On August 3, local time, US media reported that the negative impacts of the Trump administration’s tariff policies are gradually becoming apparent. The US economy is currently exhibiting multiple weak signals, with persistent issues such as a cooling labor market and weak consumer demand casting a shadow over the economic outlook.
Yahoo Finance reported, citing economic data released by the U.S. Department of Labor on August 1, that the U.S. labor market has shown clear signs of cooling. The U.S. unemployment rate rose 0.1 percentage points in July to 4.2%, and nonfarm payroll employment increased by 73,000 jobs, below market expectations. Simultaneously, the number of jobs added in the nonfarm sector in May and June was significantly revised downward from the previously reported 144,000 and 147,000 to 19,000 and 14,000 respectively, representing a total reduction of 258,000 jobs. Furthermore, the hiring rate fell to its lowest point in seven months, and the quit rate dropped to 2%, reflecting sustained weakening in the labor market’s dynamism and a substantial softening of business demand.
Yahoo Finance, citing multiple economists, points out that the above economic data indicates the negative impact of the US tariff policy is accelerating. Greg Daco, chief economist at EY-Parthenon, stated that the uncertainty surrounding US government policies and inflation pressure caused by tariffs are beginning to have a more noticeable impact on economic activity. Specifically, the US tariff policy has not only suppressed consumer spending but has also led businesses to adopt a wait-and-see attitude, significantly hindering economic activity. Michael Pearce, deputy chief US economist at the Oxford Economics Institute, also believes that US consumers have not fully absorbed the impact of tariffs on their income and purchasing power, and as the growth of real income for US consumers slows, the impetus for consumer spending is continuously waning. Non-essential goods categories, such as the furniture industry, will be significantly affected.
The report also indicates that the impact of US tariffs on American businesses has become apparent. Whirlpool and Procter & Gamble, among others, have been directly affected by the tariffs, and Apple CEO Tim Cook warned that Apple will suffer a loss of $1.1 billion this quarter due to tariffs. These signs suggest that the US economy faces a severe challenge at the outset of the second half of the year. Simultaneously, trade friction continues to escalate, with the Trump administration imposing tariffs on multiple trading partners; the 39% tariff on Swiss imports is particularly noteworthy. A team of economists at Wells Fargo points out that the Trump administration’s assertion of ‘no impact from tariffs’ is not supported by the facts.