Economics: Weapons Of Economic Self-Destruction

(Drivebycuriosity) - Trump`s trade war against China shows the first casualties in the USA. In April US retail sales & industrial production fell and stocks dropped sharply. The imposed tariffs on Chinese goods are weapons of self-destruction. They are taxes on imported goods which are paid by the US consumers. President Trump boasted that the US government collected about $100 billion so far, so American consumers already lost $100 billion to their government (cnbc). They have to spend more money on computers, furniture, clothing, chemicals and plenty of other goods which is curtailing their budgets. As a result they have less money to spend less for American goods.

It seems that the trade war is also slowing China`s economy and hurting so the global economy. Sequentially the US looses not only exports to China, because of retaliations there, it exports also less to other countries. The Federal Reserve of Atlanta calculates that economic growth in the US already slowed down to 1.4% in the second quarter (frbatlanta).

If the trade war escalates it will endanger the global economic expansion - and might even cause a recession in the US. If the US slides into a trade war caused recession it is unlikely that Trump will get reelected next year. Even a sluggish economy could dampen his chances considerably. The trade war against China hurts everybody.