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Slowing Freight Business is Bad News for the Economy

August 26, 2019

Last year when President Donald Trump revealed that he would increase tariffs on hundreds of Chinese-made items from 10% to 25%, which included bicycle components, Wayne Sosin made a point to stockpile materials.

Sosin is the president of Conway, a South Carolina located Worksman Cycles, which builds industrial tricycles and cruiser bicycles, noted that the company purchased additional Chinese-made rims, spokes, and tubes before the new tariffs landed. Ever since the company horded parts, they’ve now stopped doing so, because the increased tariffs are affecting the company’s bottom line.

“Some of it made it on time,” Sosin said. “In a perfect world, we would have bought even more but our suppliers couldn’t deliver. In fact, Sosin even pondered flying some parts in by air cargo, however, the cost was just too expensive.

This U.S.-China trade battle is currently unfolding from the Worksman factory which is located near the Atlantic coast to shipping and air freight lanes that extend over the Pacific Ocean.

“I don’t think we’ve seen anything quite like this before and that sets up all sorts of unusual behavior in the industry,” said Mark Diamond, a principal at consulting firm ICF.

Overall Impact of the Tariffs

Currently, economists and business executives are all trying to evaluate the overall affect of the tariffs and the present vitality of the economy. It’s hard to figure with mixed signals like consistent consumer spending, weak manufacturing data, and unpredictable stock and bond markets.

According to J.P. Morgan, the new tariffs will cause the average American home to lose around $1,000 a year. Beyond that, other brewing trade disagreements are fueling even grimmer outlooks. In fact, Morgan Stanley, said earlier in the week that global expansion would grow by 2.8% which is “the lowest rate since the financial crisis.”

Also, in July, the Cass Freight Index, which monitors the North American rail and truck volumes, dipped 0.8 percent from June. This meant the eighth month of declines, and an overall fall of nearly 6 percent from the previous year.

What do you all think? Is this trade war going to help spark a recession?

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