The impact of the adjustment of US tariffs on the US economy: Economic trends under policy shocks and data Insights

The US Department of Commerce has issued an order, imposing a 50% tariff on various steel household appliances such as dishwashers, washing machines and refrigerators starting from June 23rd. This "steel derivative product" tariff storm has instantly become the focus of global economic public opinion. This policy not only directly impacts the home appliance trade chain, but also interweaves with a series of key economic data to be released on the same day, jointly outlining the complex and volatile picture of the US economy in the near future. ​

From the perspective of trade, the United States has always been the core market for global home appliance consumption, with a high degree of import dependence. The sudden imposition of high tariffs is like setting up an impregnable barrier on the international trade channel. When foreign home appliance enterprises' products enter the US market, the cost has suddenly increased by 50%, which has significantly reduced the attractiveness of the US market to foreign home appliance enterprises. Take China as an example. As a major global exporter of home appliances, many well-known brands previously held a certain share in the US market. After the tariff increase, the price competitiveness of Chinese home appliances has sharply declined. In order to survive and develop, enterprises have no choice but to turn their attention to other markets such as Europe and Asia. The source structure of imported home appliances in the United States will face significant adjustments. This might also trigger a chain reaction in other countries. These countries might adjust their trade strategies with the United States, and the global home appliance trade pattern is facing a reshaping. ​

At the market pattern level, the domestic home appliance industry in the United States has ushered in a situation where opportunities and challenges coexist. The protection of tariffs has blocked some imported products, providing domestic enterprises with a larger market space. In theory, it can expand production scale, increase market share, drive the development of upstream and downstream industries, and create more job opportunities. Domestic home appliance giants like Whirlpool are expected to take over orders that were originally flowing to imported products, which in turn will stimulate upstream steel suppliers to increase production, and the business volume of the downstream logistics and distribution industry will also increase accordingly. However, in the process of home appliance production, it is inevitable to import various components. The increase in tariffs has also led to a rise in the procurement costs of these enterprises. If enterprises fail to pass on the increased costs to consumers, their profit margins will be severely compressed, their business pressure will increase dramatically, and they may even face the risk of some small and medium-sized enterprises going bankrupt due to the inability to bear the cost pressure. ​

The series of economic data to be released on June 23rd provide an important basis for assessing the recent situation of the US economy. The preliminary S&P Global Manufacturing PMI for June in the United States, which was released at 21:45, has attracted much attention. The manufacturing PMI measures the development status of the manufacturing industry through eight indicators including production and new orders, with 50 being a significant dividing line. Recently, the development trend of the US manufacturing industry has been unstable due to factors such as trade frictions and fluctuations in raw material prices. If the preliminary value of the manufacturing PMI this time is higher than 50, it indicates that the manufacturing industry is in an expansion stage and the economic growth momentum is strong. This will greatly boost market confidence, attract more funds to flow into the manufacturing sector, and drive up the share prices of related enterprises. Conversely, if the data is below 50, the signal of manufacturing contraction will trigger market concerns about an economic recession, and investors will promptly adjust their investment portfolios to avoid risks. ​

The preliminary S&P Global Services PMI for June, released at the same time, is equally crucial. The service industry dominates the US economy and contributes more than 70% of the GDP. The PMI of the service industry reflects the operating conditions of service enterprises, including the level of business activities and the number of new orders. The prosperity of the service industry can create a large number of jobs and drive the growth of consumption. If the preliminary value of the service industry PMI performs well, it indicates that service enterprises are operating actively and consumer demand is strong, which will inject strong impetus into the economic growth of the United States. Conversely, if the data falls short of expectations, it implies that the development of the service industry is hindered, thereby dragging down the overall economic growth. ​

The annualized data on the total number of existing home sales in the United States in May will also provide important references for the market. The real estate market is closely linked to multiple industries such as finance, construction, and home furnishing. The sales data of existing homes directly reflects the activity level of the real estate market. If the total number of existing home sales in May increases on an annualized basis, it indicates a strong demand for the real estate market, which will drive the development of the construction industry, promote the purchase of building materials and employment of construction workers. At the same time, the subsequent consumption behaviors of home buyers such as decoration and the purchase of furniture and home appliances will further boost the growth of related industries. Conversely, a decline in data indicates a cooling of the real estate market. This not only affects the revenue of real estate enterprises but may also raise concerns among financial institutions about the risks of real estate loans, exerting a negative impact on the overall economy. ​

The recent adjustment of tariffs on household appliances in the United States and the release of key economic data jointly constitute an important window for observing the economic trend of the United States. The implementation of tariff policies will continue to ferment at the trade and market levels, while the performance of economic data provides real-time feedback on the health of the US economy. The two influence each other. Whether the US economy will witness new growth under policy stimulus or fall into difficulties under multiple pressures in the future is worthy of continuous attention and in-depth discussion by global economic participants.