Trade

Trump Threatens to Start a Recession

JM Ashby
Written by JM Ashby

Trump has increased his tariffs on $200 billion in Chinese goods from 10 to 25 percent, but the White House is also preparing to impose tariffs on another $300 billion in Chinese goods.

The office of Trump's unhinged trade representative, Robert Lighthizer, is expected to outline the plans today which would impose tariffs on virtually everything we import for China.

WASHINGTON (Reuters) - President Donald Trump on Friday ordered the U.S. trade representative to start the process of raising tariffs on all remaining imports from China, the USTR said in a statement.

The statement by USTR Robert Lighthizer said the value of products subject to new round of tariffs is approximately $300 billion.

It said details on the process for a public notice and comment period for the tariffs will be published shortly in the Federal Register, and more details will be available on the USTR’s website on Monday.

Trump reportedly told Chinese officials that he'll impose tariffs on $300 billion in additional goods at the end of this month if they don't give in to his demands and cut a deal.

Trump's increase in tariffs on $200 billion in goods is going to have serious consequences for the economy, but imposing tariffs on all goods from China would obviously be much worse.

Morgan Stanley's chief investment officer reportedly informed the bank's clients this morning that Trump's new threat would "likely" lead to a recession according to the Wall Street Journal.

If a fresh round of duties are put in place, “the potential cost” of these duties could represent a decline of 1% to 1.5% of companies’ net income. Even worse, “the demand destruction and ailing confidence increase the potential impact well beyond just higher costs, and would likely lead to an economic recession in our view,” wrote Mike Wilson, Morgan Stanley’s chief investment officer, in a Monday note to clients. [...]

“In the case of 25% tariffs on all of China’s exports to the U.S., we are inclined to think this has the potential to tip the U.S. economy into recession given the costs issues companies are dealing with,” he argued. “Surely they would attack labor costs aggressively in such a scenario and unemployment would rise materially—the essence of an economic recession.”

In other words, Trump may finally wreck the healthy economy he inherited from President Obama and he'll do so for no substantiated reason at all. We're gaining nothing from his trade war, only losing.

  • Draxiar

    I’ve lost track at this point…what was his reason for this trade war?

  • muselet

    As Donald Trump stands atop the smoldering ruins of the world economy, I wonder how he’ll try to spin it as some sort of win! for him and Murca.

    You know he’ll try.

    –alopecia

  • Aynwrong

    I don’t know if Trump’s voters actually wanted this. I believe what they really wanted was the unhinged racist scapegoating of all non white people everywhere. He’s delivered and then some. What I do know is that they’re getting another set of consequences from his election whether they like it or not. They richly deserver it. Sadly so many of us non deplorables are going to have to deal with it as well.

    Side note: The only problem I ever had with Hillary Clinton calling the Tangerine Nightmare’s supporters deplorable is that it was far too polite.

    • muselet

      Just to clarify:

      “You know, to just be grossly generalistic, you could put half of Trump’s supporters into what I call the basket of deplorables. Right?” Clinton said. “The racist, sexist, homophobic, xenophobic, Islamaphobic—you name it. And unfortunately there are people like that. And he has lifted them up.”

      She said the other half of Trump’s supporters “feel that the government has let them down” and are “desperate for change.”

      “Those are people we have to understand and empathize with as well,” she said.

      Hard to argue with either part of her characterization, really.

      –alopecia

      • Aynwrong

        I don’t know… I could take issue with 2nd part. Trump’s voters have been voting for the government letting them down party for decades.

        • muselet

          I did say “hard,” not “impossible.” ☺️

          –alopecia

  • jimtowndem

    do you suppose this is what putin wants, to wreck our economy. it sure seems like it is working

    • muselet

      The short answer is yes.

      –alopecia