{"id":17452,"date":"2018-06-05T14:09:10","date_gmt":"2018-06-05T11:09:10","guid":{"rendered":"https:\/\/bestinsurance.gr\/a1\/?p=17452"},"modified":"2018-06-05T14:09:10","modified_gmt":"2018-06-05T11:09:10","slug":"why-trumps-trade-war-isnt-worrying-wall-street-economists-yet","status":"publish","type":"post","link":"https:\/\/bestinsurance.gr\/a1\/archives\/17452","title":{"rendered":"Why Trump’s Trade War Isn’t Worrying Wall Street Economists, Yet"},"content":{"rendered":"
\n

Why Trump’s Trade War Isn’t Worrying Wall Street Economists, Yet<\/h1>\n<\/div>\n
\n
\n
    \n
  • President has infuriated trading partners with tariff moves<\/li>\n
  • Economists say real risk would be sliding business confidence<\/li>\n<\/ul>\n<\/section>\n
    By\u00a0Andrew Mayeda<\/p>\n

    (Bloomberg) —\u00a0<\/section>\n

    President\u00a0Donald Trump\u2019s zeal for tariffs\u00a0has yet to derail the global economic outlook.<\/p>\n

    While Trump has sown confusion and frustration among fellow political leaders, economists at most Wall Street banks are barely changing their forecasts for solid global growth this year as they estimate only modest fallout from a skirmish over commerce.<\/p>\n

    Take Trump\u2019s 25 percent steel tariffs. After stripping out food and energy, consumer prices are poised to rise by three basis points in response, Goldman Sachs Group Inc. said in a research note Monday.<\/p>\n

    The worry remains that Trump may just be getting started. If the president delivers on all his tariff threats, $475 billion in goods would be affected, and core inflation would speed up by about 15 basis points, according to Goldman. That\u2019s still a small increase, but one that might get the attention of the Federal Reserve, which could spur more aggressive policy tightening.<\/p>\n

    What Next?<\/h3>\n

    \u201cThe impact of tariffs on $50 billion here and there, on its own, is relatively limited,\u201d said\u00a0Torsten Slok, chief international economist at Deutsche Bank AG. \u201cThe real danger continues to be the uncertainty about what\u2019s next.\u201d<\/p>\n

    The damage could get serious if trade tensions sap business confidence, causing executives to put off capital spending and other investment decisions, he said. Business spending is bouncing back after years of caution following the global financial crisis, and is partly driven by the enactment of Republican corporate tax cuts.<\/p>\n

    Factory purchasing managers see a jump in capital spending this year, according to The Institute for Supply Management\u2019s semi-annual forecast released last month. The investment surge is one of the factors driving the strongest global expansion in seven years.<\/p>\n

    \u201cYou have a lot of conversations with people who are saying, \u2018Is my industry next?\u2019” said Slok. The threat of a global trade war is \u201cno longer a tail risk,\u201d he added.<\/p>\n

    The International Monetary Fund has warned that a trade war could undermine the strongest global upswing in seven years. \u201cEverybody loses in a protracted trade war,\u201d IMF spokesman Gerry Rice said last week.<\/p>\n

    Trade Costs<\/h3>\n

    Bloomberg Economics estimates a trade war would\u00a0cost\u00a0the global economy about $470 billion by 2020 — roughly the size of Thailand\u2019s economy. That projection assumes the U.S. hikes import costs by 10 percent, and the rest of the world retaliates in kind.<\/p>\n

    For now, Trump\u2019s trade assault hasn\u2019t severely dented confidence among American businesses, according to the Fed\u2019s beige\u00a0book, which polls firms across the U.S. While some respondents \u201cnoted some concern about the uncertainty of international trade policy,\u201d outlooks for near-term growth remain \u201cgenerally upbeat,\u201d the May beige book reported.<\/p>\n

    Some economists are stopping short of using the term \u201ctrade war.\u201d Analysts at ING Bank NV are calling the current situation a \u201ccold\u201d trade conflict with a muted economic impact.<\/p>\n

    Protectionist Agenda<\/h3>\n

    Two things need to happen for hostilities to reach the level of a global trade war, ING analysts\u00a0Viraj Patel\u00a0and\u00a0Raoul Leering\u00a0said in a research note. One, Trump would have to broaden protectionist measures to other sectors — a distinct possibility, given the administration is probing whether car imports represent a security risk. And secondly, the president would also have to respond to Chinese retaliation by raising the ante, such as by slapping a blanket 20 percent duty on all Chinese imports, according to ING.<\/p>\n

    Beijing is threatening to respond to a direct tariff attack with duties of its own on everything from American soybeans to airplanes. Both sides have refrained from imposing tariffs so far, as they try to hammer out a deal on trade issues.<\/p>\n

    The economic damage may also broaden if fears of a trade war cause a sharp selloff in risk assets, causing financial conditions to tighten. U.S. stock prices fell sharply in late March after Trump promised to impose tariffs on Chinese goods. Since then, investors appear to have become less jittery about hawkish trade statements by the president.<\/p>\n

    U.S. stocks closed at a 12-week high Monday, as optimism about the world\u2019s biggest economy more than offset worries about protectionism.<\/p>\n

    Under ING\u2019s worst-case scenario, which it calls \u201call-out trade war,\u201d the U.S. economy would take the biggest hit, with output dropping by 2 percent over two years.<\/p>\n

    \u201cSomebody loses money when you force people to put investments on hold, when things get more expensive than they should have to, when they have to break up supply chains,\u201d\u00a0Adam Posen, president of the Peterson Institute for International Economics, said in an interview on Bloomberg TV. \u201cAll of it adds up.\u201d<\/p>\n<\/section>\n

    –With assistance from\u00a0Jeanna Smialek\u00a0and\u00a0Katia Dmitrieva.<\/p>\n<\/section>\n<\/div>\n
    \n
    \n

     <\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

    Why Trump’s Trade War Isn’t Worrying Wall Street Economists, Yet President has infuriated trading partners with tariff moves Economists say real risk would be sliding business confidence By\u00a0Andrew Mayeda (Bloomberg) —\u00a0 President\u00a0Donald Trump\u2019s zeal for tariffs\u00a0has yet to derail the global economic outlook. While Trump has sown confusion and frustration among fellow political leaders, economists<\/p>\n","protected":false},"author":1,"featured_media":5318,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":["post-17452","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-1"],"jetpack_publicize_connections":[],"_links":{"self":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/17452","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/comments?post=17452"}],"version-history":[{"count":1,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/17452\/revisions"}],"predecessor-version":[{"id":17453,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/posts\/17452\/revisions\/17453"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/media\/5318"}],"wp:attachment":[{"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/media?parent=17452"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/categories?post=17452"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bestinsurance.gr\/a1\/wp-json\/wp\/v2\/tags?post=17452"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}