Companies Scale Back or Postpone Capital Investments as Trade War Escalates

As President Donald Trump’s tariff war against various countries (including top U.S. allies) escalates, U.S.  businesses are already experiencing slow or halted international investments.

A report by The Financial Times regarding June’s meeting of the Federal Reserve reveals that some U.S. companies have “scaled back or postponed” plans for capital investment due to “uncertainty over trade policy.”

“[Business contacts] in the steel and aluminum industries expected higher prices as a result of the tariffs on these products but had not planned any new investments to increase capacity,” the minutes said, according to FT.

“Conditions in the agricultural sector reportedly improved somewhat, but contacts were concerned about the effect of potentially higher tariffs on their exports,” they continued.

However, there are no concerns that Trump’s trade actions would overshadow the overall positive news about the state of the U.S. economy.

Trump hurt relations with long-time U.S. allies Canada and Mexico last month by implementing a set of tariffs on steel and aluminum. At that time the White House cited national security concerns as reasoning.  Shortly after tensions over the tariffs boiled over at the Group of Seven summit of leading industrialized nations last month in Canada. At the G7 summit, Trump refused to support a joint communique signed by all world leaders present at the gathering.

“Based on [Canadian Prime Minister Justin Trudeau’s] false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!” Trump tweeted after leaving the summit.


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