US

America To Handle A Sharp Dip In GDP In 2020

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Trump administration’s trade war with Beijing is not only going to mean huge losses for business in US but as much as $850 billion lost globally through early next year, as confirmed by a Federal Reserve report published recently.

The United States itself is going to see hundred and billions of dollars lost in outputs. Trade uncertainty and a volatile market is something that researchers are seeing for the first time since 1970s.

The Fed researchers then estimated the blow such uncertainty delivers to economic activity, as businesses pull back on investment and production. They concluded that globally and in the United States, its impact is around 1% to GDP.

So, in simple mathematical terms, US GDP estimated at $20 trillion, a percent impact is huge and comes to almost a loss of almost $200billion and as much to the global economy as well.

Trump’s decisions to tighten the noose on sanctions, is going to hurt the American economy in the longer run, is a running sentiments of industrial experts, economists and Fed researchers themselves.

In his effort to win better trade terms, the Trump administration had increased tariffs on hundreds of billions of dollars of Chinese imports and imposed or threatened to impose duties on imports from other trading partners, including Mexico and the European Union. In retaliation, one of the world’s most powerful economies, China along with other nations have threatened or imposed their own tariffs on U.S. goods.

Now, Trump has shifted his pressure on the Federal Reserve asking them to slash U.S. interest rates. This is age old tactic to save your face and an economy that needs support at a time, when White House might not have preempt the repercussions of the trade war.

On their fair part, Fed policymakers for their part have said they will not let politics dictate interest-rate policy. But they have consistently called out the tariffs as detrimental to U.S. growth. Trump has somewhere behaved like Turkey’s President  Recep Tayyip Erdoğan who coughed up money to support civil war and win favour to his seat, putting his country’s economy in jeopardy.

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