Philly Fed Survey: Trump Trade Disputes Barely Slows Manufacturers’ Investment Plans
US Manufacturers in the northeast are largely shrugging off global trade disputes and plan to boost investments next year thanks to tax cuts, according to a Federal Reserve survey.
More than 64% of business respondents in the Philadelphia Fed district said tariff and trade policies wouldn’t impact their investment plans next year.
About 19% said the duties would cause them to modestly or significantly decrease capital expenditures in Y 2019, according to the bank’s October manufacturing business outlook survey published Thursday.
Meanwhile, almost 40% of respondents said they will boost investments because of tax relief, which included reduced rates for corporations.
The findings contradict speculation from many economists.
President Donald Trump’s former economic adviser Gary Cohn has said uncertainty from trade tensions could cancel out the benefits of tax cuts.
It’s [President Trump’s] job to leave those committees alone to do their job,” Mr. Cohn said. “They are acting in the best interest of the United States. . . . I don’t think he should be making comments on any independent agency.”
Mr. Cohn responded to reports he left the administration over trade policy, and admitted he is opposed to President Trump’s use of tariffs to create leverage for better trade deals for America.
“Anything that raises the price of a good doesn’t make sense for our economy, even if they’re paying it to the government as a tariff,” Mr. Cohen said. “It’s just another tax.
“. . . The President and I completely agree on what has to be done. We just may not agree on how to get there.”
Amherst Pierpont Securities’ chief economist Stephen Stanley said in a note he was “surprised at the ambivalence toward trade policy.”
“I would have expected uncertainty around trade policy to have an impact close to the mirror image of the tax relief question,” Mr. Stanley wrote. “The drag from an uncertain trade policy may be weaker than generally thought.
In total, almost 41% of businesses in the survey plan to boost capital expenditures next year while about 46 expect no change. The central bank’s Philadelphia district covers businesses in eastern and central Pennsylvania, Southern New Jersey and Delaware.