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Trump’s Bellicose Trade Rhetoric May Nix the Benefits of His Corporate Tax Cut and End the Second-Longest Expansion

June 30, 2018 in Blogs

By Angelo Young, Salon

That may not be the recession looming out there in November, but we can see it from here.


Janet Yellen, the former head of the Federal Reserve who stepped down earlier this year, once declared that economic expansions don’t die of old age. Her remark has become a popular slogan among economists when they’re asked whether the U.S. is long overdue for a recession.

It’s not an absurd question. Since World War II, the average period of U.S. economic growth between recessions has been about five years, with the average recession lasting about 11 months. Nine years after the worst recession in 85 years ended, many watchers are wondering (some impatiently) how much longer this current long and slow expansionary period can continue.

All the indicators point to continued economic growth, at least for now. There's a significant danger, however, that President Trump's sustained trade bluster will generate headwinds offsetting any benefits realized by his corporate tax cuts.

On Thursday, the Department of Commerce announced the nation’s gross domestic product for the first three months of the year grew by two percent, a downgrade from earlier estimates but still higher than the same period in the previous two years. Wall Street firms are predicting the stimulus of GOP tax cuts that passed in December will boost second quarter GDP by as much as 4.5 percent.

The question is this: How much life is left in the current economic expansion, and will President Donald Trump’s hostile attitude toward trading partners cause the U.S. economy to contract?

Trade Wars Are Bad for Business

The Trump administration has lashed out at Mexico, Canada, China and the European Union by announcing a series of punitive trade measures it says are aimed at punishing countries for exploiting the U.S., but these threats have also rattled U.S. manufacturers and agricultural exporter who either depend on a supply of imported materials or access to foreign markets.

In addition to steel and aluminum tariffs announced by the administration earlier this year, the president has floated a 20 percent import tax on European cars, …read more

Source: ALTERNET

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