US President Donald Trump has declared a trade war on the rest of the world, sparking global financial markets and raising concerns about a potential recession. The move, which includes higher import tax rates on dozens of countries and territories, has left economists puzzled as to why Trump is trying to overhaul the existing economic order.
Trump claims that other countries are ripping off US businesses and workers, but mainstream economists disagree, saying that his tariffs will only harm the US economy. They argue that trade deficits are not a sign of national weakness, but rather a result of Americans’ propensity to save little and consume more than they produce.
The US has already been experiencing high trade deficits for decades, and experts say that tariffs will only exacerbate this problem. In fact, economists say that the opposite is true: a larger trade deficit can lead to economic growth as the country imports more goods and services.
Trump views tariffs as an all-purpose economic fix, but experts argue that they are a “smoking gun” that will cause investment in the US to crash. They also point out that Trump’s actions have created uncertainty and alienated the US from its trading partners.
The S&P 500 has plummeted 12% since Trump announced sweeping import taxes on April 2, and experts say that this move is a recipe for disaster. The US trade deficit in goods and services reached $918 billion last year, but economists argue that this is not a sign of weakness, but rather a result of the country’s consumption patterns.
Overall, Trump’s trade war has sparked global panic and economic uncertainty, and experts warn that it could have severe consequences for the US economy.
Source: https://time.com/7275957/trump-tariffs-usa-trade-deficits-economic-growth-strength-world-order