to impose tariffs on goods imported from China, and to return to the negotiating table to reach a solution with China.
The open letter warns that American enterprises and trade associations are worried about the situation of tariff escalation. The increase in tariffs and the uncertainty surrounding Sino-US trade negotiations have caused market turmoil and posed a threat to the US economy.
According to the survey released by the Business Roundtable composed of executives of large American enterprises on the 12th, the "Economic Outlook Index" fell by 5.7 points to 89.5 points in the second quarter. This index reflects the sales expectations, capital expenditures and recruitment plans of American business executives for the next six months, and shows that American business circles are increasingly uneasy about the direction of US trade policy.
"(The US government’s trade policy) is increasing the risk of bad economic results," said Jamie Dimon, CEO of JPMorgan Chase and chairman of the Business Roundtable at the press conference that day. "The uncertainty of trade policy, the weak global economic growth and the inaction of the US government on other urgent public policy issues are worrying."
Tom Linebarger, chairman and CEO of Cummins, an American engine manufacturer, said that "trade (policy) is the most terrible threat to enterprise growth". He said that imposing tariffs on China’s goods exported to the United States would increase consumers’ costs and reduce the competitiveness of American enterprises.
American financial data software company predicts that due to the uncertain tariff policy and global economic prospects, for those multinational companies whose sales are more than half from outside the United States, their profits in the second quarter may drop by 9.3%. The company expects that Apple’s profit may drop by 14.6% in the second quarter, and Boeing’s profit may drop by as much as 43.7%.
The U.S. government previously announced that the tariff rate on the $200 billion list goods imported from China will be increased from 10% to 25% from May 10, 2019. The U.S. government also threatened to impose a 25% tariff on the remaining about $300 billion of goods exported from China to the United States, involving many end consumer goods.
Lorraine Hutchinson, an analyst at Bank of America Merrill Lynch, predicts that tariff escalation will lead to growth risks for American retail enterprises such as clothing. According to the semi-annual survey recently released by institute for supply management, about 59% of American enterprises indicated that increasing tariffs would lead to higher product prices. Wal-Mart, an American retail giant, also said that tariffs will force it to raise the retail price of goods.
Tariffs not only hit large enterprises, but also make life more difficult for small enterprises. USA Today reported a few days ago that the negative impact of tariffs has exhausted the energy of many small American enterprises because their cost digestion ability is worse than that of large enterprises. Adjusting the supply chain will cost hundreds of thousands or even millions of dollars, which is unbearable for many small enterprises.