US President Donald Trump’s trade policies are rekindling concerns of a potential economic downturn in the country. The stock market slumped on Monday to record lows, with investors worried that a trade war could push the world’s biggest economy into recession.
Trump has hinted that a recession is possible, despite his administration’s efforts to boost growth. His commerce secretary, Howard Lutnick, dismissed concerns of a recession, saying that global tariffs will come down as a result of Trump’s policies.
However, experts point out that the US economy relies heavily on trade and its structural issues make it difficult for tariffs to have a significant impact. The country has a large trade deficit, which is expected to worsen with higher tariffs. This could lead to higher inflation, runaway deficits, and potentially force the Federal Reserve to end its rate-cutting cycle prematurely.
In reality, tariffs are not paid by foreign countries but by US importers, who ultimately pass on the costs to consumers in the form of higher prices. Economists have also found that Trump’s tariffs have had little impact on employment in the US, with some studies even suggesting negative effects on certain sectors.
As the US economy continues to grapple with structural issues, it remains to be seen whether Trump’s policies will lead to growth or further economic instability.
Source: https://indianexpress.com/article/business/trump-america-tariffs-recession-us-economy-downturn-9880328