US-China Trade War Fuels Recession Fears, Will It Hurt Trump In 2020?
The strength of the U.S. economy has been the central pillar of President Donald Trump's reelection strategy, and for every incumbent president, avoiding a recession has been a determining factor in whether or not they win a second term.
As Trump addressed a crowd of workers at the Shell Petrochemicals Complex outside of Pittsburgh, touting record low unemployment and half-million new manufacturing jobs, the effects of the U.S.-China trade war were looming.
On Monday, markets took a dive as it appeared trade negotiations between Washington and Beijing were at a total impasse and the Trump administration was poised to tax the remaining balance of U.S. trade with China by Sept. 1. Markets bounced back Tuesday on the news that the administration was postponing tariffs on consumer goods, including cellphones, laptops and toys through December.
Before leaving his New Jersey residence, Trump told reporters the delay was "for the Christmas season, just in case some of the tariffs would have an impact on U.S. consumers."
Even with the good news, the trade war has prompted several top financial institutions to raise the specter of a recession. This week, Bank of America reported that the odds of a recession occurring within the next year had increased to 30%. They cited the trade war, slower economic growth and the limited ability of the Federal Reserve to stimulate the economy with rate cuts.
Republican strategist Ford O'Connell explained that the trade war hurts Trump's chances of reelection "in the sense that his calling card is the economy and history dictates, going back to FDR, that if you avoid a recession you will be reelected as an incumbent president."
It is also clear that barring a major economic, military or political disaster, 2020 will be a close election that will come down to a handful of battleground states. The states that are in play are largely in the industrial Midwest, parts of the south and the farm belt, where Trump's tariff policy has hit home.
"About four of those states are favorable to Trump's strategy but he's also recognizing there's only so much pain they can take at the moment," O'Connell said.
The Democratic primary has, so far, featured little discussion of those issues.
"It's clear that the Democrats, for whatever reason, seem to have no answer for China," O'Connell said. "They're barely even acknowledging what a longterm threat it is to the U.S. both economically and militarily. You'd think they just woke up to this fact."
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Tariff threats Drive Wedge Between U.S., Mexico, Amid Talks
The United States continued talks with Mexico on Thursday amid U.S. President Donald Trump's threats to slap tariffs on its southern neighbor. If tariffs take effect, that could impact both economies and drive a wedge between Washington and its third largest trading partner, experts said.
At issue is whether Mexico will step up efforts to stop the flow of undocumented migrants crossing its southern border into the United States. Trump has expressed frustration over growing inflow of illegal immigrants. Last month saw a decade-long high in apprehensions of illegal migrants, with 133,000 detained at the border.
Mexico is also used as a route of entry to the United States by violent criminal gangs from El Salvador, such as the infamous MS-13, while many of Trump's supporters also believe that illegal immigration drives down working class wages and increases competition for blue collar jobs.
Illegal immigration will be one of Trump's major platforms in the 2020 elections, and the president believes Mexico has done very little to mitigate the situation. While Mexico on Thursday vowed to provide 6,000 troops to beef up border security, that may not be enough to satisfy Trump's demands.
The U.S. president has threatened that if Mexico does not take action to stem the tsunami of illegal migration, he will slap a 5 percent tariff on Mexican goods that will grow incrementally if no agreement is reached.
TV news personality and Republican Strategist Ford O'Connell told Xinhua the main problem is that U.S. laws do not reflect the reality on the ground. The vast majority of illegal migrants are from Guatemala, El Salvador and Honduras. Many are traveling as families, or claiming to be families.
The laws are designed to stop single men from Mexico, rather than families or children migrating alone. Laws make it difficult to detain such individuals, even if they are lying about being under the age of 18. Authorities often have no choice other than to release them into the United States, where they remain indefinitely.
"Thanks to American laws, the people who come here illegally, the majority will never be deported," O'Connell told Xinhua.
"If people don't ever think they are going to be turned away, why would they ever stop coming?" O'Connell said.
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Trump Administration Races To Finalize Tariffs Amid Turnover And GOP Opposition
Trump administration officials are scrambling to finalize the president’s proposed steel and aluminum tariffs by the end of the week amid fierce opposition from congressional Republicans and frenzied negotiations with world leaders.
Republican lawmakers have lobbied President Trump to narrow the scope of his tariffs or choose a tactic that poses fewer economic risks after he announced his plan to tax all imported steel and aluminum, regardless of origin, in order to protect American manufacturing.
Trump has softened his tone on the tariffs this week in the face of withering opposition from U.S. allies and members of his own party. Other senior administration officials have worked to calm political and market unrest by walking back Trump’s threat to apply the tariffs universally, instead suggesting countries can negotiate their way to an exemption.
Ford O’Connell, a Republican strategist, compared the evolution of Trump’s tariff proposal to the way his gun control ideas have fluctuated in meetings over the past month.
“I look at this a lot like gun negotiations with the GOP,” O’Connell said. “Trump is going to look for the sweet spot.”
Trump Breaks With GOP, Sparking New Tensions
President Trump is publicly breaking with congressional Republicans on trade and guns, causing tensions within the party at a time when lawmakers hope to be united ahead of the midterm elections.
Republican strategists and nonpartisan political experts say Trump appears to be looking beyond this fall’s elections, when GOP control of Congress is at stake, to his own bid for a second term in 2020.
The announcement on Thursday of the tariffs, which have yet to formally be put in place, came shortly after Trump said that Brad Parscale, his longtime digital marketing strategist, would be his 2020 reelection campaign manager.
While there have been no significant polls on the tariffs so far, Trump’s populist positions on trade were popular in Pennsylvania, Ohio, Michigan and Wisconsin, states that sealed his victory over Democratic nominee Hillary Clinton in 2016.
“He’s fighting for the industrial Midwest, which is essentially the key for him to win reelection, and this is obviously something where he is putting their interests first while everyone else is pooh-poohing the idea of fighting for the American worker,” said Ford O’Connell, a Republican strategist who worked on Sen. John McCain’s (R-Ariz.) 2008 presidential campaign.
Trump's Tariff Threat May Be Timed For Pennsylvania U.S. House Race
President Donald Trump has alarmed the Republican establishment and world leaders by threatening tough steel tariffs, a message that might be meant not just to shake the world trade order but to help defend a congressional seat in Pennsylvania.
Some Republican strategists said Trump’s tariff threat appeared to be timed, at least in part, to sway voters in the steel country of Pennsylvania, including its 18th District where Republican Rick Saccone and Democrat Conor Lamb are facing off.
In a special election on March 13, the two will vie to replace Republican Tim Murphy, who resigned in October in a sex scandal. If Saccone loses, it would be a blow to Trump, the first loss by Republicans of a seat in the House of Representatives since he took office in January 2017. The results will not affect Republican control of the chamber.
Trump has endorsed Saccone and is scheduled to visit the Pittsburgh area on Saturday for a campaign event. Saccone met Trump on arrival for a similar event in January.
Republican strategist Ford O’Connell said Trump’s stance on steel and aluminum tariffs could help Republicans, not only in southwestern Pennsylvania, but across the industrial Midwest.
“The timing definitely helps Saccone,” O’Connell said.
Read more from David Morgan and Roberta Rampton at Reuters
