The Fed Isn’t Devastating American Manufacturing, Trump’s Trade War Is

Official White House Photo by Shealah Craighead/Public Domain

JakeThomas

“We have now tariffed our way into a manufacturing recession in the US and globally.”

America’s manufacturing sector is not doing well, with factories across numerous industries seeing a decline in exports, but it is not the Federal Reserve’s monetary policy that is damaging the U.S. economy — it’s President Donald Trump’s trade war.

CNN Business noted that Trump tweeted blame at the Fed on Tuesday after “the Institute of Supply Management's closely-watched manufacturing index dropped to 47.8 in September, its lowest level since June 2009.”

But Trump’s assessment is unfair, CNN Business said, pointing to evidence that shows it is the president’s ongoing trade war and tariff scheme that is hurting American manufacturing, and the U.S. economy at large.

“The Institute for Supply Management's manufacturing report did not mention Fed policy,” the publication noted. “Nor did it cite borrowing costs, Powell or the strong US dollar. None of the business executives who were quoted in the survey blamed those issues.”

Rather, it was Trump’s trade war with China that kept coming in executives’ interviews.

"The tariffs have caused much confusion in the industry," an electrical equipment, appliance and components manufacturer said.

And a quote from a food, beverage and tobacco products executive pointed in the same direction: "Chinese tariffs going up are hurting our business. Most of the materials are not made in the US and made only in China."

Likewise, economists and market analysis are singing a similar tune.

Chief investment officer at Bleakely Advisory Group, Peter Boockvar, told clients in a note on Tuesday: “We have now tariffed our way into a manufacturing recession in the US and globally.”

Ethan Harris, head of global economics at Bank of America, echoed Boochvar’s words in comments to CNN Business: "What is the ultimate cause of all of this? It's the trade war. This whole narrative about the Fed being too slow is completely wrong. The Fed has never moved faster."

A strong dollar certainly is not helping the situation, CNN Business acknowledged, but it is not the primary issue.

Harris told the publication that Trump’s trade war is actually causing the dollar’s strength and the central bank is working to mitigate the effects, saying, "The Fed is the thing that has really helped cushion the blow of the trade war. They have been preventing the dollar from being even stronger.”

Read the full report.

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