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    Here’s How Trump Could Lose the Coming Trade War

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    The good news: I don’t think Donald Trump will cause a global trade war.The bad news: The reason I say that is I believe that a trade war would be coming even if Trump had lost the election, largely because China is refusing to act like a responsible economic superpower. Unfortunately, Trump may be the worst possible person to guide U.S. policy through the turmoil that’s probably ahead.He won’t be the reason we have a trade war, but he may well be the reason we lose it.China is the greatest economic success story in history. It used to be very poor; there are still many people alive who remember the great famine of 1959-61. But after the reforms that began in 1978 its economy soared. Even now, China is only a middle-income country, with G.D.P. per capita substantially lower than ours or in Western Europe. But China has a huge population, so by some measures it is now the world’s largest economy.However, all indications are that China’s era of torrid economic growth is behind it. For decades, Chinese growth was fueled mainly by two things: a rising working-age population and rapid productivity growth driven by borrowed technology. But the working-age population peaked around a decade ago and is now falling. And despite some impressive achievements, the overall rate of technological progress in China, which economists measure by looking at “total factor productivity,” appears to have slowed to a crawl.But a growth slowdown doesn’t have to be a catastrophe. Japan went through a similar demographic and technological downshift in the 1990s and has, on the whole, handled it fairly gracefully, avoiding mass unemployment and social unrest.China, however, has built an economic system designed for the high-growth era — a system that suppresses consumer spending and encourages very high rates of investment.This system was workable as long as supercharged economic growth created the need for ever more factories, office buildings and so on, so that high investment could find productive uses. But while an economy growing at, say, 9 percent a year can productively invest 40 percent of G.D.P., an economy growing at 3 percent can’t.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Fashion World Fears High Tariffs in Trump Administration

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      President-elect Donald J. Trump has threatened a tax of at least 60 percent on goods from China — a move with the potential to decimate small American brands.In the days after Donald J. Trump won the presidency, several small American fashion designers placed anxious calls to overseas manufacturing partners. Spurred by fears that the president-elect will make good on promises to raise tariffs, thereby upending their operations, they scrambled to find alternatives.The tariffs “would be devastating,” according to Chris Gentile, owner of the Brooklyn-based Pilgrim Surf + Supply, which produces items like padded work coats and fleece zip-ups in China. “I don’t know how we could function.”Throughout his campaign, Mr. Trump threatened to levy a 10 to 20 percent tax on most foreign products and, most significantly, at least a 60 percent tariff on goods from China. The thinking is that sharp taxes would compel companies to begin producing in America again. In conversations with clothing designers over the past week, that logic was met with extreme skepticism.Some designers are not convinced that talk of dizzying tariffs will survive past the campaign trail. But for smaller, independent apparel businesses that rely on the comparative affordability and high quality of Chinese clothing manufacturers, the mere threat of increased taxes on foreign goods was enough to plan for the worst.“We’ve established relationships with these factories,” Mr. Gentile said. “They’ve become almost like family.”A still-scrappy entrepreneur 12 years in, Mr. Gentile doesn’t have an army of supply-chain wonks to ferret out new factories. The task of corresponding with his manufacturers falls largely on him. He’s spent untold hours working with his Chinese production partners on how to set in the sleeves of his shirts just so or how poofy a down jacket should be.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      5 Things to Know About Trump’s Tariff Threats

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      The president-elect says that tariff is “the most beautiful word in the dictionary.” You may be hearing it a lot.President-elect Donald J. Trump has professed a belief in the power of tariffs for decades. Now, as he prepares to take office, they are a central part of his economic plan.Mr. Trump argues that steep tariffs on foreign goods will help benefit U.S. manufacturing and create jobs. His proposals would raise tariffs to a level not seen in generations. Many economists have warned of potentially harmful consequences from such a move, including higher costs for American households and businesses, and globally destabilizing trade wars.Here are five crucial things to know about Mr. Trump’s sweeping trade plans.Mr. Trump has floated several hefty tariff plans.While campaigning for the White House, Mr. Trump offered up a running list of tariffs. He talked about a “universal” tariff of 10 to 20 percent on most foreign products. He has proposed tariffs of 60 percent or more on Chinese goods. And he has suggested removing permanent normal trading relations with China, which would result in an immediate increase in tariffs on Chinese imports.Mr. Trump has also promoted the idea of a “reciprocal” tariff, in which the United States would match the tariff rates that other countries put on American goods. He has suggested using tariff revenue to replace income taxes. And he has threatened tariffs of 100, 200 or even 1,000 percent on Mexico, saying the country should do more to stop flows of migrants and shipments of Chinese cars.The Biden administration has also raised tariffs on goods from China, but Mr. Trump’s plans are much larger — affecting trillions of dollars of products, rather than tens of billions.Mr. Trump says foreign companies pay the tariffs. That’s usually wrong.A tariff is a tax that is put on a product when it crosses a border. For instance, a company that brings its product into the United States — the importer — actually pays the tariff to the U.S. government.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Airbus, With Eye on U.S. Race, Says It Will Be Ready for Higher Tariffs

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      The giant European airplane maker’s chief executive said it would pass along any higher charges to its customers.Airbus, the world’s largest commercial airplane manufacturer, said on Wednesday that it was preparing for the possibility that the United States would impose new tariffs on all imports, and that the company would deal with the higher charges by passing them along to its airline customers.In a call with reporters, Airbus’s chief executive, Guillaume Faury, said the European company was monitoring the U.S. presidential election next week and would be prepared for the possibility of a new 10 percent tariff. Former President Donald J. Trump, the Republican candidate, has made sweeping tariffs a critical plank of his economic platform if he wins.Mr. Faury said any new tariff would be passed along to Airbus’s airline customers, in much the same way that Airbus dealt with a tariff that Mr. Trump put on European aircraft in 2020 as part of a long-running airplane subsidy dispute.“So that’s something we will be discussing with our customers” if necessary, Mr. Faury said. “But it puts them in a difficult place of adding an additional cost on what they have ordered and what they’re procuring,” he said. “That’s basically mainly a decision of the state that has to be borne by the companies.”He added: “So we are prepared. We know what it feels like. We don’t believe that’s helping aviation and the competitiveness of the airlines and the aviation industry, but it’s something we would be able to manage.”Airbus on Wednesday announced a 22 percent jump in its net profit for the first nine months of the year despite major problems in its supply chain. Mr. Faury said that Airbus’s net profit rose to 983 million euros, or $1.1 billion, through September, and that its third-quarter adjusted earnings before interest and taxes were €1.4 billion.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

    • 138 Shares108 Views

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      Trump Flirts With the Ultimate Tax Cut: No Taxes at All

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      The former president has repeatedly praised a period in American history when there was no income tax, and the country relied on tariffs to fund the government.Former President Donald J. Trump has spent much of the presidential campaign brainstorming new, and sometimes untested, ways to cut taxes. In the election’s final stretch, he raised the possibility of going even further: eliminating income taxes entirely.During a Fox News segment on Monday, Mr. Trump took questions at a barbershop in the Bronx. When asked if the United States could potentially end all federal taxation, Mr. Trump said the country could return to the economic policies in the late 19th century, when there was no federal income tax.“It had all tariffs — it didn’t have an income tax,” Mr. Trump said. “Now we have income taxes, and we have people that are dying. They’re paying tax, and they don’t have the money to pay the tax.”In June, Mr. Trump floated the idea of replacing federal revenue from income taxes with money received from tariffs. Mr. Trump has not provided specific details of how that would work, and it is unclear if he wants to eliminate all federal taxes, including corporate income taxes and payroll taxes, or only end the individual income tax.Either way, both liberal and conservative experts have dismissed his idea as mathematically impossible and economically destructive. Even if Republicans control Congress, lawmakers are unlikely to dismantle the income tax system. Yet Mr. Trump’s combination of tax cuts and tariff increases has been central to his political pitch.“There is a way, if what I’m planning comes out,” Mr. Trump said of ending income taxes.Replacing income taxes with tariffs would reverse the progressivity of the tax system in the United States. In general, income taxes are progressive, meaning that Americans with more income pay a higher tax rate. Tariffs, which impose a tax on products imported into the United States, are regressive. They raise the prices on imported items like clothing and groceries, placing a larger burden on lower-income Americans who spend a bigger percentage of their income on those goods.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      I.M.F. Says Inflation Fight Is Largely Over but Warns of New Threats

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      The International Monetary Fund said protectionism and new trade wars could weigh on growth.The global economy has managed to avoid falling into a recession even though the world’s central banks have raised interest rates to their highest levels in years to try to tame rapid inflation, the International Monetary Fund said on Tuesday.But the I.M.F., in a new report, also cautioned that escalating violence in the Middle East and the prospect of a new round of trade wars stemming from political developments in the United States remain significant threats.New economic forecasts released by the fund on Tuesday showed that the global fight against soaring prices has largely been won: Global output is expected to hold steady at 3.2 percent this year and next. Fears of a widespread post-pandemic contraction have been averted, but the fund warned that many countries still face a challenging mix of high debt and sluggish growth.The report was released as finance ministers and central bank governors from around the world convened in Washington for the annual meetings of the I.M.F. and the World Bank. The gathering is taking place two weeks ahead of a presidential election in the United States that could result in a major shift toward protectionism and tariffs if former President Donald J. Trump is elected.Mr. Trump has threatened to impose across-the-board tariffs of as much as 50 percent, most likely setting off retaliation and trade wars. Economists think that could fuel price increases and slow growth, possibly leading to a recession.“Fear of a Trump presidency will loudly reverberate behind the scenes,” said Mark Sobel, a former Treasury official who is now the U.S. chairman of the Official Monetary and Financial Institutions Forum. Mr. Sobel said global policymakers would probably be wondering what another Trump presidency would “mean for the future of multilateralism, international cooperation, U.S.-China stresses and their worldwide ripples, and global trade and finance, among others.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

    • 125 Shares169 Views

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      China’s Lackluster Growth Continues, Signaling Why Beijing Acted on Economy

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      Falling prices, weak consumer spending and a housing market crash help to explain why the Chinese government is taking steps to stimulate the economy.The Chinese economy continued to grow at a lackluster pace over the summer, according to data released on Friday, underscoring the urgency of the government’s recent attempts to bolster the economy.Construction has slowed because of a housing market meltdown. Millions of young college graduates have been unable to find work. Many local governments have run out of money to build roads or even pay the salaries of teachers and other workers.Looming over it all are falling prices across the Chinese economy, from apartments to cars to restaurant meals. Broadly falling prices, a phenomenon called deflation, make it hard for companies and families to earn enough to pay their mortgages and other debts.China’s economy grew 0.9 percent in July through September over the previous three months, China’s National Bureau of Statistics said. When projected out for the entire year, the economy grew at an annual rate of about 3.6 percent in the third quarter.The growth in part reflected an official revision on Friday to show that the second quarter was even weaker than previously acknowledged. Growth then was at an annual pace of 2 percent, and not the previously reported pace of 2.8 percent.Beijing has announced a series of measures since Sept. 24 to address the lingering troubles that became clear in the numbers released on Friday. The central bank has cut interest rates and minimum down payments for mortgages. The finance ministry promised the sale of more bonds to raise money for local governments to pay municipal salaries and buy vacant apartments for conversion into affordable housing.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

    • 138 Shares179 Views

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      Louis Vuitton Owner LVMH Sees Stock Drop on Weak China Sales

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      Weak sales in China at LVMH, the owner of Dior, Tiffany and more, sent a shudder through the luxury sector.Shares in LVMH dropped on Wednesday after the luxury goods giant warned about an “uncertain economic and geopolitical environment” and its latest earnings disappointed analysts.The conglomerate — which owns Dior, Tiffany, Fendi and more — is a bellwether for the industry. Its financial results, released on Tuesday after European markets closed, has sent a shudder through the luxury sector, particularly in response to slowing sales in the hugely important Chinese market.LVMH, which is run by the French billionaire Bernard Arnault, said that sales for last quarter fell 3 percent from the same period the previous year. The company also reported a decline in sales in its fashion and leather goods unit, which makes up about half of the conglomerate’s revenue, for the first time since early in the coronavirus pandemic.Shares of other fashion and lifestyle brands also declined, including Hermès and Kering, the owner of Gucci.Investors are jittery about the Chinese economy. Beijing introduced a package of measures last month that spurred a major rally in Chinese stocks, but details remain vague about the extent of the measures to bolster weak consumer spending, stabilize the real estate market and strengthen banks.China recently announced retaliatory penalties on European brandy — LVMH owns Moët Hennessy — in response to higher tariffs imposed by the European Union on Chinese-made electric vehicles.“Consumer confidence in mainland China today is back in line with the all-time low reached during Covid,” Jean-Jacques Guiony, LVMH’s chief financial officer, told analysts on Tuesday.Some industry observers are betting that LVMH will cope. “We are not sure this quarter particularly changes the LVMH story,” analysts at Bernstein wrote in a note. Even without a lot of detail, the stimulus signals in China are encouraging and demand will return, the analysts said.China’s housing minister is set to hold a news conference on Thursday and is expected to outline more measures to bolster growth.Danielle Kaye More

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      Fears of a Global Oil Shock if the Mideast Crisis Intensifies

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      The threat of an escalating conflict between Israel and Iran has created an “extraordinarily precarious” global situation, sowing alarm about the potential economic fallout.As the world absorbs the prospect of an escalating conflict in the Middle East, the potential economic fallout is sowing increasing alarm. The worst fears center on a broadly debilitating development: a shock to the global oil supply.Such a result, actively contemplated in world capitals, could yield surging prices for gasoline, fuel and other products made with petroleum like plastics, chemicals and fertilizer. It could discourage investment, hiring, and business expansion, threatening many economies — particularly in Europe — with the risk of recession. The effects would be potent in nations that depend on imported oil, especially poor countries in Africa.The possibility of this calamitous outcome has come into focus in recent days as Israel plots its response to the barrage of missiles that Iran unleashed last week. Some scenarios are seen as highly unlikely, yet still conceivable: An Israeli strike on Iranian oil installations might prompt Iran to target refineries in Saudi Arabia or the United Arab Emirates, both major oil producers. Iranian-supported Houthi rebels claimed credit for an attack on Saudi oil installations in 2019. The Trump administration subsequently pinned the blame on Iranian forces.As it has done before, Iran might also threaten the passage of tankers through the Strait of Hormuz, the critical waterway that is the conduit for oil produced in the Persian Gulf, the source of nearly one-third of the world’s oil production. Such a move could entail conflict with American naval ships stationed in the region.That, too, is currently considered to be improbable. But the upheaval in the region in recent months has pushed out the parameters of possibility, rendering imaginable scenarios that were once dismissed as extreme.As Israel plots its next move, it has other targets besides Iranian oil installations. Iran would have reason for caution in crafting its own retaliation. Broadening the war to its Persian Gulf neighbors would invite a punishing response that could push Iran’s own economy — already bleak — to the brink of collapse.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More