Now Reading
Economists: Trump’s trade war a ‘tipping point’ for global economy

Economists: Trump’s trade war a ‘tipping point’ for global economy

Economists and investors alike are really hoping that Trump’s threats to hike the tariffs even further turn out to be a bunch of hot air, aimed at scoring a few policy points, as their manifestation as a reality would spell some bad news not just for the American economy, but for that the whole world. It’s for this reason that they’re describing Trump’s trade war as a ‘tipping point for the global economy’. That has a lot of implications. If Trump enacts an additional $200 billion worth of tariffs on China and tariffs on imported European cars, then growth will experience a slowdown, and could do even more than that to certain other more ‘vulnerable’ markets, such as Europe.

Bloomberg reports:

The escalating trade battle between the U.S. and the rest of the world is raising the risk of a meaningful slowing in an otherwise vibrant American economy.

While the tariffs already in place and set to be implemented will barely dent U.S. growth, economists say the panoply of additional measures being considered would take a perceptible bite out of gross domestic product if they go ahead.

“It’s going to be more noticeably painful,” said Peter Hooper, chief economist at Deutsche Bank AG in New York.

Hooper, who expects the economy to expand 3 percent this year, said the steps already taken or in the works would clip just 0.1 percentage point off GDP growth.

Throw in President Donald Trump’s threat to slap a 10 percent tariff on an additional $200 billion of Chinese imports and a 20 percent levy on car shipments from the European Union and the impact grows to 0.3 point to 0.4 point, he said. And the fallout could even be greater if heightened tensions begin to infect consumer, business and investor confidence.

“It really dings the economy but certainly doesn’t undermine it,” said Mark Zandi, chief economist at Moody’s Analytics Inc., who agreed with Hooper’s estimate of a roughly 0.3 percentage point impact from the accumulated trade actions.

Even though markets have taken the contretemps largely in stride — perhaps in the belief that Trump’s latest threats are more of a negotiating tactic than a concrete plan — U.S. equity futures followed Asian shares lower early Monday after an escalation of tensions over the weekend.

Corporate Mindset
Central bankers though are taking notice. Federal Reserve Chairman Jerome Powell said on June 20 that officials are beginning to hear that companies are postponing investment and hiring due to uncertainty about what comes next.

“Changes in trade policy could cause us to have to question the outlook,” he said during a panel discussion at a European Central Bank conference in Portugal.

The increasing tariff strife poses particular problems for the central bank because it’s likely to both raise inflation and depress growth.

Trump administration officials have played down the economic impact of the trade battle.

“Anyone who thinks the economy is being wrecked doesn’t know what they’re talking about,” Commerce Secretary Wilbur Ross said in a June 21 Bloomberg Television interview.

The worsening trade friction comes at a time when the U.S. economy is, in the words of Powell, “performing very well.”

Growth in the second quarter is on track to clock in at 4.5 percent, according to IHS Markit’s Macroeconomic Advisers, as tax cuts power both consumer and company spending. That would be the strongest in almost four years and twice as fast as the first quarter’s annualized advance of 2.2 percent.

The tariffs though will put a crimp in activity going forward by raising costs for households and businesses.

“It’s starting to chip away at the tax cut,” said Nariman Behravesh, chief economist at IHS Markit. “If they keep down this path, all the positive effects of the tax cut will be gone.”

Thanks in part to the tax cuts, the U.S. does look to be in better shape than its trading rivals to weather any fallout.

See Also

“The U.S. can afford a trade war relatively more than Europe, China” and other countries because its economy is more domestically driven, said Christian Keller, head of economic research for Barclays Plc.

Export Reliance
Exports amounted to almost 12 percent of U.S. GDP in 2016, compared with close to 20 percent for China and 43 percent for the EU, World Bank data show.

While China has policy levers it can pull to try to offset the impact from trade struggles, Europe is more vulnerable, Zandi said. The ECB’s benchmark interest rate is already at zero.

Of course, Europe’s troubles could redound back on the U.S. if the euro weakens against the dollar, as seems likely, he said.

It “would be a tipping point” for the global economy if Trump goes ahead with tariffs on $200 billion more of Chinese goods and a 25 percent tax on all car imports, said Ellen Zentner, chief U.S. economist for Morgan Stanley.

They’re concerned about losing the benefits that Trump’s tax plan gave them. If they’ve become sufficiently used to that margin of profits to play with, then it’s possible that some corporations may slow down expansions or experiment with chopping their labor force as they react to cuts in the profit margin due to facing taxes from a whole other direction. In America, while profits are not known for trickling down, retarded profit and losses certainly do, meaning that Trump’s tariffs could spell the end for lots of American jobs, and likely for jobs in other nations as well. Trump is playing with economic fire in his quest to ‘negotiate’ better ‘deals’ with the rest of the world, one at a time.

 

 

Liked it? Take a second to support The Duran on Patreon!

15
Leave a Reply

avatar
15 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
15 Comment authors
Nightcrawler136Red Pilled ThoughtCrimesJeffrey SpinnerDenLilleAbetibetan cowboy Recent comment authors
  Subscribe  
newest oldest most voted
Notify of
Nightcrawler136
Guest
Nightcrawler136

Go Trump go! Crash the world economy and then watch as gold back currencies rise like a Phoenix!

Jeffrey Spinner
Guest
Jeffrey Spinner

What I read elsewhere was the trade war by Trump is a way to crash the economy to get the cabalist NWO bankers of the west to go down in one fell swoop. Personally, without total war here in the US, the population is done, so whatever. Come to ‘Merica and be exposed to constant aerial spraying, GMO bioweapons, tainted with herbicides and pesticides that endocrine disrupt, contaminated water, drugs, vaccines, psychotic media, education, courts and government. You really haven’t lived until you look around and can’t find any clean food for a reasonable price, breathe air unless filtered, same… Read more »

Red Pilled ThoughtCrimes
Guest
Red Pilled ThoughtCrimes

poor globalists….. trump letting em kill themselves with bad economic policies

DenLilleAbe
Guest
DenLilleAbe

The US is the country of milk and honey! The American consumer is loaded with greenbacks, what does he care is his nr. 2 Mercedes Benz is going to cost 25 % more, nahh! These tarifs will not hurt a true American!! Anybody earning less than 100 000 greenbacks a year is not a patriot, is not a Republican, but is a commie Democreep. True Americans Honk it down on mainstreet, in their Merc or BMW Cabs, playing with gold chains, smoking weed and picking up 2 dollar whores. They dont care about tarifs, they would not know the difference… Read more »

tibetan cowboy
Guest
tibetan cowboy

” … in an otherwise vibrant American economy.”

Ignorant article with unacceptable factual errors. Unemployment is 21+%, inflation 10+%, negative economic growth, and most Americans getting poorer with no purchasing power or sustainable jobs, as starters:

http://www.informationclearinghouse.info/49632.htm.

The nation is a wreck for all but the very wealthy, and collapsing fast.

The GOP has become for years now the party of negligent homicide if not genocide in its destruction of the society except for the 1%, and all safety nets:

https://truthout.org/articles/unmasking-the-gop-as-the-party-of-negligent-homicide/.

JNDillard
Guest
JNDillard

At some point the off-shoring of both jobs and income are going to have to stop. It is difficult to tell at what point the music stops and who is going to be left without a chair, but off-shoring will stop, one way or the other, sooner or later. However, the severity of the addiction to the status quo by the plutocracy that runs the US is so great, and the collusion to maintain it in the EU and China is so strong, that there seems to be no way to break out of cycles of chronic corruption.

thomas malthaus
Guest
thomas malthaus

Fairer trade with China might mean dollar capital outflows from there would accelerate. Could it be that China remains a quasi capitalist-Communist-in –practice
nation that people and money are leaving regardless?

Euclides de oliveira pinto net
Guest
Euclides de oliveira pinto net

A quantidade de informações falsas é gritante !!! Só botam banca porque os mercados mundiais ficaram atrelados ao dólar, papel pintado impresso pelos Rothschilds, único autorizado a imprimir os “toilet paper USAdo” que sustentam a economia norte-americana… se ocorrer a introdução de novas moedas, o dólar de mentira vai para o ralo da história… só papel pintado sem garantia de nada, a não ser a ameaça militar dos valentões !!! FUCK´s dólar !!! Vão passar fome !!!

Gonzogal
Guest
Gonzogal

“If they’ve become sufficiently used to that margin of profits to play with, then it’s possible that some corporations may slow down expansions or experiment with chopping their labor force as they react to cuts in the profit margin due to facing taxes from a whole other direction”

Harley-Davidson To Move Some Production Outside US Over EU Tariffs
https://www.zerohedge.com/news/2018-06-25/harley-davidson-move-some-production-outside-us-over-eu-tariffs

gragor11a
Guest
gragor11a

” … tariffs ….. will barely dent U.S. growth, …

What passes for US growth is actually Cannibal Capitalist. Few are benefiting from this growth, Those of the ‘lower classes’ see no benefit what so ever from such growth.

This house of cards is extremely wobbly and 45 just might be the man to bring it all tumbling down. Avarice will kill this golden goose.

Rastislav Veľká Morava
Guest
Rastislav Veľká Morava

The “Global Economy”….Globalism is not a good thing for most countries.
There will be pain to go through, to get out of it.

IanSeed
Guest
IanSeed

It’s a shame to see that even the decent alternative media are buying into this narrative that Trump is going to crash the world economy all on his own. “Tipping point” might technically be true but look at the state the world is already in! The world economy is about to crash because of a decade of zero interest rates and endless QE has caused an “everything” bubble”. Stock markets, bond markets, property, all asset prices in fact. That free money works its way into high end goods like clasic cars and paintings. one sold for $450m, just one painting.… Read more »

Vince Dhimos
Guest
Vince Dhimos

US economists are just like all other journos. They lie to the benefit of the US. But the real impact of this could be totally different.

John Mason
Guest
John Mason

Picture very symbolic, walking on a tight rope the wrong way designates disaster!

Artyne
Guest
Artyne

Tump may be on the bridge and everyone sees him thru the window, but he’s definitely not steering the helm. There’s someone else tilling the helm and it isn’t Trump. There’s involved economic theory here and its beyond Trump, so the steerage is likely from a World Group with authority to do it. Just like Deep State decided on the Twin Towers destruction, Bush was just along to be seen thru bridge windows, but he wasn’t steering the helm. That decision was way out of his hands although, Cheney was certainly cooperating 200%, he didn’t decide either. Nor is Mr.… Read more »

Copyright DRN Media PLC 2019. RSS: http://theduran.com/feed

Scroll To Top