Louisiana governor calls out Trump's reckless tariffs as they hit hundreds of jobs and economic warning signs mount
While President Donald Trump faces the most pressing dangers from a growing impeachment inquiry in the House of Representatives, the state of the economy should remain a major concern, and the signs that it could face trouble have not abated.
The latest sign that Trump's reckless tariff policy is harming American workers came this week from Louisiana, where the Bayou Steel Group has filed for bankruptcy in an industry that was supposed to be helped by the president's trade policy. Trump has repeatedly said that he has "saved" the steel industry — often backed up with blatantly false claims.
Louisiana Gov. John Bel Edwards, a Democrat leading the red state, blamed the tariffs for the stress Bayou Steel Group was under.
“While Bayou Steel has not given any specific reason for the closure, we know that this company, which uses recycled scrap metal that is largely imported, is particularly vulnerable to tariffs," he said in a statement. "Louisiana is among the most dependent states on tariffed metals, which is why we continue to be hopeful for a speedy resolution to the uncertainty of the future of tariffs. Meanwhile, we will do everything within our power to help those displaced workers.”
Bloomberg reported that nearly 400 workers could be impacted in the state, and another 72 could be hit in Tennessee.
In July 2019, Edwards had written to Trump to share his fears about the tariff policies. But it's not just users of imported scrap metal that face challenges — the tariffs have economy-wide impacts. As I have covered recently, the trucking industry, too, has been hit particularly hard by Trump's tariffs.
Rob Misheloff, the president of Smarter Finance USA, which helps businesses obtain financing, especially for their transportation needs, recently told me that he has seen the significant strain in the trucking industry. Though the trucking industry, like any other, has its own cycles of booms and busts, he said that the trade war has had a significant negative impact on the transportation sector. Increases in costs for truckers have cut profitability in half, he said, which can make it much more difficult for truckers to finance upgrades, repairs, or any other unexpected costs.
"I don’t see it getting better in the near-term," he said, noting that the fact that tariff policy all rests within the White House means there's little sometimes little help he can give to his clients to manage the risk. "It’s out of their hands. So in some sense, we don’t have much good advice. There's nothing they can do and there’s no magic bullet. Shipping’s down, and that’s partially because of the trade war. And a market is a market."
Misheloff, who primarily serves small businesses, argued: "The little guy is kind of the canary in the coal mine" when it comes to vulnerability in the economy.
On its own, this should be troubling enough. According to the American Trucking Associations, there were an estimated 3.5 million truck drivers in 2018. RTS Financial has found that there are 7.4 million jobs total “tied to the trucking industry.” So weakness in this sector affects many American lives.
But as Misheloff explained, trucking is "a leading indicator" for the financial health of the rest of the country.
"Trucking slows down before the economy goes into recession. That doesn’t necessarily mean that economy’s going to go into recession," he continued, "[but] the probability has increased."
On Tuesday, Bloomberg reported that additional signs of distress in the manufacturing sector have risen:
In the U.S., a closely watched factory index unexpectedly dropped to the lowest since 2009 -- driving down stocks as well as yields on Treasuries. Meanwhile the specter of deflation resurfaced as South Korea, a bellwether for international trade, reported a drop in consumer prices and the Reserve Bank of Australia cut its interest rate to a record low.
With a trade war between the U.S. and China still raging, industry executives from the U.S. and Germany to Japan and Russia complained of contracting business, and the World Trade Organization cut its forecast for commerce to the lowest in a decade.
Some of these factors have nothing to do with Trump administration policy, of course. But many of the president's choices seem to be exacerbating existing risks, and the government is doing little to mitigate the dangers.
What does all this mean for impeachment? Potentially nothing — but it could also become pivotal quite quickly.
Right now, while some Republicans have aired tentative concerns about Trump's conduct toward Ukraine, few seem on board with actually calling it an impeachable offense. The best bet remains, then, that though Trump is likely to be impeached by the House, he will be acquitted by the Senate.
But Trump's protection in the Senate hinges very tightly on his support from the GOP, which is linked to the president's support among Republican Party voters, which remains relatively strong. His support from this population has been largely consistent throughout his presidency, and it has always seemed that a major shift in the country's economic fortunes would be the most likely factor if his GOP approval were ever to fall. And there have been signs that Americans are increasingly critical of Trump's approach to the economy. So if the economy were to falter while Trump was fighting back a serious case for impeachment, his chances for acquittal could diminish.
House Speaker Nancy Pelosi has indicated she wants a rapid push for impeachment, so there's little reason to think a significant economic downturn before the Senate trial is more likely than not. But if Trump survives the push for impeachment, he'll still need to win again in November 2020 to maintain power — and an economic downturn would make that much more difficult.