OECD: Trump Tariffs Wreak Greater Economic Damage Than Previously Thought

OECD Growth Forecast Downgrade

• 📉 The OECD has sharply downgraded its current year growth forecast for the United States, from 2.2% to 1.6%.
• 🌍 The global economy is also expected to slow markedly both this year and next, influenced by stalled trade talks.

Footwear Industry's Existential Crisis

• 👟 Tariffs are described as an existential crisis for the footwear industry, impacting companies like Nike and Crocs.
• 🗣️ The industry is seeking an exemption from tariffs, highlighting that the policy should align with the President's rhetoric of not focusing on textiles.
• ❓ If exemptions are not granted, costs will inevitably go up for consumers.

Impact of Uncertainty and Tariffs on Footwear

• 📈 Uncertainty about tariff rates is worse than the rate itself, making it difficult to cost goods.
• ⚠️ Tariffs at 145-154% are considered an embargo, while fluctuating rates create significant pricing challenges.
• 📉 Current muted prices are a concern, as consumers have already pulled back, leading to declining sales.
• 🛍️ Higher prices are expected, particularly for back-to-school and holiday shopping, shrinking consumer discretionary income.
• 💰 Companies are anticipating 15-20% price increases to cover costs, which will have a compounding effect.

Steel Tariffs and Auto Industry Impact

• 🏭 President Trump's decision to double steel tariffs to 50% aims to revitalize U.S. manufacturing, causing steel stocks to rise.
• 🚗 Companies that use steel as an input, such as the auto industry, will face higher input costs, leading to decreased competitiveness.
• 📉 Historical data from 2018 shows that while steel employment saw a slight increase, manufacturing jobs in steel-using companies decreased significantly.
• ⚠️ Experts warn that these tariffs could destroy manufacturing jobs and push up consumer prices.