Source: Yicai
According to CCTV news reports, the United States’ high tariff barriers are triggering multiple economic crises. A Federal Reserve governor warned on the 24th that if the Trump administration maintains its aggressive tariff policy, a wave of layoffs in companies could lead to a surge in the unemployment rate, and it cannot be ruled out that interest rate cuts might be implemented in response. At the same time, rising prices are intensifying the debt pressure on the American public, and local small and micro industries, such as flower shops, are also facing impacts.
The President of the International Monetary Fund called on countries on the 24th to swiftly resolve trade disputes to prevent the spread of systemic risks.
U.S. Officials Warn: High Tariffs Could Cause Unemployment Rate to Soar
On April 24, local time, Christopher Waller, a member of the U.S. Federal Reserve Board, warned that the trade war initiated by President Trump could soon lead to a rise in unemployment.
It is reported that due to retaliatory tariffs imposed by other countries on American goods, the current employment situation in the United States is facing risks. Waller stated that if the tariffs remain unchanged, there will not be a significant impact on the U.S. economy before July. If the Trump administration reinstates aggressive tariff levels, companies may begin to lay off employees, and if the unemployment rate rises significantly, he will support interest rate cuts.
Waller stressed that he expects more rate cuts soon once there is a serious deterioration in the labor market.
High Tariff Barriers Pressing on American Citizens
debt issues exacerbate the situation
Currently, the surge in credit card debt has trapped many Americans in a difficult financial situation. As the U.S. wages a tariff war globally, rising prices will further intensify the public’s debt repayment pressure.
According to a credit card report released by Bankrate in April this year, in November last year, 48% of credit card holders in the United States were unable to pay off their debts in the current account period and needed to postpone repayment. This compares to 44 per cent in January last year.
Among the American public who are unable to pay off their credit card debt in the current period, 53% have been in debt for over a year.
Data from the Federal Reserve Bank of New York shows that by the end of last year, total U.S. credit card debt reached a record high of an astonishing $1.21 trillion, an increase of 4% from the previous year. The average American household has about $6,600 in credit card debt.
Ted Rossman, a senior industry analyst at Bankrate, USA: If you pay the minimum payment at an average interest rate of about 20%, you will be in debt for 18 years and will have to pay nearly $10,000 in interest.
Driven by a high-consumption culture, many Americans are gradually falling into the debt trap. Those burdened with massive debts even have to maintain their lives by “borrowing to pay off debts.” Many American experts are concerned that the U.S. government’s tariff policies leading to rising prices could exacerbate Americans’ debt issues, causing the debts of more and more Americans to spiral out of control.
Ted Rossman, a senior industry analyst at Bankrate, said that people’s incomes are being squeezed by costs related to housing, healthcare, food, and child-rearing, leaving less and less disposable income.
Financial consulting firm Yibo Rui Group expert Rod Griffin: Out-of-control debt refers to debt that affects your ability to pay for basic necessities of life. For example, you have debt that prevents you from paying for food or daily bills, or you can only pay for one of the two; there are also those who can make payments but only pay the minimum amount due. This will lead to their debt continuing to increase, trapping them in an ever-deepening debt spiral.
The florist owner is worried.
According to CBS News, 80% of flowers in the United States rely on imports. The U.S. government’s excessive imposition of tariffs is impacting the floral industry, and many florists are feeling anxious as they and consumers will have to bear higher costs.
Flower wholesaler Andy Arthur stated that their flowers come from Ecuador, Colombia, Canada, Thailand, and the Netherlands. Florist manager Pereira said that (imported flowers) mainly come from South America, such as Colombia and Ecuador.
Multiple flower shop owners have stated that the flowers sold in their shops have been affected by tariff policies, and the prices of fresh flowers are continuously rising.
Under the impact of tariffs, many flower industry practitioners find themselves in a dilemma. On one hand, the increased costs from tariffs put them under great pressure; on the other hand, they worry about losing customers if they only rely on raising prices to cover the tariff costs. Some flower industry practitioners are looking for ways to minimize their losses as much as possible.
The global economy is facing a new major test
South Korean workers worry about their livelihoods.
Hyundai Motor Group is South Korea’s largest automobile exporter to the United States. On March 24, just two days before the United States announced a 25% tariff on imported cars, executives from Hyundai Motor Group visited the White House and announced that they would invest $21 billion in the U.S. over the next four years, which includes an investment of $5.8 billion by its subsidiary Hyundai Steel to build a new factory in Louisiana to supply steel to its automobile plants located in Alabama and Georgia.
The news of massive investments in the U.S. has heightened the concerns of employees at Modern Steel Company. A factory of Modern Steel Company in Incheon, South Korea, has already ceased operations.
Jiang Duxun has worked at this Incheon factory of Modern Iron Manufacturing Company for 15 years. The company recently announced that the factory will shut down for a month and initiate a voluntary departure process to lay off employees.
Jiang Duxun, an employee of Modern Ironmaking Company: In the past, we often stopped work for three or four days and then resumed production. But this time, the sudden halt for a month has made everyone very anxious.
In recent years, Hyundai Steel has been hit hard by the sluggish domestic construction market, competition from foreign steel products, and union strikes. Last month, the U.S. imposed a 25% tariff on imported steel and aluminum products, further affecting South Korea’s steel exports to the U.S., adding to Hyundai Steel’s business environment. Hyundai Steel had to declare an “emergency management” and take a series of measures to save costs, including cutting executive salaries, implementing a voluntary retirement plan for employees, and reducing the size of some plant operations.
In this case, the investment plan announced by Hyundai in the United States has left domestic workers in South Korea feeling dissatisfied. Investors are also skeptical about the investment plan of Hyundai Motor Group.
They questioned whether investing in the U.S. could grant Hyundai a tariff exemption, how this overseas investment would be financed, and whether Hyundai could ensure there would be enough customers to absorb the overseas production capacity. Analysts warned that this substantial investment in the U.S. could further increase the financial pressure on Hyundai Steel.
Since the announcement of the investment plan in the U.S., the stock price of Hyundai Steel has dropped by 22%. During the same period, the stock price of Hyundai Motor Group has also fallen by 12%.
Canada claims to fight against US tariffs
On April 24, local time, Canadian Finance Minister Chrystia Freeland stated at a press conference for the G7 Finance Ministers’ Meeting held in Washington, USA, that Canada needs to combat U.S. tariffs, which have affected a large number of Canadian goods. In addition, U.S. tariffs will also trigger inflation and impact global economic growth.
Shang Pengfei stated that the G7 remains united, but there are tensions among them regarding U.S. tariff issues. He also mentioned that he recently interacted with U.S. Treasury Secretary Basant, and he will announce more details about trade negotiations with the U.S. after the Canadian federal election.
The IMF President calls on countries to resolve trade disputes as soon as possible.
The President of the International Monetary Fund (IMF), Kristalina Georgieva, stated on the 24th that a significant shift in trade policies has led to a sharp increase in uncertainty, and the global economy is facing new major challenges. She urged countries to engage in constructive cooperation, resolve trade disputes as soon as possible, keep markets open, and eliminate uncertainty.
