The economy 100 days after Trump’s inauguration

San José, CA – One of the biggest issues that propelled Donald Trump to a comeback victory in 2024 was the economy and inflation in particular. While Trump hammered at the issue, saying that he was going to make America affordable again, Biden, Harris and most Democrats tried to deny that there was a problem, repeating over and over that the economy was in great shape.

Not only was this turning a deaf ear to the voice of many working-class and low-income people, but the Democrats’ position relied on official inflation measure, the Consumer Price Index, or CPI, which left out two important costs: interest payments (which were way up because of the Federal Reserve’s method of fighting inflation by raising interest rates) and home insurance costs, which were rising rapidly as climate change-fueled disasters, from hurricanes to wildfires, were driving up insurance companies’ costs, which in turn were raising premiums.

One of the promises that candidate Trump made was to bring down egg prices on “day one.” But this was a classic sleazy business “bait and switch” tactic, as Trump has done nothing about the problem. In fact, from January to March, egg prices at the grocery store rose almost 25% in just two months! While Trump rails about needing to bring production back to the United States, it is not a cure-all even if done, given 99.5% of all eggs consumed here are produced in the United States.

Trump also tried to address the deindustrialization that has eliminated hundreds of thousands of well-paying union jobs, especially across the Midwest. Trump began big with double-digit tariffs on the largest U.S. trading partners: Canada, China and Mexico. Trump upped the tariffs, with 25% tariffs placed on steel and aluminum. Then he doubled down with his historic “Liberation Day” tariffs announced April 2 that were based on the U.S. trade deficit with each country.

However, Trump’s tariffs were not sustainable, causing Trump to back down many times. First, he suspended tariffs on Canadian and Mexican goods that were USMCA eligible, that is products covered by the free market agreement between the U.S., Mexico, and Canada, that Trump negotiated in his first term. He put the “Liberation Day” tariffs on hold, except for China, which had the backbone to fight back. Then he exempted the tariff on Chinese-made cell phones and computers, and most recently, suspended the tariffs on imported cars.

These jumps and drops in tariffs have had a whiplash effect on financial markets, with Trump’s first 100 days having the biggest drop in stock prices since the second term of Richard Nixon, who had also upset the capitalist world economic order by ending the U.S. dollar’s convertibility into gold, which was a key part of the post-World War II Bretton Woods currency structure.

Usually when there is financial turmoil, many investors from around the world will rush to buy the U.S. dollar and U.S. government bonds, seeing them as “safe havens” in troubled times. But Trump’s trade war on the rest of the world in general, and on China, the world’s largest economy as measured by “purchasing power parity”, has ended this, with both the U.S. dollar falling as well as bond prices, which is causing interest rates to go up.

While Trump denies that tariffs will raise prices, the American people know better, and surveys of expected future inflation are now the highest since the 1980s. Consumer confidence has now dropped for five months in a row. Mainstream economists, the Federal Reserve, and the International Monetary Fund have all raised their projections for inflation this year.

The tariffs are also starting to have an impact on jobs. Early on, the tariffs on autos from Canada and Mexico (now largely suspended) caused a Stellantis auto factory to pause production, which led to job losses at parts plants in both Canada and the United States. Indeed, all the mainstream economic forecasts have raised the likelihood of a recession later this year, along with rising unemployment.

The trade war with China is already causing shipments of goods to the United States to fall, and by late May, price increases and shortages will start to show up at retail stores.

Deindustrialization and the export of U.S. production to other countries is a real problem, but broad tariffs and dystopian dreams of American workers screwing in screws into iPhones are not the solution. The problem at its root is caused by the capitalist system’s goal of maximizing profits in general, and Wall Street’s expanding reach in particular. This can be seen in the case of the Ames True Tempur factory in Harrisburg, Pennsylvania, which Trump visited to celebrate his first 100 days in 2017.

At that time, Ames was the largest wheelbarrow plant in the world and made 85% of the wheelbarrows sold in the United States. The company had a storied history going back to 1774, supplying shovels to George Washington’s army in the Revolutionary War for independence from British colonial rule. Trump proclaimed that “We believe in ‘made in the USA’” and signed executive orders that led to his first tariffs. But in 2023 the company’s owner, Griffon Corporation, closed the plant and shifted the work abroad. True Tempur wheelbarrows can still be found in big box home improvement stores but are now marked “Made in China.”

A similar story can be seen in China’s most well-known goods export, Apple computers and phones. Apple began manufacturing here in the United States, but began production in China in 1988, and in 2004 shut down its last factory in the United States near Sacramento, California.

The story is the same with U.S. auto imports from Canada and Mexico – they are not from Canadian or Mexican-owned auto companies. They are U.S. (and European, Japanese and Korean) car companies that have shifted production to Canada and Mexico to sell to the United States.

Donald Trump is trying to convince U.S. workers that other countries are stealing U.S. jobs and robbing the United States. In fact, the job losses are “made in the U.S.A.” in the corporate boardrooms and on Wall Street to maximize profits, or in the words of Griffon Corporation “a compelling opportunity for shareholder value creation.”

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Source: https://fightbacknews.org/the-economy-100-days-after-trumps-inauguration?pk_campaign=rss-feed