How badly will American manufacturers be hurt by retaliatory tariffs by Canada against American goods? How will all this economic warfare likely play out, in the long run?

in #economics2 months ago

For context, this is a question I answered on Quora

Here’s the thing. The US was already in a manufacturing recession in 2023 and 2024 and the manufacturing sector had been contracting several consecutive months that started at the end of 2022.

Here is Reuters in December 2023: manufacturing had already contracted for 13 consecutive months (since November 2022) after the FED open market committee started hiking the overnight rate.

US manufacturing persists in recession mode, production falls

Bloomberg: Rolling Manufacturing Recession Collides With US Election Angst

Manufacturing was beginning to recover in January this year with production expanding for the first time in over two years. Then Trump decided to start a trade war with our neighbors. While he did postpone it for a month, allowing for another month of expansion, it will likely start contracting again because our manufacturing sector is heavily dependent on parts produced across the border and raw materials from China; 90% of made in the USA products are just assembled in the U.S especially American cars. We may end up in a full blown recession that results in higher unemployment rates and another foreclosure crisis of laid off workers being unable to pay their mortgages.