Many business leaders won’t say it out loud, but I have yet to meet a Wisconsin business person who likes President Trump’s tariff vendetta.
I use the word “vendetta” because, in my view, his wide-ranging tariffs are more about punishing other countries and exhibiting economic power than building businesses at home.
Maybe in the long term, some companies will bring back some work and jobs to the United States from their foreign plants and suppliers, but that’s decidedly in the long term. It takes years to set up complex operations here.
In the short term, the opposite is true. The big companies at the top of the supply chains are holding back on launching new products until the chaos from erratic tariff hikes and reductions clear off. They are holding off on purchases of new machines, building new plants, releasing large blanket orders and hiring new employees. All the companies down the supply chain are put into reverse.
Sachin Shivaram
One Wisconsin CEO, Sachin Shivaram, CEO of Wisconsin Aluminum Foundry in Manitowoc, whose order rate is down 35% to 40% since the start of the year spoke up and said, “We have had little choice,” he wrote, “but to lay off workers at all of our plants.”
He added, “Almost everyone in the business community thinks that tariffs are a bad idea.”
In another statement, he said, “The tariff policies are increasingly looking like the misguided convictions of one president.
President Trump gets big headlines for his wheeling and dealing with big countries, like China, India and the European Union. He gets fawning compliments and big photo opportunities, but beneath that showmanship many companies are seeing a meltdown of their top lines. Some that rely heavily on imports are going out of business.
Down deep, Trump’s unending campaign to lower interest rates is testimony to his hidden fear that the economy is slowing down. The purpose of lower interest rates is to mitigate a slowdown and stimulate growth.
In Wisconsin, it isn’t only manufacturers who are hurting. Higher tariffs on lumber from Canada have gashed the U. S. wood industry, such as building products.
China’s retaliatory tariffs on American food products have hurt Wisconsin cranberry and soybean exports, though some of that damage may be offset by Chinese leader Xi Jinping’s promise last week to buy soybeans. The volume of those purchases has not been revealed.
In another sector, Trump’s push to lower meat prices by bringing in beef from Argentina and Venezuela has infuriated American ranchers and meat packers.
Kim Ruhl
Interestingly, Wisconsin economist Kim Ruhl, who was tapped to leave UW-Madison to advise the president as a member of the prestigious Council of Economic Advisors, has long been skeptical of tariffs. He was quoted in the Daily Cardinal last year saying, “There is very little evidence that we can create jobs in any meaningful way by raising tariffs.”
It will be interesting to see how long Ruhl lasts in the presidential office.
Dale Kooyenga
Dale Kooyenga, president of the Metropolitan Milwaukee Association of Commerce, thinks a tariff war is “bad math.” He wrote a convincing multi-point case against pervasive tariffs, saying, for example, “Quite simply, tariffs are taxes, and a $600 billion tax increase will be a drag on the economy.”
Trump was recently infuriated when a Canadian advertisement quoted Ronald Reagan in a 1987 speech saying, “High tariffs inevitably lead to retaliation by foreign countries and the triggering of fierce trade wars. The result is more and more tariffs, higher and higher trade barriers, and less and less competition. So, because of the prices made artificially high by tariffs that subsidize inefficiency and poor management, people stop buying. Then the worst happens. Markets shrink and collapse, businesses and industries shut down, and millions of people lose their jobs.”
Long and short, Trump pays no attention to top international economists, to business voices or to the icon of conservative U.S. politics, former President Reagan.
One closing thought: More than 70% of the U.S. economy is based on services, not the manufacturing of goods. And Trump is not going to accomplish heavy job creation in manufacturing or agriculture, because they are getting hyper-efficient and need fewer workers per unit of output than ever before.
The boom in artificial intelligence is accelerating a long-term productivity increase.
Putting it all together, Trump needs to get his tariff obsession done with so the economy-wrecking uncertainty is put to rest.
