Business Roundtable Cites Tariffs as Economic Headwind, Optimistic About China Trade Resolution
Increased material costs was the top cost pressure for 20 percent of CEOs surveyed by the Business Roundtable, and that group's leader said tariffs are the reason why. Only labor costs was mentioned by more CEOs. Business Roundtable CEO Josh Bolten said that while the survey, released Dec. 7, didn't ask which set of tariffs is the problem, he's hearing from companies that metals tariffs are a bigger burden than the Section 301 tariffs. That's because a relatively small amount of production uses inputs from lists one and two of Chinese imports, and steel is used in many sectors. "The ones that have gotten the biggest public attention are the auto manufacturers," he said, "but really it's across the membership."
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If the third Section 301 list were to go to 25 percent, that would shift, he said. But Bolten said the group is optimistic that substantial progress can be made in China trade talks, so the tariffs won't escalate. "Ninety days isn't enough to address all of it. It's a good start. We hope they accomplish enough in the 90 days to continue the conversation."
President Donald Trump tweeted Dec. 7 that "China talks are going very well!" That came after he tweeted the night before that he agreed with China's statement that said, "We are full of confidence that an agreement can be reached within the next 90 days."
Business Roundtable Board Chairman Jamie Dimon, who is also CEO of JP Morgan Chase, said there are a lot of positive signs coming from China. But he acknowledged that anxiety about the trade war with China has contributed to volatility in the stock market in the last week. "On sentiment, we have constant stuff about trade, and how bad it's gonna get," he said during a conference call with reporters to share the survey results.
Dimon and Bolten also addressed the new NAFTA. Dimon said that in general CEOs are very supportive of the rewrite. Bolten said it would be a bad idea for Trump to withdraw from NAFTA to force a vote on NAFTA 2.0. The Business Roundtable has not yet publicly supported the rewrite, and when asked why, Bolten said, "we're hopeful of being in a position to enthusiastically support that," but that they are disappointed that steel and aluminum tariffs remain on Canada and Mexico.