Goldman Sachs predicted on Monday that S&P 500 companies’ earnings will take a 15% hit if an all-out trade war breaks out between the U.S. and China.
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Former U.S. Trade Representative Ron Kirk said Goldman Sachs’ forecast may not be too far off if President Trump imposes all of his proposed tariffs.
“We’ve had the first wave against China and that retaliation…but now the president has proposed a tariff on cars from the European Union, and the national security guidelines, and then an additional $200 to $300 billion in tariffs on China, and under that scenario, I think you could get to those numbers,” he told FOX Business’ Liz Claman on “Countdown to the Closing Bell.”
Currently, the United States has imposed tariffs on $34 billion worth of Chinese products, but last Friday, President Trump said that he was ready to raise U.S. tariffs on $500 billion worth of Chinese imports. The president is also threatening to impose tariffs on $351 billion of imported automobiles and auto parts.
Though Kirk agrees with the president that all foreign trade partners should open up their markets and “play by the rules,” he argues that tariffs will be counterproductive to that process.
“The reason most of us object to tariffs, it’s just such a blunt instrument and it always invites retaliation, and then you do end up on the road to a type of hit to earnings that Goldman has referenced,” he said.
The U.S. meat industry is one of many industries that have claimed to be hurt by Trump’s trade spat with China. China along with Mexico are the largest foreign buyers of U.S. meat, but both have set tariffs on U.S. pork products in response to U.S. levies.
According to the latest federal data, 2.5 billion pounds of meat and poultry produced by U.S. farmers have been stockpiled in cold-storage warehouses.
“I think we’ve got to hope that with the outcry from manufacturers, workers, businesses, Detroit, that perhaps logic may prevail and we’ll find another way forward,” Kirk said.