US unemployment rate and public debt may both soar, Federal Reserve warns

Source: China Business News

According to CCTV News, the high tariff barriers erected by the United States are triggering multiple economic crises. A Federal Reserve board member warned on the 24th that if the Trump administration maintains its aggressive tariff policy, a wave of corporate layoffs may cause the unemployment rate to soar, and he does not rule out the possibility of lowering interest rates to respond. At the same time, rising prices have increased the debt pressure on the American people, and local small and micro industries such as flower shops have also been hit.

On the 24th, the Managing Director of the International Monetary Fund called on countries to resolve trade disputes as soon as possible to avoid the spread of systemic risks.

US officials warn: High tariffs may cause unemployment to soar

On April 24 local time, Christopher Waller, a member of the U.S. Federal Reserve Board, warned that the trade war triggered by U.S. President Trump may soon lead to a rise in unemployment.

It is reported that the current employment situation in the United States is at risk because other countries have imposed retaliatory tariffs on American goods. Waller said that if the tariffs remain in place, there will be no significant impact on the U.S. economy before July. If the Trump administration returns to aggressive tariff levels, businesses could start laying off workers, and he would support rate cuts if unemployment rises sharply.

Waller stressed that he expects more rate cuts to come soon if the labor market deteriorates significantly.

Tariff barriers are rising and American people are under pressure 

Debt problems are getting worse

Currently, the surge in credit card debts has put many Americans into a financial predicament that is difficult to escape. As the United States launches a tariff war around the world, rising prices will further increase people's debt repayment pressure.

According to a credit card report released by the U.S. Bank Rate Network in April this year, in November last year, 48% of American credit card holders were unable to pay off their debts in the current bill period and needed to postpone repayment. This figure was 44% in January last year.

Among Americans who are unable to pay off their credit card debts within the current period, 53% have been in debt for more than a year.

According to the Federal Reserve Bank of New York, total U.S. credit card debt hit an all-time high of a staggering $1.21 trillion at the end of last year, up 4% from the previous year. The average American household has about $6,600 in credit card debt.

Ted Rossman, senior industry analyst at American Bank Rate Network: If you repay the minimum payment at an average interest rate of about 20%, you will be in debt for 18 years and pay nearly $10,000 in interest.

Driven by the high-consumption culture, many Americans are stepping into the debt trap step by step. Burdened with huge debts, they even had to rely on "debt to pay debt" to make ends meet. Many American experts are worried that the US government’s tariff policy will lead to rising prices, which may make Americans’ debt problems worse and that the debts of more and more Americans will get out of control.

Ted Rossman, senior industry analyst at U.S. Bank Rate Network, said people's income is being squeezed by housing costs, medical care, food, childcare and other expenses, and their disposable income is getting smaller and smaller.

Rod Griffin, an expert at financial consulting firm Experian Group: Out-of-control debt refers to debt that affects your ability to pay for basic necessities of life. For example, you may have debt that prevents you from paying for food, bills, or just one of the two; or you may be able to pay back your debts but only make the minimum payments. This will cause their debt to continue to increase and they will fall deeper and deeper into the debt spiral.

Florists are worried

According to a report by Columbia Broadcasting Corporation, 80% of flowers in the United States are imported. The U.S. government's excessive imposition of tariffs is hitting the U.S. flower industry, and many florists are worried that both they and consumers will have to bear higher costs.

Flower wholesaler Andy Arthur said their flowers come from Ecuador, Colombia, Canada, Thailand and the Netherlands. Florist manager Pereira said (imported flowers) mainly come from South America. For example, Colombia and Ecuador.

Many flower shop owners said that the flowers sold in their shops were affected by the tariff policy and the prices of flowers were rising continuously.

Under the impact of tariffs, many flower industry practitioners are caught in a dilemma. On the one hand, they feel pressured by the increased costs of tariffs, but on the other hand, they are worried that they will lose customers if they simply raise prices to cover the tariff costs. Some flower workers are looking for ways to minimize their losses.

The global economy is facing a new major test

South Korean workers worry about their livelihoods

Hyundai Motor Group is South Korea's largest automobile exporter to the United States. On March 24, two days before the United States announced a 25% tariff on imported cars, executives of Hyundai Motor Group visited the White House and announced that they would invest $21 billion in the United States over the next four years, including a $5.8 billion investment by its Hyundai Steel Company to build a new plant in Louisiana to supply steel to its auto plants in Alabama and Georgia.

The news of the huge investment in the United States has heightened the concerns of Hyundai Steel employees. In Incheon, South Korea, a Hyundai Steel Co. factory has stopped operations.

Kang Do-hoon has worked at Hyundai Steel's Incheon factory for 15 years. The company recently said it would shut down the factory for a month and start a voluntary resignation process to lay off employees.

Hyundai Steel employee Kang Do-hoon: In the past, we often stopped work for three or four days and then resumed production. But this time the work was suddenly suspended for a month, and everyone felt very anxious.

In recent years, Hyundai Steel has suffered from a sluggish domestic construction market, competition from foreign steel products and union strikes. The business environment at Hyundai Steel was further strained by the 25 percent U.S. tariff on imported steel and aluminum products that came into effect last month, further affecting South Korea's steel exports to the United States. Hyundai Steel was forced to declare a state of "emergency management" and take a series of measures to save costs, including cutting executive salaries, implementing a voluntary retirement plan for employees and reducing the scale of operations of some factories.

Against this backdrop, Hyundai’s announced investment plan in the US has caused dissatisfaction among workers in South Korea. Investors are also skeptical about Hyundai Motor Group's investment plans.

They questioned whether Hyundai could obtain tariff exemptions through investment in the United States, how the overseas investment would be financed, and whether Hyundai could ensure that it had enough customers to absorb its overseas production capacity. Analysts warn that the huge investment in the United States could further increase financial pressure on Hyundai Steel.

Hyundai Steel's shares have fallen 22% since the U.S. investment plan was announced. Hyundai Motor Group's stock price also fell 12% during the same period.

Canada says it wants to fight US tariffs

On April 24 local time, Canadian Finance Minister Francois-Philippe Champagne said at a press conference of the G7 Finance Ministers' Meeting held in Washington, the United States, that Canada needs to fight against US tariffs, and that the US tariff policy has affected a large number of Canadian goods. In addition, US tariffs will trigger inflation and affect global economic growth.

Shang Pengfei said the G7 remains united, but there are tensions among them over US tariffs. He also said that he had interacted with U.S. Finance Minister Bessant in recent days and that he would release more details on trade negotiations with the United States after the Canadian federal election.

IMF Managing Director calls on countries to resolve trade disputes as soon as possible

International Monetary Fund (IMF) Managing Director Georgieva said on the 24th that major trade policy shifts have led to a sharp increase in uncertainty, and the global economy is facing new major tests. She called on countries to work constructively to resolve trade disputes as soon as possible, keep markets open and eliminate uncertainties.