Gary Cohn, a former economic advisor in the White House, claims that only a few weeks divides Americans from the moment when the duties imposed by Trump will painfully affect their wallets.
– The cycle in which the goods are sold in China, loaded onto the ship, flows through the ocean, goes to the United States, is processed in the factory and finally goes to the store shelf, lasts in the USA for eight weeks – he said.
Read also at Business Insider
These words were in an interview with CBS in the “Face the Nation” program.
Cohn, who managed the National Economic Council for a year during the first term of Trump, is currently the Vice President of IBM. Earlier he was the operational director at Goldman Sachs.
Shopping for a supply is ongoing
Customs duties entered into force on April 2, so a real blow to consumer wallets will take place in the “last weeks of May”.
Americans are already shopping for a supply to avoid the expected price increases. This applies especially to expensive products such as cars, washing machines and electronics.
“Car sales reach almost record levels,” notes Cohn. “People want to avoid increases,” he added.
Although hard data – for example, quarterly reports – indicate the constant force of the economy, Cohn emphasized that so -called Soft data, such as tests of consumer moods, show more and more disturbing signals.
See also: Four leading economists say that the US recession is almost certain
“There is a clear weakness in the polls,” he says. He also drew attention to the warnings about the decline in sales in the second quarter, reported by such brands as Chipotle, Pepsico or the luxury LVMH concern.
Who will touch the duties?
Small companies will affect the customs. Details from the toy industry are already facing a 145 % duty for goods that they usually order for Christmas. Many of them reduce orders or consider closing business.
Last week, logistics experts and representatives of the shipping industry expressed similar fears. In an interview with Business Insider, they forecasted significant disruptions in the availability of goods and price increases in the coming weeks.
Four of them warned that Uncontrolled voltages in supply chains can lead to an increase in unemployment in the USA, destabilization on world markets and exacerbation of geopolitical tensions.
Duties “extremely regressive”
The situation is aggravated by a sharp decline in the reservation of sea containers on the China -USA route. According to the data presented by the Secretary of Treasury Scott Bessent during the JPMorgan conference, the inheritance is as much as 64 percent.
Cohn also emphasized that customs are “extremely regressive”, i.e. they hit people with lower income the mostwhich spend most of the salary on basic goods.
Trump considered the introduction of new tax breaks for households earning below 200,000. hole. (approx. PLN 749 thousand) to compensate for price increases. However, according to Cohn It is hard to imagine that any real changes could come into force until the end of May.
With the growing economic uncertainty and the lack of any active commercial negotiations between the USA and China, Cohn leaves no illusions, economic problems related to customs policy are just beginning.
The above text is a translation with American Business Insider edition
