The Trade War, Paused for Now, Is Still Wreaking Damage

The Trade War, Paused for Now, Is Still Wreaking Damage

The trade war hit the trucking industry at a vulnerable moment, said Aaron Terrazas, director of economic research at Convoy, a shipping-focused technology company. Trucking companies expanded aggressively in recent years, adding trucks and drivers more quickly than demand was growing. The resulting glut pushed down prices, just as the slowdown in trade began eating into demand.

“There was almost this one-two punch where we were having this normal supply correction in the market and subsequently we got hit by the trade war,” Mr. Terrazas said.

Mr. Trump and his allies have said the trade deals will deliver a jolt to the economy and lead to faster growth this year. But economists are skeptical. Wall Street analysts expect growth, which is already cooling, to slow further in early 2020, and few have marked up their estimates in response to the trade announcements.

“I think we’re seeing the bottom, but we’re going to bounce around for a period of time before we really see any noticeable growth,” said Eric Starks, chief executive of FTR, a freight research firm. “That is assuming that there are no outside shocks and it seems like every other day a new shock keeps happening.”

Economists said the agreements should help shore up the struggling manufacturing sector and prevent further damage to the economy. But they won’t necessarily heal the damage that has already been done. Companies that shifted supply chains away from China in response to the trade war won’t necessarily move them back now that tensions have cooled, for example. And companies may be hesitant to commit to long-term investments until they see evidence that the trade deals will last.

“How much can we really go back to the way things were before this tiff?” Mr. Terrazas asked rhetorically. “Are they going to go back quickly to the way things were before, or are companies going to say this new uncertainty is going to be a feature of the global trade picture for the years ahead?”

Manufacturing is a relatively small part of the American economy, and there is little risk that even a sustained slump in manufacturing could, on its own, push the country into a recession. Consumer spending remains robust, and the fears of a downturn that gripped financial markets over the summer have eased.

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