Published in Breaking News

Monthly index: Tariffs pinching economy

BY MiBiz Staff Tuesday, August 07, 2018 03:23pm

West Michigan’s economy “is beginning to feel the pinch” from trade tariffs imposed by President Trump, according to a monthly index of regional purchasing managers.

Although most respondents in the July survey of industrial purchasing managers in the Grand Rapids and Kalamazoo areas believe “that the economy remains strong,” the Institute for Supply Management survey results reflect rising uncertainty from the trade tariffs, along with concerns about commodity prices and shortages, said Brian Long, director of supply chain management research at Grand Valley State University’s  Seidman College of Business.

“For the short term, the positive impact for the recent tax cuts along with the strong economic momentum will keep the economy growing though the third quarter and possibly into the fourth quarter of 2018,” Long wrote in his July report. “But we must soon begin to see some progress on the trade negations in order for the stimulus of the tax cuts to not be wiped out by retaliatory tariffs. Even if there are no further tariffs imposed, the uncertainty of the future will begin to weigh on future economic growth.”

In individual categories, the July index for new orders declined sharply and moved into negative territory, Long said. Indexes for production, purchases and employment also each declined, although they remained positive.

“Although our last report was quite strong, growth has slowed in almost every sector of the West Michigan economy,” he said. “Business planners hate uncertainty, and many firms appear to be putting expansion plans on hold until they can see a clearer picture of where the trade war is taking us and exactly how much it will cost.”

Easing auto sales affected parts suppliers, capital equipment producers continue to benefit from the lower federal tax rate and many industrial distributors said their sales were flat, possibly from seasonal factors, Long said.

EDITOR’S NOTE: This story has been updated from its original version. 

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