Trade tensions weigh on investment

Companies have reduced or postponed investment in the United States because of fears over international trade tensions, the Federal Reserve observes.

The U.S. central bank, in a Veige Book Report published Wednesday, that the effects of tariffs seem limited, although they increase costs, especially among manufacturers.

“Most regions report concerns and uncertainties related to trade tensions, especially, but not exclusively, among industrialists,” writes the issuing institute in this report, a snapshot of the US economy made from discussions of regional branches of the Fed with companies.

Several regions have noted that companies reduce or postponed investments, worried about their business prospects, the Fed continues, without giving specific examples.

It states, however, that “a utility company has found that tariffs on certain building materials may require it to reduce its investments somewhat”.

In recent months, President Donald Trump has imposed tariffs on imports from various trading partners, including Canada, Mexico, China, the European Union, resulting in retaliation against US exports .

He also forced Canada and Mexico to renegotiate the North American Free Trade Agreement (NAFTA). If Mexico and the United States have been able to agree , the Canadian and American negotiators are still at work.

Lack of manpower

Despite these trade tensions, the US economy is growing at a moderate pace and a tight labor market is creating shortages throughout the country.

For several years, construction, road transport and engineering companies have reported a lack of manpower.

More recently, however, “several regions have also reported such a shortage of less qualified categories of staff in catering and distribution […]. ”

The Fed has raised rates twice this year, and the markets are more certain that it will reoffend after its monetary policy meeting on September 25-26.

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