Arab Press

بالشعب و للشعب
Friday, Aug 22, 2025

America's economy is slowing. Ending the trade war could fix that

America's economy is slowing. Ending the trade war could fix that

Happy Sunday. A version of this story first appeared in CNN Business' Before the Bell newsletter. Not a subscriber? You can sign up right here.

The Federal Reserve doesn't have a magic wand to revive the slowing American economy. But President Donald Trump might.
New evidence emerged last week showing how tariffs and the vast uncertainty surrounding the US-China trade war are hurting the economy.

The manufacturing sector suffered its worst month since June 2009. Services, the larger portion of the modern economy, grew at its weakest pace in three years.

And although the unemployment rate tumbled to a 50-year low, a remarkable feat, private payroll growth continues to slow.
Taken together, the latest figures paint the picture of a slowing economy, but not one that's close to collapsing. Either way, growth could use a jump-start. While stocks rallied sharply late last week on hopes for a Federal Reserve rate cut, easy money alone won't solve the underlying problem: trade uncertainty.

"The economy needs a resolution to the trade war. The longer this persists, the greater damage it does to the US economy," said Kristina Hooper, chief global market strategist at Invesco.

The outlook for the economy is dimming. The New York Federal Reserve's GDP growth forecasting model was downgraded on Friday to 1.3% for the fourth quarter, compared with an earlier forecast of 1.8%.

The good news is that US and Chinese officials are scheduled to meet this week in Washington to try to make progress towards trade peace. Expectations are low for a breakthrough, although if one emerged it would immediately boost sagging business spending.

"We really need to have a rollback of the tariffs for there to be an improvement in CEO confidence," said Hooper.

Instead of getting rolled back, however, tariffs are currently scheduled to go up.

US tariffs on $250 billion of Chinese goods are set to rise on October 15, to 30% from 25%. And the Trump administration plans to impose 15% tariffs on December 15 on consumer-facing imports from China, including laptops, smartphones and certain footwear and apparel.

The on-again, off-again nature of the trade war has created confusion among business executives.

"It's not the tariffs themselves. It's the uncertainty about tariffs that is causing businesses to hesitate to make decisions," said David Kelly, chief global strategist at JPMorgan Funds. "Your entire business plan can be overturned by a tweet."


Factories cut jobs

Some economists argued that the very mixed September jobs report hints at damage from the US-China trade war. For just the second time since mid-2017, the manufacturing industry shed jobs last month. That makes sense because manufacturing is at the front lines of the trade war.

"The woes of the manufacturing sector are beginning to weigh on the broader economy," said Scott Clemons, chief investment strategist at Brown Brothers Harriman.

Bigger picture, total nonfarm payroll gains have slowed to 161,000 per month this year, compared with 223,000 in 2018. And wage growth decelerated in September.

"This is as good as it's likely to get until the trade war is resolved," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Shepherdson said the same leading indicators that predicted the hiring slowdown are now signaling that nonfarm payroll growth will decelerate to just 50,000 by the end of the year, from 304,000 in January. That means the unemployment rate would then begin to rise.

The hope is that trend will be reversed by progress on the trade front.

Expectations for a near-term resolution are low, however, especially after President Donald Trump vowed during last month's UN speech to address the "grave economic injustice" of unfair trading practices by China.

The last thing the already-slowing economy needs is a breakdown of the trade negotiations that leads to a rise in tensions and fresh rounds of tariffs.

"If there is an escalation, we could be headed for Brexit-level uncertainty," Invesco's Hooper said. "That would greatly increase the likelihood that the US goes into a recession."
Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Dogfights in the Skies: Airbus on Track to Overtake Boeing and Claim Aviation Supremacy
Tim Cook Promises an AI Revolution at Apple: "One of the Most Significant Technologies of Our Generation"
Are AI Data Centres the Infrastructure of the Future or the Next Crisis?
Miles Worth Billions: How Airlines Generate Huge Profits
Zelenskyy Returns to White House Flanked by European Allies as Trump Pressures Land-Swap Deal with Putin
Beijing is moving into gold and other assets, diversifying away from the dollar
Trump Backs Putin’s Land-for-Peace Proposal Amid Kyiv’s Rejection
Zelenskyy to Visit Washington after Trump–Putin Summit Yields No Agreement
Iranian Protection Offers Chinese Vehicle Shipments a Cost Advantage over Japanese and Korean Makers
United States Sells Luxury Yacht Amadea, Valued at Approximately $325 Million, in First Sale of a Seized Russian Yacht Since the Invasion of Ukraine
Saudi Arabia accelerates renewables to curb domestic oil use
Cristiano Ronaldo and Georgina Rodríguez announce engagement
Asia-Pacific dominates world’s busiest flight routes, with South Korea’s Jeju–Seoul corridor leading global rankings
Private Welsh island with 19th-century fort listed for sale at over £3 million
Sam Altman challenges Elon Musk with plans for Neuralink rival
Australia to Recognize the State of Palestine at UN Assembly
The Collapse of the Programmer Dream: AI Experts Now the Real High-Earners
Armenia and Azerbaijan to Sign US-Brokered Framework Agreement for Nakhchivan Corridor
British Labour Government Utilizes Counter-Terrorism Tools for Social Media Monitoring Against Legitimate Critics
WhatsApp Deletes 6.8 Million Scam Accounts Amid Rising Global Fraud
Texas Residents Face Water Restrictions While AI Data Centers Consume Millions of Gallons
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
WhatsApp Users Targeted in New Scam Involving Account Takeovers
Trump Deploys Nuclear Submarines After Threats from Former Russian President Medvedev
Germany’s Economic Breakdown and the Return of Militarization: From Industrial Collapse to a New Offensive Strategy
Germany Enters Fiscal Crisis as Cabinet Approves €174 Billion in New Debt
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
AI Raises Alarms Over Long-Term Job Security
Russia Formally Recognizes Taliban Government in Afghanistan
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Mediators Edge Closer to Israel-Hamas Ceasefire Agreement
Germany Seeks Taliban Deal to Deport Afghan Migrants
Emirates Airline Expands Market Share with New $20 Million Campaign
Robots Compete in Football Tournament in China Amid Injuries
×