The ongoing trade struggle between the US and other countries in the world is proving to be detrimental to the global economy. It is perceived that the conflict will slow down the growth of the economies of tens of countries around the world. Currently, international tariffs are already denting the U.S. economy to such a significant point. Peter Hooper, the chief economist at Deutsche Bank AG in New York, claimed that the changes would be noticeably painful. Hooper continued and predicted the economic growth by 3%. It would take only 0.1% off the Gross Domestic Product. President Donald Trump has in the past threatened to impose a 10% tariff on an additional $200 billion of Chinese imports.
The president continues to slap a 20% levy on car imports from the European Union. Peter concludes by saying that the fallout could be grave if it reached the customer, businesses, and the investor’s confidence. However, most economic analysts claim that the president is looking for a way of negotiating new trading terms. For instance, after the struggle between U.S. and Asia, America’s equity futures followed Asian shares lower on early Monday.
Bankers and financial Institutions have also taken into consideration the tariffs imposed on the two regions. They have cited this to be an indication of financial strain in the near future. Central banks have given signs of imposing inflation to balance the equation between imports and exports. It might also lead to a decrease in the economic growth by almost 1%. Investors and businesspersons are holding their money anxiously speculating about the unstable atmosphere in the business environment.
However, the Trump administration downsized any perspective of the trade war to bring any economic damage. In fact, they say that without the ongoing conflict, the economy would be in shreds. The chief economist at IHS Markit, Nariman Behravesh, noted that the tariffs would soon affect the tax cuts. This was initiated a few months ago to ease the pressure that had been imposed by taxes on the ordinary citizen. Due to the cuts, the U.S. is in a better shape than its rivals in case of any fallout. Christian Keller, head of economic research at Barclays Plc., said the United States is in a better position to take any blows as its economy is domestically driven. Thus, the country does not rely on imports from the other countries. Regarding exports, the U.S’s GDP was standing at 12% in 2016. This was in comparison to China’s 20% and European Union’s 43%.