A majority of manufacturing, construction, and other firms that actually produce goods are starting to feel the effects of President Trump’s threatened tariffs, according to a new survey of business economists.
Sixty-three percent of respondents in that sector reported some kind of fallout from the administration’s announced tariffs on trade with China, tariffs on steel and aluminum, and other efforts to revise trade practices, the National Association of Business Economists reported in a survey.
The number of such firms who’ve suffered some kind of negative effects from Trump’s trade policies has risen since April, when a majority reported no repercussions. Now, a quarter report delaying investments because of the tariffs, and others are raising prices or redirecting investments out of the U.S.
Monday’s survey is the latest indication of how a trade war could affect the economy at large. Earlier this month, Federal Reserve officials published a warning that trade war risks have intensified, based on their conversations with private-sector leaders.
Despite tariff fears, though, the economists are optimistic, expecting “continued economic growth” over the next year, according to Sara Rutledge, the chair of the survey and an independent real estate economist and data science research fellow at StratoDem Analytics.
“Labor market conditions are tight, with skilled labor shortages driving firms to raise pay, increase training, and consider additional automation,” she said.
Outside of sectors like manufacturing, construction, and mining, most firms don’t expect trouble from the brewing trade war, the same as the last time the survey was conducted in April. Similarly, most don’t plan hiring more or investing more in response to the tax cuts, although some do.
Overall, though, the economists do expect business investment to be strong in the year ahead. The Trump administration has touted the big increase in capital investment reported in the first quarter gross domestic product figures as a sign that the tax cuts are working.
