Made in China – The impact of the Trump administration’s trade policy on your wallet
Bottom Line: About a month ago I brought you the reality of the China trade situation. In that story I illustrated that US manufacturing in China had declined by 15% over the past year. Meaning that American companies have regularly been scaling back on Chinese manufacturing likely driven in part due to the administration’s policy. This is generally a good thing. Especially when some of that manufacturing has come back to the US. Still there’s a lot on the line in the country right now. 52% of American products do have at least some of the process taking place in China. That’s a lot better than 61% a year ago but clearly there’s a lot that can and will be impacted one way or another based on how this trade situation works out. But here’s the thing. It gets back to the reporting of all the trade conflict. Are there real-world implications to what’s been playing out over the past 2+ years? Absolutely. Are those outcomes generally presented to you in an honest, responsible way by news media? Absolutely not. Think back to how many times the media has cried wolf about the negative impact of Trump’s trade policy on your wallet and then realize this truth. Inflation is low and has been low.
The CPI, or Consumer Price Index, how much more or less it costs us to buy the same stuff year over year, is well below average under the Trump administration. Most recently the CPI has averaged just 1.9%, well below the average 3% rate historically. In other words, President Trump’s trade policies and economic policies generally have produced below average inflation. This is highlighted by the dramatic decrease in energy costs led by the United States surging into energy independence becoming the number one oil and natural gas producer in the world. Despite all the volatility around the world gas prices today are 15 cents per gallon lower than a year ago. This is the rest of the often-untold story. It’s also a cushion with which President Trump can work. With wages at record highs up about 4% over a year ago and the cost of living coming in at less than half of that – there's a lot that can change before you have to worry about inflation from whatever happens with China trade policy...which to date has only produced lower prices in the US.