NOV. 1, 2016 JAN. 26, 2018 NOV. 1, 2019
SOURCE: S&P GLOBAL
S&P 500 INDEX
S&P 500 GROWTH RATE
2 , 000
2 , 500
3 , 000
27.3%
ANNUALIZED
3.8%
ANNUALIZED
NI
CO
LA
S^ A
SF
OU
RI
—A
FP
/G
ET
TY
IM
AG
ES
64
FORTUNE.COM // DECEMBER 2019
trade
IT ’S CLEAR WHY TRUMP’S ECONOMIC SUCCESSES stopped cold in early
- That’s when he launched the trade war against China and to
lesser extents against Mexico, Canada, and Europe. Like virtually
all trade wars (and most other wars), it started small and escalated
through tit-for-tat retaliations that neither side was willing to stop.
Result: The average U.S. tariff on Chinese imports, 3% at the start
of last year, could hit 24% by year-end, with Chinese tariffs on U.S.
goods set to do the same.
Steep tariffs are hurting U.S. business, and CEOs are saying so. A
September survey by the Conference Board that revealed a vertigi-
nous drop in CEO confidence also asked an open-ended question
about what worried CEOs most. The top answer was tariffs and
trade wars. Purchasing managers say the same. “Global trade re-
mains the most significant cross-industry issue,” says Timothy Fiore
of the Institute for Supply Management. The ISM’s latest Purchas-
ing Managers Index shows the manufacturing sector contracting for
the third consecutive month. “Automotive related manufacturing is
definitely slowing in the U.S.,” an executive in the metals industry
told the ISM. “I think we are seeing the negative impacts of the tariff
war with China and the unsigned [U.S.-Mexico-Canada Agreement]
deal starting to hurt consumer confidence, especially on large pur-
chases. Corporations are slowing orders/production accordingly.”
That executive is right about consumer confidence—it’s declining,
and when the University of Michigan asked consumers about their
main concerns, they mentioned tariffs and trade most often. That’s
with mammoth federal spending helped juice
growth to 2.9% last year, but now the Fed
predicts only 2.2% growth this year, 2% next.
That’s right in line with growth since 2000,
which has averaged 2.1%
What happened is no mystery. Trump has
wiped out the benefits of his first-year policy
successes by doubling down on his signature
campaign issues, tariffs and immigration,
adding a thick layer of uncertainty and chaos
to his policy intentions, and raising federal
indebtedness to new highs. Managing the
world’s largest economy is apparently harder
than he thought. “Trade wars are good, and
easy to win,” he famously tweeted last year.
Turns out they aren’t. “It would be so easy
to fix our weak and very stupid Democrat
inspired immigration laws,” he tweeted last
March. Turns out immigration policy is
harder than it looks. We’re seeing now why
Trump’s highest-profile policy prescriptions,
reducing trade and immigration, have long
been opposed by economists across the politi-
cal spectrum.
WHY TRUMP IS BAD FOR BUSINESS
Split Decision
After Trump’s election, the market
shot up like a rocket. In the past
two years, investors have had a
bumpier ride.
French President
Emmanuel Macron
shakes hands with
Chinese President
Xi Jinping following
a signing ceremony
at the Great Hall of
the People, in Beijing
this November.
