Economic policy

Subterms

    Latest story

    163 Shares27 Views

    Haitians helped boost Springfield’s economy – now they’re fleeing in fear of Trump

    by

    Every morning, Alicia Mercado makes the 50-minute drive from her home in Columbus to Springfield, where she runs the Adasa Latin Market store. She opened the business next to a Haitian restaurant in 2023, having spotted a gap in the market for Caribbean and Latin foods – the neighborhood’s Haitian population was booming at the time.But over the past year, she says her business, which includes an international money transfer kiosk, has taken a major hit.“About 80 to 90% of our customers were Haitians; now that’s down to about 60% over the past six months,” she says. “No more people are moving to Springfield.”Mercado’s experiences are being echoed around the city of 58,000 people that garnered international attention last year when Donald Trump falsely claimed during a presidential debate that immigrants were eating people’s pets.Until the end of last year, Springfield was something of a surprise economic juggernaut.A report from the Federal Reserve Bank of Cleveland found that it ranked second among all Ohio cities for job growth since the pandemic.New housing projects, worth hundreds of millions of dollars, are among the biggest investments the city has ever made.That growth was partly fueled by the availability of manufacturing and blue-collar jobs that were eagerly filled by the more than 15,000 Haitian immigrants who had moved to the city over the past eight years, fueling businesses such as Mercado’s.Local companies got cheap, reliable labor, while Haitian workers received stable income, health insurance and a safe place to live. Many bought homes and invested their hard-earned income into improving the city’s housing stock that, in turn, padded the city’s tax coffers. For the most part, it was a win for all involved.But since then, the city’s economic fortunes have spiraled.Springfield businesses, big and small, are struggling in the aftermath of thousands of Haitians fleeing the town after the Trump administration’s termination of the humanitarian parole program for citizens of several countries, including Haiti, in June. On top of that, the government has ended temporary protected status, affecting the immigration status of more than half a million Haitians, which comes into effect on or before 5 February 2026.The Department of Homeland Security says conditions in Haiti have improved to allow US-based Haitians to return. However, violence prompted Haiti’s government in August to issue a state of emergency in parts of the country. The US Department of State currently has a level four “do not travel” advisory for Haiti.The consequences of these moves are being keenly felt in places such as Springfield.Since January, when the Trump administration took office, the percentage of manufacturing jobs in Springfield has been falling by double digits as the civilian labor force also declines, something thought to be partly fueled by Haitians leaving the city due to fear of the administration’s anti-immigrant rhetoric.At Topre America, an automotive parts manufacturing company north-east of downtown Springfield, dozens of jobs that Haitians had once filled – forklift drivers, supervisors and stackers – have remained unfilled on the company’s employment webpage for months.Unemployment has ticked up slightly in the city – but still at a rate twice the state’s increase – in the 12 months since Trump’s racist comments.In a city where income tax makes up the majority of municipal funding, the loss of thousands of Haitian workers means fewer dollars for public services for all residents.“Our tax revenue, which is the backbone of our general fund, has flattened. After years of strong growth post-pandemic, the rebound is behind us,” Springfield’s city finance director, Katie Eviston, reported at a city commission public meeting in June.Previous estimates had tracked that 2025 would see a 3.5% increase in income tax funds for the city. By June, that anticipated growth, however, had been wiped out in what Eviston said was a “level of decline [that] hasn’t occurred since the early days of the Covid shutdown”.Moreover, the city faces a worrying $4.25m financial hole due to the cancellation of a host of Biden-era programs and grants by the Trump administration.Springfield and its businesses aren’t alone in dealing with the fallout of the Trump administration’s immigration policies.Experts say it has consequences for businesses and companies right across the country. In June, the Association of Equipment Manufacturers (AEM) said that ending visas for international workers would leave 85,000 jobs unfilled.“Stripping [immigrants’] ability to work and threatening them with removal is not just a human cost; it is an economic one,” an AEM executive wrote in the Washington Examiner.Small communities in Indiana, Pennsylvania and elsewhere in Ohio that enjoyed an economic rebound in the aftermath of the pandemic are also experiencing depressed purchasing power due to White House-fueled job cuts.“Trump’s immigration policy slowed inflows. Suddenly, more firms have seen their immigrant worker supplies decline, forcing them to pay more to attract native workers, thereby placing upward pressure on inflation,” says Mark Muro, a senior fellow at the Brookings Metro thinktank.“This, combined with Trump’s tariffs, has created serious upward price pressure along with the rise in labor costs – not a great combination for many US producers in the heartland.”Without the ability to work, many Haitians are leaving the US.According to the Immigration and Refugee Board of Canada, more than 26,000 Haitians sought asylum there in the first six months of 2025, many of whom are thought to have fled the US. By contrast, just 21,756 claims were made for all of 2024.Many Haitians in Springfield, however, are stuck in place, without jobs and with bills mounting up.“A lot of people have work problems – we have lost half our customers,” says Youdins Solon, who helps out at his family’s Keket Bongou Caribbean restaurant in south-east Springfield. Solon moved to Springfield last March, having lived in Florida for 18 months prior. But by the summer, he lost his job at a local Amazon distribution center when his immigration status was revoked. He says he is one of hundreds who have been laid off.“I’m lucky because I have my family here, but for a lot of people, they moved [out of Springfield] because they were afraid of the situation.”But for those who have staked their businesses on a thriving immigrant community in Springfield, it’s not easy to pack up and leave.“We order Haitian food from companies in Florida and Chicago every two weeks,” says Mercado, “but now, that’s greatly reduced.” More

    More stories

    • 138 Shares48 Views

      in US Politics

      Pennsylvania city divided over Trump as it reels from economic whiplash

      by

      It was set to be the most expensive project that the beaten-down manufacturing sector of Erie, Pennsylvania, had seen in decades. In a blighted corner of town, a startup planned a $300m plant that would turn plastic waste into fuel for steel factories.Neighborhood advocates in Erie’s impoverished east side hoped the facility would provide the jobs and prosperity they needed. Environmentalists decried the pollution they expected the plant to bring. Unions got ready for what they hoped would be hundreds of jobs created by its construction, with more to come once it opened.And then it was over. Mitch Hecht, founder of the company pursuing the project, announced that a Department of Energy loan crucial to the plant’s funding was put on hold as a result of Donald Trump’s policies, which “had a severe and immediate impact on our ability to move forward”.It was the latest bout of economic whiplash to strike the county on north-west Pennsylvania’s Lake Erie shoreline, just months after its voters helped return Trump to the White House. Those who backed the president say they are sticking with him, even as his administration’s spending cuts have upended projects and budgets and tariffs have created new uncertainties for businesses.Once reliably Democratic at the presidential level, Erie county has emerged as hotly contested territory ever since 2016, when Trump became the first Republican to win the area in 32 years. Joe Biden carried the county by a slim 1,417 votes four years later, but it flipped back to Trump in 2024 by nearly the same margin.“We’re set up in this moment for extreme growth over the next 15, 20, 30 years, and as we try to just hobble off the starting line, we’re just getting whacked over the head by these larger macro policies and intentional immigration policies that create an inflation environment,” said Drew Whiting, CEO of the Erie Downtown Development Corporation.View image in fullscreenThe non-profit’s renovation efforts have helped open a food hall and new apartments and shops in what was once the poorest zip code in the US, and its latest project is a mixed-use space that could create 100 jobs and bring in up to $10m a year in tax revenue. But since the start of the year, costs of labor and materials have jumped 37%, which Whiting blamed on a dollar weakened by economic uncertainty, along with labor shortages worsened by Trump’s immigration crackdown.A short drive from downtown, a placard reading: “A recycling revolution is happening in Erie” standing outside a long-shuttered paper mill is the only sign remaining of the plastic waste facility that the startup International Recycling Group (IRG) planned to build there.Though environmental groups warned IRG’s plant would create more pollution and lead to garbage filling Lake Erie, projects intended to fight the climate crisis and address long-running problems such as how to dispose of plastic waste were priorities of the Biden administration, and last year, IRG announced it had received a $182m loan commitment from the energy department.On his first day in office, Trump signed an executive order that paused disbursements of such funds, and by April of this year, Hecht had announced that the loan had been put on hold, and the project would be canceled. IRG did not respond to a request for comment, and the Department of Energy did not respond to an email sent during the government shutdown.Railing against “waste, fraud and abuse” in Washington, Trump has put on hold numerous federal programs. Erie’s food bank, Second Harvest, has lost $1m that would go towards food purchasing, or about 25% of their budget, due to such funding cuts, its CEO, Gregory Hall, said.Meanwhile, need for their assistance has only grown, climbing 43% in the past two to three years as food prices rose and local grocers went under. A deadlock in the state legislature over approving a budget, which began in July, has only worsened the financial situation. “It has been a plethora of different funding cuts, different programs canceled, that is truly having an impact on not only the amount of food, but the types and quality of food that we can provide to the neighbors in our region,” Hall said.Trump’s solution to the ills plaguing communities like Erie is tariffs, which he says will encourage businesses to bring jobs back to the US from overseas, and protect domestic manufacturers from foreign competition. Businesses are divided over how significant the levies are, and whether the turmoil they have brought will be worth it.“It’s greatly impacted profitability, but it’s also it’s leading to the product not getting harvested,” said Roger Schultz, a farmer outside Erie who said his largest markets for apples, Canada and Mexico, are far less interested in taking his crop this year because of the levies.He was skeptical that the president’s promises of new trade deals would lead to those markets reopening.“Fundamental changes have happened out there in the marketplace, and no amount of pleading or price cutting or, ‘Hey, won’t you try this,’ is going to get you back in that,” Schultz said.At the injection plastic firm Erie Molded Packaging, sales have risen 15% this year, and its president, Tom Tredway, said he is looking at expanding their factory, thanks in part to tax deductions for businesses included in Trump and the GOP’s One Big Beautiful Bill Act. While all of their suppliers and customers are in the US, the thin-gauge aluminum that is used in liners for their plastic containers is manufactured abroad, and tariffs have driven the prices higher.“It’s a nuisance more than anything,” he said.skip past newsletter promotionafter newsletter promotionView image in fullscreenJezree Friend, vice-president of the Manufacturer and Business Association, an Erie-based advocacy and training group, described the higher costs as a necessary evil.“It’s a growing pain that gets you now. I think a lot of the business owners recognize that and are actually OK with that, by what they’re telling me,” he said.When Second Harvest distributes groceries, people line up in their cars hours early out of concern that the food on hand may run out. Those who supported the president on a recent Wednesday said they were pleased with what he had done so far.“I think he stands up for the people. I think he’s doing right,” said Norm Francis, 81, who runs a business fixing stained glass. “Corporate greed”, he said, was to blame for food prices that had become increasingly unaffordable for him, but the tariffs were “the right thing to do”.Ahead of him in line was Sally Michalak, 73, a retiree who was counting on Trump’s deportation campaign to curb inflation.“He’s getting rid of the illegals, so once all that settles down, I think grocery prices will go down,” she said.As for his funding cuts, Michalak shrugged them off as a necessary component of transforming a government she viewed as broken.“It’s just one of these deals where, if the house burns down, you have to tear it down completely before you rebuild it, and that’s what he’s doing,” she said.Rebuilding was on the mind of Gary Horton, executive director of the Urban Erie Community Development Corporation, as he sat in the gymnasium of a shuttered elementary school not far from where IRG would have built its plant. Closed in 2012 as enrollment in the neighborhoods around it declined, the Burton school has been used by local police for active shooter drills that have left paint splatter on the walls and bullet casings on the floor.Two years ago, Horton’s group bought it and turned the grounds into a community garden, with plans to hopefully reopen the school if the neighborhood’s economy turned around, hopefully with the help of the plastics plant.“The success of it would have helped us here, but it would have also helped maybe cultivate an atmosphere where other developers or other owners of projects would do the same thing,” Horton said.Now that the project has been canceled, “the odds of doing something right now aren’t great,” Horton conceded. “But we still have the challenge, and we still have the opportunity.” More

    • 200 Shares62 Views

      in US Politics

      US and Canada spar over ad of Reagan denouncing tariffs that led to derailed trade talks

      by

      After the US suspended all trade negotiations with Canada over a 1987 speech by Ronald Reagan denouncing tariffs that appeared to spark Donald Trump’s ire, the premier of Ontario said he planned to run an ad featuring the speech again during the World Series on Friday.Doug Ford, whose government ran the Reagan ad in US markets this week, first posted on X that the two nations were “stronger together”, while Trump added his own string of social media posts trumpeting the supposed benefits of tariffs.“Canada and the United States are friends, neighbours and allies. President Ronald Reagan knew that we are stronger together,” Ford wrote on X alongside the Reagan video. “God bless Canada and God bless the United States.”Ford said the ad will run during the first game of the World Series, but, after speaking with Canadian prime minister Mark Carney, Ford announced the campaign will end Monday.“Our intention was always to initiate a conversation about the kind of economy that Americans want to build and the impact of tariffs on workers and businesses,” Ford said. “We’ve achieved our goal, having reached US audiences at the highest levels.”The quick breakdown in relationships apparently stems from a one-minute television advertisement featuring Reagan’s radio address declaring that “trade barriers hurt every American worker”.Trump responded on Truth Social without evidence that Canada had somehow run a “fraudulent” and “fake” advertisement, and announced that “all trade negotiations with Canada are hereby terminated”.Rubio, the secretary of state, told reporters on Friday that Ford had aired commercials in the US which “took President Reagan’s words out of context”, adding that the Reagan Foundation had criticized the effort, too. “The President made his announcement that he suspended any trade talks with Canada for now,” Rubio said.The Reagan Foundation said on Thursday that the Ontario government’s advertisement “misrepresents” Reagan’s address, without elaborating how. It added that officials “did not seek nor receive permission to use and edit the remarks” and added that the organization was reviewing its legal options.It also encouraged people to watch the video of Reagan’s speech on its YouTube channel.Ford’s office responded by reposting the longer, five-minute excerpt, and said that the commercial uses “an unedited excerpt from one of Reagan’s public addresses, which is available through public domain”.Democratic lawmakers on the House ways and means committee jumped in to defend the Ontario advertisement. “This is the ad that drove Trump to cancel all trade talks with Canada,” the committee posted on social media. “Unlike Trump’s AI slop, this is real and uses Reagan’s own words on tariffs.”The dispute comes as both countries face critical deadlines in the next few weeks. Next week marks the cutoff for public comments on the scheduled review of the United States-Mexico-Canada Agreement, which faces its mandatory six-year assessment in July 2026. The following day, 4 November, Carney, will deliver a federal budget expected to focus on reducing reliance on US markets.Then on 5 November the US supreme court will hear constitutional challenges to Trump’s authority to impose tariffs under emergency powers. A federal appeals court ruled in August that such sweeping duties exceed presidential authority, potentially undermining the legal foundation for the 35% tariffs now applied to Canadian steel, aluminum, timber and automobiles.Chris Sands, the director of the Center for Canadian Studies at Johns Hopkins School of Advanced International Studies, suggested the collapse in talks simply formalizes a dead-end process.“Can we stop trade talks? Yes, you can stop talks about steel, aluminum, energy, all of it,” he said.“But there was no evidence we were going anywhere anyway.”Sands noted the irony of Trump citing Reagan while reversing his trade legacy. “Reagan loved the country – he loved free trade. Maybe Donald Trump believes that, but it’s not what he’s selling now.”Washington imposed 25% tariffs on Canadian imports this spring, prompting retaliation from Ottawa before Trump raised duties to 35% in August. Ontario, heavily dependent on cross-border manufacturing and automotive trade, has been particularly affected. The breakdown ultimately leaves Carney navigating domestic pressure with a minority government.“Carney’s trying to keep all the provinces together,” Sands said. “He’s walking a tightrope between angry Canadians, an angry Trump, and premiers who are going off-script.”Before departing for Asia on Friday morning, Carney acknowledged the changed reality. “We can’t control the trade policy of the United States,” he told reporters, noting that US policy had fundamentally shifted from previous decades.But he emphasized Canada’s readiness to resume detailed negotiations on steel, aluminum and energy sectors, “when the Americans are ready to have those discussions, because it will be for the benefit of workers in the United States, workers in Canada and families in both of our countries.”For now, Carney said, Canada will focus on what it can control: building at home and “developing new partnerships and opportunities, including with the economic giants of Asia”. More

    • 150 Shares130 Views

      in US Politics

      The populist playbook: Democratic US Senate candidate seeks to replicate Mamdani’s success

      by

      During Vermont senator Bernie Sanders’s Fight the Oligarchy tour stop in Michigan, Democratic US Senate candidate Abdul El-Sayed hit on bold populist policies like Medicare For All and taxing the rich.But he drew among the loudest cheers from the crowd in Kalamazoo, when he bellowed his updated reversal of an Obama catchphrase that signified a new pugilistic tactic when dealing with Maga attacks. “When they go low, we don’t go high. We take them to the mud and choke them out,” he said.El-Sayed’s fiery speech and his populist campaign in Michigan’s Democratic primary for the Senate race comes on the heels of Zohran Mamdani’s stunning June win in New York City’s mayoral primary, which has generated momentum on the left-wing of the party.The Sanders-endorsed, anti-establishment El-Sayed, 40, follows a similar blueprint as Mamdani, and Michigan in some ways offers favorable terrain for the leftwing populist playbook. But at the same time a repeat of Mamdani’s success in the more conservative, upper midwest swing state is far from certain, and the race is viewed as a possible bellwether on leftists’ electability in statewide campaigns across the US.“This is a time when that call for new politics is resonating beyond the places one would expect it to resonate, like in the far reaches of Michigan’s rural communities,” said Yousef Rabhi, a former Michigan House Democratic floor leader who has endorsed El-Sayed. “Abdul and Mamdani are speaking to this moment.”Like Mamdani, El-Sayed eschews partisanship in favor of leftwing populist economic ideas, sharply criticizes Israel, and leans heavily on a sense of authenticity. In New York City, that formula resonated with younger people, activated disaffected voters and attracted support for Mamdani from across the political spectrum. Mamdani remains strongly ahead in the New York mayoral raceUsing that style in Michigan is a break from the moderate Democratic politics that for decades have dominated in the state, and which defeated El-Sayed in 2018 when he lost to now governor Gretchen Whitmer in a gubernatorial Democratic primary.But since then, El-Sayed has run health departments in Detroit and Wayne county, and touts accomplishments like helping to eliminate $700m in medical debt for local residents.The economic playing field has also shifted since 2018, and El-Sayed thinks his message is more likely to resonate now than seven years ago. “People now understand Donald Trump was not the cause, but the symptom,” he said during an interview with the Guardian at a Detroit coffee shop.Moreover, Democratic voters’ frustration with the party is near all time highs, and the left believes there is appetite for outsider candidates, populist economics and criticism of Israel’s war in Gaza. It has boosted El-Sayed, especially in a state that’s home to the uncommitted movement and large Arab-American and Muslim populations.But there are some crucial differences between El-Sayed’s and Mamdani’s races.El-Sayed’s opponents are not damaged like Mamdani’s main competitors, mayor Eric Adams and former New York governor Andrew Cuomo. In the August 2026 primary election, El-Sayed faces US congresswoman Haley Stevens, and state senator Mallory McMorrow. The latter is similarly young and critical of party leadership, and has styled herself as an outsider. But McMorrow largely shares the establishment’s economic policy positions and brought on political insiders, like controversial former Cuomo consultant Lis Smith.Educated, middle-class voters who wanted to vote for an outsider were key to Mamdani’s win. El-Sayed also needs those votes, but they may be split among him and McMorrow, even if the two candidates have substantially different policies and El-Sayed is more truly an outsider, said Josh Cohen, a progressive political analyst who writes the Ettingermentum newsletter.“The race is not the ideal feel and circumstance in the way that New York was for Mamdani,” Cohen said. An El-Sayed win would suggest voters are concerned with policy, he added. “It would be a very meaningful sign that people’s desire for a shift isn’t superficial.”Another key difference between McMorrow and El-Sayed lies in Israel policy. El-Sayed calls for an end to “blank check” military aid to Israel and other countries, and uses the term “genocide”. McMorrow, by contrast, has tried to walk a tightrope, calling for humanitarian relief while not using the term “genocide” until October.El-Sayed’s populist economic proposals include a ban on tax incentives for companies like Amazon, new taxes for billionaires, the elimination of medical debt and a strengthening of anti-monopoly laws to address corporate price gouging.Though those are leftist ideas, El-Sayed said he avoids the “left-right” label, which might help thread a needle in places like the rural, conservative upper peninsula. Financial pain and its cause are the same everywhere, El-Sayed added, so his focus is on the economic divide, not the cultural or political one.“It’s the divide between the people who have been locked out and those doing the locking out,” he said. He added that his solutions have broad appeal no matter what they are labeled, and that explains why some Trump voters surprisingly show up for “a guy named Abdul”.“They didn’t vote for Donald Trump out of a sense of hate for Muslims. They voted for him because of a sense of frustration with the way the system has locked them out,” El-Sayed said. Indeed, the Trump-to-Mamdani voter was a key piece of the story in New York City.But Mamdani also had built-in help from politically aligned groups who in recent years laid dow campaign and issue infrastructure that was key to his win. No such infrastructure to push these ideas exists in Michigan.Even if El-Sayed wins the primary, Republicans will try to make the general election about social wedge issues instead of economics, said Jared Abbott, a political scientist and director of the Center for Working Class Politics.Mamdani and El-Sayed have so far been “very disciplined” in focusing on the “working class’s bread and butter economic issues”, Abbott added, and that would be essential to his overcoming GOP general election attacks.A win in the general could have an outsize impact on national politics – just as the Squad members’ 2018 midterm wins reverberated into the presidential primary and Biden’s domestic policy, El-Sayed’s election in a swing state could help pull the 2028 presidential race and next president to the left.“It would be a massive proof of concept that progressives do not [currently] have,” Abbott said. More

    • 150 Shares179 Views

      in US Politics

      Trump’s promise of a US manufacturing renaissance leaves experts scratching their heads

      by

      Donald Trump’s hugely disruptive trade war is setting the stage for a manufacturing renaissance in the US, administration officials say. Outside the White House, many economists are skeptical.Global trade experts point to many reasons they believe the president’s tariffs will fail to bring about a major resurgence of manufacturing, among them: Trump’s erratic, constantly changing policies, his unfocused, across-the-board tariffs, and his replacing Joe Biden’s carrot-and-sticks approach to brandish sticks at the world.“I think [Trump’s tariffs] will reduce the competitiveness of US manufacturing, and will reduce manufacturing employment,” said Michael Strain, an economist at the conservative American Enterprise Institute (AEI). “They’re raising the costs of production to US manufacturing companies, and that makes manufacturers less competitive. There will be some winners and some losers, but the losers will outnumber the winners.”‘Trump keeps changing his mind’The president and his aides insist that higher tariffs on more than 100 countries – making goods imported from overseas more expensive – will spur domestic manufacturing. “The ‘Made in USA’ label is set to resume its global dominance under President Trump,” White House spokesperson Kush Desai claimed recently.But few economists see that happening. Ann E Harrison, an economics professor and former dean of the Haas School of Business at the University of California, Berkeley, said the erratic, on-again-off-again rollout of Trump’s tariffs has already gone far to doom the president’s hopes of inspiring a huge wave of manufacturing investment.“For the policy to be successful, it has to be consistent over a long period,” she told the Guardian. “People need to believe it’s going to last. Some factories take five years to plan and build. You’re talking a long-term play. But Trump keeps changing his mind. Even over the last six months, we’ve had very little consistency.“The other problem is that he’s old, and no one is sure he’s going to be around that long. These policies need to be consistent, and that’s not happening.”Economists point to another question mark that is causing corporate executives to think twice about building factories in the US. In May, the US Court of International Trade ruled that Trump’s blanket tariffs are illegal – a decision that is under appeal.Strain, at the AEI, said: “When you add into the equation the erratic nature of president Trump’s tariff regime, when you add the question of its questionable illegality, when you add that none of this is going through Congress, when you add that even when the US secures a ‘deal’ with another country, it’s not really a deal, there are major outstanding questions.”France doesn’t think its alcohol exports will be hit by tariffs as part of the European Union’s agreement to pay 15% tariffs, noted Strain. “That’s a big question mark that would never go unresolved in any regular, traditional trade deal,” he said. “That’s all part of the massive uncertainty we’re seeing.”The Biden administration used deliberate industrial policies to boost several strategic industries, most notably semiconductors and electric vehicles, including a 100% tariff on EVs from China and 25% on lithium-ion EV batteries, as well as subsidies to buy EVs and build EV-related factories. The policies resulted in a surge in new factories to build semiconductors, electric vehicles and EV components.Biden “said we care about semiconductors and national security, and what he’d try to do is get actual investors to invest in it”, said Dani Rodrik, an economist specializing in trade and industrial policy at Harvard’s Kennedy School of Government, who predicted Trump’s blanket tariffs will prove less successful in inspiring investment. “If you really want to increase manufacturing and employment in the US, you’d go about it in a very different way, through industrial policies that first identify specific segments you care about.”When China, Japan and South Korea adopted policies to build their electronics and auto industries, they insisted that the corporations that benefited from those policies compete with foreign companies to help make them globally competitive. “For industrial policy to succeed, it has to work to promote more competition,” said Harrison, at the Haas School of Business. “The problem with tariffs is they do just the opposite. They restrict competition.”Susan Helper, an economist at Case Western Reserve University who worked on industrial policy in the Biden and Obama administrations, said Trump’s tariff rates on some countries and markets – like 15% on the EU, Japan and South Korea – are too low to spur much investment, questioning why a company would build a major factory to circumvent such a duty.“A [semiconductor fabrication] plant, that’s a billion dollars. You need to get a payback and that takes several years,” Helper said. “If the tariffs are 145% [as Trump once imposed on China], that’s attractive for building a plant. But if they fall back to 15%, then it’s really hard to get a return on your investment.”The administration boasts that several of its trade deals have specific commitments to spur huge manufacturing investment. It says its deal with the EU includes a $600bn investment pledge; with Japan, a $550bn investment pledge; and with South Korea, $350bn. Jamieson Greer, US trade representative, wrote in the New York Times: “These investments – 10 times larger than the inflation-adjusted value of the Marshall Plan that rebuilt Europe after World War II – will accelerate US reindustrialization.”But these supposed pledges have attracted skepticism. After all, this president claimed during his first term that “the eighth wonder of the world” was being built in Wisconsin after FoxConn pledged to invest $10bn and create 13,000 jobs at an electronics plant. But that promise fell embarrassingly short.Many economists question whether the EU, Japan or South Korea can force corporations to make a specific investment in the US. Indeed, an EU Commission spokesperson said the bloc had expressed “aggregate intentions” that are “in no way” binding. “These large numbers really sound like window dressing, some round numbers they’re throwing around,” said Harvard’s Rodrik.“Some include investments you were already going to make, and some are aspirational,” said Todd Tucker, a trade and industrial policy expert at the Roosevelt Institute. “Once we’ve had time to evaluate whether the investment happens or not, Trump will be on to the next press cycle.”In recent years, manufacturing employment has been trending downward – not just in advanced industrial countries, but also in China, as new technologies enable factories to churn out goods more efficiently, with fewer workers. That trend raises questions whether Trump’s trade policies can increase factory jobs in the US.‘An island of backwardness’The US is past its manufacturing peak, Berkeley’s Harrison noted. “That was actually during World War Two, and it has been declining ever since,” she said. “I don’t see manufacturing’s share of the economy or manufacturing employment reversing.”She added: “If the question is, are you going to bring about a major resurgence in manufacturing employment, it’s not just unlikely, the answer is no. More and more manufacturing is robot-driven and not done by people.”Auto industry officials in the US complain that Trump’s 50% tariffs on steel and aluminum have increased their costs and injured their competitiveness. “In manufacturing, for every one job in steel production, there are 80 jobs that use steel,” the AEI’s Strain said. “So putting tariffs on imported steel might help that one guy, but you’re hurting the other 80 people.”A study by Federal Reserve economists found that the tariffs Trump imposed in his first term were actually associated with a reduction in factory jobs nationwide, because increased input costs and retaliatory tariffs outweighed import protection from tariffs.Helper, at Case Western Reserve University, warned that the US auto industry will be hurt badly by Trump’s mishmash of tariffs coupled with his slashing subsidies for EVs. “Trump’s policies are setting the auto industry up to be an island of backwardness,” she said. “The rest of the world is going to be making EVs, but we’re going to be focused on making really high profits on pickup trucks that will be bad for the climate and won’t sell in the rest of the world.“We’ll have a great, competitive position in large, gas-guzzling pickups, but we’ll fall further behind in EVs. That’s a very risky and dangerous path.” More

    • 263 Shares119 Views

      in US Politics

      The Guardian view on Trump’s shock therapy: warehouse and transport workers are the first victims of a class war | Editorial

      by

      The White House, eager to win a trade war it barely understands, has yanked the emergency brake on China-US trade without checking who’s inside the vehicle. Donald Trump’s early April trade decree has taken a month to hit the economy – that’s how long Chinese containers need to reach Los Angeles. And on cue, US pacific ports registered a 45% drop in container bookings this week from China. When warehouses fall quiet and trucks idle in California, the silence will creep eastward. Unemployment will surely tick upwards.Even if Washington reverses course by the end of May, and Beijing plays nice, the best-case scenario is delayed damage. Some goods are being rerouted to avoid charges, but you can’t reboot global logistics overnight. This isn’t strategic decoupling – it’s economic self-harm. By the time the Trump administration notices, it will be too late. The consequences of the US president’s rash tactics will reverberate through Main Street. Mr Trump offers a flippant excuse: blame 11-year-olds with too many dolls – not his own tariffs – for rising hardship.US gross domestic product just shrank for the first time in three years – despite Mr Trump’s promise of a “golden era”. His tariffs are steering the world toward a downturn. Even the International Monetary Fund (IMF) knows it. According to its latest modelling, the fund now sees the probability of global growth falling below 2%, a threshold widely seen as equivalent to a global recession, as approaching one in four. That’s double the risk it estimated six months ago. Escalating US tariffs, says the IMF, are the main reason behind the darkening skies.What does this mean for the world? Below 2% global growth, much of the per capita gains vanish. Most of what’s left is soaked up by expanding giants in Asia and Africa – places with the people and industrial catch-up capacity to grow even in a weakened global economy. The UK does not have this. Britain is an ageing, post-industrial economy in a productivity slump without the momentum of demographics or the slack of underdevelopment. That’s why Labour can’t afford to sit back. Rising living standards and real economic security require government to invest, build and redistribute – because the market alone won’t.Commentators still blindly cling to David Ricardo’s 1817 theory of comparative advantage – as if today’s global capitalism mirrors Georgian England’s trade in wine and cloth. It doesn’t. Ricardo assumed nations specialise based on domestic costs. But in a world of mobile capital, it’s companies that specialise, not countries. That’s what the economist Dani Rodrik warned in the late 1990s: free capital flows undermine comparative advantage. Development now depends not on obeying trade patterns, but on shaping them – through industrial policy.But Maga protectionism isn’t rebuilding US industry – it’s shock therapy. Mr Trump engineers a trade crisis to hike prices, kill off “uncompetitive” firms and clear the way for a leaner, capital-heavy economy. Meanwhile, tax cuts hand America’s oligarchic tendency even more power to reshape markets in its image. Mr Trump’s narrative promises a revival for US workers – particularly the unionised holdouts in places such as Detroit – but what they will get is higher costs, stagnant wages and patriotic slogans. This isn’t industrial policy. It’s class politics disguised as economic nationalism – a controlled demolition of what remains of US labour’s bargaining power, sold as a populist renaissance.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. More

    • 150 Shares169 Views

      in US Politics

      Trump says Biden caused the economic downturn. That’s malarkey | Steven Greenhouse

      by

      While Donald Trump delusionally asserts that “we’re celebrating the most successful first 100 days of any administration in American history”, last week’s economic news emphatically refutes that. Trump’s commerce department reported on Wednesday that the US economy – in a sharp and dismaying reversal – shrank in the first quarter of this year.That of course is when Trump returned to the White House, but Trump, true to form, denied that he was in any way responsible for the surprisingly bad economic news. Trump, who has spent his life blaming others and refusing to admit mistakes, was quick to blame Joe Biden for the downturn. The nation’s gross domestic product declined at a 0.3% annual rate in the quarter, after adjusting for inflation.At Wednesday’s cabinet meeting – where cabinet secretaries sounded like North Korean officials obsequiously extolling Kim Jong-un – Trump noted the bad first-quarter report and said: “This is Biden, and you can even say the next quarter is sort of Biden.” Later in the day in a speech to corporate executives, Trump continued to try to dodge responsibility, saying: “This is Biden’s economy.”Even the very careful New York Times said that Trump was full of it. The Times wrote that Trump “blamed his predecessor for handing him a bad economy, despite data showing that growth was strong when he took office”.When Biden left office, many economists had glowing words about the economy. “President Trump is inheriting an economy that is about as good as it ever gets,” said Mark Zandi, chief economist at Moody’s Analytics. “The US economy is the envy of the rest of the world, as it is the only significant economy that is growing more quickly post-pandemic than pre-pandemic.”With regard to the bad first-quarter GDP report, economists overwhelmingly agree that there was one overriding cause, and that cause was not Joe Biden. Rather, it was the huge uncertainty and fears stirred by the prospect of Trump’s tariffs. Eager to stock up on foreign goods before Trump imposed his wave of tariffs, US businesses rushed to increase their imports, and according to the formula used to calculate GDP, soaring imports have a downward effect on economic growth.Like the boy who would never admit he broke the cookie jar, Trump refused to admit that his tariffs had anything to do with the first-quarter downturn. For Trump, truth is a distant galaxy. It’s a foreign enemy that he is forever trying to repel. He stubbornly refuses to admit that the economy was in strong shape when he took office, just as he shamelessly refuses to admit that “MS-13” was Photoshopped on to the knuckles of Kilmar Ábrego García, an immigrant who was wrongly deported to a brutal prison in El Salvador. Far too often, Trump seems allergic to the truth. During an interview with Terry Moran of ABC News, he brazenly insisted that Moran accept Trump’s falsehood about Ábrego García, telling him: “Why don’t you just say: ‘Yes, he does’” have MS-13 tattooed on his knuckles.It’s as delusional for Trump to claim that “we inherited from the last administration an economic catastrophe”, as he did in a speech to a joint session of Congress in March, as it is for him to insist that Ábrego García’s knuckles say “MS-13”.When Biden left office, no economists were forecasting a recession anytime soon – that’s why Wednesday’s report that the economy shrank in the first quarter was such a surprising reversal. During last year’s fourth quarter, Biden’s last full quarter in office, the nation’s GDP grew at a solid 2.4% rate. Indeed, ever since the Covid-19 pandemic ended, economic growth in the US was considerably stronger than in Britain, Germany, France, Japan and other G7 nations. Several weeks before election day, the Economist magazine ran headlines saying the US economy was “the envy of the world” and had “left other rich countries in the dust”.When Biden’s term ended, the jobless rate was a low 4.0%. Not only that, during Biden’s four years, the average unemployment rate was lower than for any president since the 1960s. Trump won over many voters by attacking high inflation under Biden – and it was a serious problem – but by the time Biden left office, inflation had slid to just 2.9%, far below its 9% peak in 2022 and nearly down to the Federal Reserve’s inflation goal.As part of his economic disinformation efforts, Trump has repeatedly said that job growth was a disaster under Biden. Sorry, Donald, that’s a lie. The fact is that during Biden’s four years, the US added 16.6 million jobs, more than during any four-year term of any previous president. (Trump will never tell you this, but during his first term, the nation lost 2.7 million jobs overall, making his first-term presidency the first presidency since Herbert Hoover’s to suffer an overall loss in jobs. The pandemic was largely responsible for that.)As part of his never-ending effort to dodge responsibility, Trump blamed Biden for the stock market’s recent troubles. During Trump’s first 100 days, the S&P 500 fell 7%, making it the market’s worst beginning to a presidential term since Gerald Ford took office in 1974 after Richard Nixon resigned due to the Watergate scandal.Devious as ever, Trump posted on Truth Social on Wednesday: “This is Biden’s Stock Market, not Trump’s. I didn’t take over until January 20th.” What Trump failed to say was that the stock market didn’t begin to plunge until 2 April, when he announced his steep, worldwide “liberation day” tariffs. That was more than two months after Biden left office – so it’s absurd for Trump to blame him for that decline. And don’t expect Trump to ever acknowledge that Wall Street soared during Biden’s four years. The Dow Jones Industrial Average climbed 39% and the S&P 500 soared by 55.7%, including a 28% jump during 2024.Jared Bernstein, who was chair of the council of economic advisers under Biden, said on MSNBC on Thursday that it was ludicrous for Trump to blame Biden for the first-quarter downturn. “I have never seen a more direct connection to what we’re seeing in the economy and stock market to the action of one person, which is to President Trump and his trade war,” Bernstein said.Many economists warn that the US economy may sink further in the second quarter due to Trump’s tariffs as some supply chains break down, some imports dry up, prices rise on many goods and many consumers and business pull back on spending due to all the uncertainty and anxiety.John Kasich, a Republican and former governor of Ohio, sneered at Trump’s efforts to weasel out of responsibility. “You can’t blame Biden,” he said. “It’s like saying the dog ate my homework.”

      Steven Greenhouse is a journalist and author focusing on labor and the workplace, as well as economic and legal issues More

    • 150 Shares169 Views

      in US Politics

      US consumer sentiment sees largest drop since 1990 after Trump tariff chaos

      by

      US consumer sentiment plummeted in April after Donald Trump’s trade war threw the global economy into chaos, according to a new report.The index of consumer sentiment, a score based on a monthly survey asking Americans about their financial outlooks, fell by 32% since January – the largest drop since the 1990 recession, according to the University of Michigan’s Institute for Social Research.“Expectations worsened for vast swaths of the population across age, education income and political affiliation,” said Joanne Hsu, director of the surveys of consumers, in a statement. “Consumers perceived risks to multiple aspects of the economy, in large part due to ongoing uncertainty around trade policy and the potential for a resurgence of inflation looming ahead.”In April, the index of consumer sentiment fell to 52.2, down from 57 in March. The last time the index fell below 55 was in the summer of 2022, when inflation rose to 9%.Consumer expectation of inflation also soared from 5% in March to 6.5% in April, the highest it has been since 1981.It is a sign that, despite his insistence that tariffs will “make a lot of money” and have not yet raised prices, Trump still has not convinced many Americans that his tariffs will actually work.Trump’s trade policies have scared investors, causing sell-offs in stock and bond markets. The president softened his tone earlier this week on his trade war with China after a volatile few weeks. Markets rallied after Trump said that his Chinese tariffs “will come down substantially”, though he also warned that “it won’t be zero.”But Wall Street tends to be more reactive than consumers, who have shown four straight months of declining sentiment on the economy. Even after Trump paused the highest of his reciprocal tariffs, causing stock markets to rise, consumer inflation expectations still remained much higher compared with March.Higher inflation expectations have also been paired with consumers anticipating slower income growth for the year ahead, meaning that more of them will be hesitant to spend in the months ahead – which all could ultimately mean a slowdown in the economy.“Without reliably strong incomes, spending is unlikely to remain strong amid the numerous warning signs perceived by consumers,” Hsu said. More

    • 175 Shares109 Views

      in US Politics

      Trump says Fed chair would resign if asked and condemns him over interest rates

      by

      Donald Trump early on Thursday condemned the Federal Reserve chair, Jerome Powell, for not lowering US interest rates, and expressed a wish for him to be gone from his role.The US president lambasted Powell as “always too late and wrong” in a post on his Truth Social platform. Trump noted that the European Central Bank (ECB) was poised on Thursday to lower interest rates again, without mentioning that the body has been responding to the chaos caused by Trump’s initiatives on tariffs.Addressing reporters later in the day, Trump claimed Powell would resign if he asked him to. Powell himself has said that he would not resign if asked to do so by the president.Trump has been pressuring Powell to cut US interest rates for months, even though the central bank is independent of the administration in setting monetary policy and the White House typically does not publicly lobby the Federal Reserve.The ECB had been expected to cut interest rates for the seventh time this year in order to prop up economic growth, and then did so not long before US markets were due to open. Powell enraged Trump on Wednesday night by warning that the president’s sweeping tariffs could raise inflation. That would make the Fed even more hesitant to cut interest rates.Christine Lagarde, the ECB president, in explaining the reasons why it has – unlike the Fed – cut interest rates, said “the economic outlook is clouded by exceptional uncertainty” because of Trump’s tariffs, which constitute a negative demand shock.Lagarde was speaking after cutting the ECB’s main deposit rate by 25 basis points to 2.25%.Europe had been preparing another interest rate cut following the global financial turmoil caused by Trump’s tariffs push, in which he has gone back and forth on whether, when and how deeply to tax imports from other countries, and on which countries, since he returned to the White House for a second term.He retreated sharply earlier this month from his decision to impose tariffs worldwide, pausing most of the charges for 90 days, although most notably not on China, after markets plunged and US government bonds – traditionally seen as one of the world’s safest financial assets – had suffered a dramatic sell-off. Wall Street chiefs and other experts also forecast a heightened likelihood of recession. Economists polled by Reuters on Thursday put US recession odds at 45%.After insisting for days that he would hold firm on his aggressive trade strategy, unveiled in full on 2 April, which he dubbed “liberation day”, Trump announced on 9 April that all countries that had not retaliated against US tariffs would receive a reprieve – and only face a blanket US tariff of 10% – until July.Powell on Wednesday said the US economy was well-positioned but added that Trump’s tariffs were likely to cause “at least a temporary rise in inflation. The inflationary effects could also be more persistent.”He indicated that the prospect of sweeping tariffs on virtually every trade partner could put the Fed in the unenviable position of having to choose between tackling inflation and unemployment.The World Trade Organization, meanwhile, warned that Trump’s tariffs would send international trade into reverse this year, depressing global economic growth.The International Monetary Fund (IMF) managing director, Kristalina Georgieva, said the global outlook was also weakening in the face of the Trump tariff onslaught, adding central banks like the Federal Reserve needed to remain agile and credible.“Resilience is being tested again – by the reboot of the global trading system,” she said.Trump also said as part of his Truth Social post at daybreak on Thursday that “Powell’s termination cannot come fast enough”. He dubbed him, further in the post, “Too Late” and put forward the argument that prices were coming down, from oil to eggs.Trump nominated Powell to become Fed chair during his first term in the White House, in 2018, and Joe Biden renominated him during his term in the White House, in 2022. The US Senate confirms the chair and the US president cannot terminate the head of the Federal Reserve before the end of their four-year fixed stints. Powell is in place until next spring.The US central bank has held interest rates steady at 4.25% to 4.5% since the start of this year.Trump said in his post: “The ECB is expected to cut interest rates for the 7th time, and yet, “Too Late” Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete “mess!” Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS. Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!”The New York Fed president, John Williams, spoke to Fox Business on TV on Thursday and backed up Powell’s wariness on rates.“I don’t see any need to change the setting of the Fed funds rate any time soon … It’s really about collecting information, understanding better what’s happening in the economy during the rest of this year, understanding kind of how the uncertainty plays out,” Williams said.Meanwhile, Politico, citing unnamed sources, reported after Trump’s post that the treasury secretary, Scott Bessent, had been cautioning White House officials against any attempt to fire Powell, for which there is no tested mechanism, saying it would risk destabilizing financial markets.And there was a fresh alarm bell sounded on the risk of stagflation, in which high inflation combines with high unemployment amid stagnant economic growth.“A sudden crystallization of the threat to Fed independence would both intensify market stress and shift it in more of a stagflationary direction with a sharp increase in tail risk,” Krishna Guha, vice-chair of an arm of the financial advisory firm Evercore ISI, said in a note.Reuters contributed reporting More